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Incentive systems
Variable compensation aims to remunerate achievements by directly linking pay to performance outcomes in the short, medium and long term. To strengthen the alignment of shareholders' interest and the interests of management and employees, performance measurement reflects the actual results of the Company overall, of the business unit of reference and of the individual, constituting a mechanism of meritocratic differentiation and selectivity.
The 2024 Group Incentive System has been confirmed as a Sustainable Performance Plan, based on both short-term and long-term performance conditions, to support the Group strategic direction by fostering a strong link between remuneration, risk and sustainable profitability. In addition, the Incentive System aims at aligning top and senior management interests to the long-term value creation for shareholders, to share price and Group performance and to sustaining a sound and prudent approach to risk management, combining annual goals with additional long-term conditions to steer the performance management measurement towards sustainable results over time.
Compliance and Sustainability Drivers for Incentive Systems
Our remuneration policies include various compliance and sustainability drivers and in particular:
- build incentive systems based on profitability, financial solidity, sustainability and other drivers of sustainable business practice with particular reference to risk, cost of capital and efficiency;
- design incentive systems which do not, in any way, induce risk-taking behaviors in excess of the Group's strategic risk appetite; in particular the incentive systems should be coherent to the Risk Appetite Framework ("RAF");
- design incentive systems to set minimum performance thresholds below which zero bonus will be paid;
- subject the remuneration to correction mechanisms that allow it to be reduced (even significantly) or zeroed in case of evidence of misconduct or negligence on the part of the beneficiaries.
Group Incentive System
Similarly to last years, the Group Incentive System, as approved by UniCredit Board of Directors on March 7, 2024, provides for:
- the definition of a bonus pool at Group level, with cascading at divisional level consistently with segment reporting disclosure, based on the actual divisional performance adjusted considering quality and risk indicators as well as cost of capital;
- allocation of a variable incentive defined on the basis of the determined bonus pool, individual performance evaluation, internal benchmark for specific roles/markets and maximum ratio between variable and fixed compensation as approved by the Annual General Meeting;
- a malus condition (Zero Factor or Reduced Scenarios) which applies in case specific thresholds of profitability, capital and liquidity are not met at Group level and envisages specific scenarios if not met or partially met at Country/Division level;
- risk adjusted metrics in order to guarantee long-term sustainability, regarding company financial position and to ensure compliance with regulations;
- definition of a balanced structure of upfront (following the moment of performance evaluation) and deferred payments, in cash and/or shares for Group Material Risk Takers;
- deferred payments for selected beneficiaries (members of Group Executive Committee ("GEC") and managers directly reporting to GEC members ("GEC-1"), excluding Company Control Functions, People & Culture and the Manager in Charge of Drafting the Company Financial Reports, subject to additional long-term performance conditions;
- distribution of financial instruments payments which considers the applicable regulatory requirements regarding the application of retention periods.
The "KPI Bluebook", a catalogue of performance indicators, is annually reviewed by relevant Group Functions and serves as the performance measurement and evaluation framework within the Group Incentive System. The KPI Bluebook includes financial and non financial performance indicators defined from the company strategy.
For further information on 2024 Group Incentive System, please refer to 2024 Group Remuneration Policy and Report.
Compliance breach, Malus and Claw-back
We reserve the right to activate malus and claw-back mechanisms, namely the reduction/cancelation and the return respectively of any form of variable compensation, in case of verification of behaviors adopted during the performance period, for which the employee:
- contributed with fraudulent behavior or gross negligence to the Group incurring significant financial losses, or by his/her conduct had a negative impact on the risk profile or on other regulatory requirements at Group or Country/Division level;
- engaged in misconduct and/or failed to take expected actions which contributed to significant reputational harm to the Group or to the Country/Division, or which were subject to disciplinary measures by the Authority;
- is the subject of disciplinary measures and initiatives envisaged in respect of fraudulent behavior or characterized by gross negligence during the reference period;
- infringed the requirements set out by articles 26 TUB and 53 TUB, where applicable, or the obligations regarding the remuneration and incentive system.
Consob Disclosure Documents
Information on the assignment of financial instruments to corporate officers, employees and collaborators pursuant to the provisions set forth in Article 114-bis of Legislative Decree no. 58 of February 24,1998, as well as to the provisions of the Issuer Regulation adopted by Consob with resolution no. 11971 of May 14, 1999.