Rules for remuneration of management

The remuneration of Board Members consists of a fixed part and a variable part, awarded on the basis of performance evaluation. The remuneration of the Members of the Supervisory Board is not dependent on options or other derivatives or any other variables or performance of the bank.

The remuneration of the President and Members of the Management Board is determined by the Supervisory Board taking into account the recommendations of the Remuneration Committee. This Committee determines the policy̨ for remuneration of the bank’s Management Board Members and the individual terms and conditions within the remuneration packages for each person on the Management Board. In determining the amount of remuneration, consideration is given, among other things, to the function performed, the scope of responsibility and professional qualifications and experience. The market competitiveness of the remuneration is also taken into account. The Remuneration Policy ensures an appropriate level of remuneration for the Management Board and Supervisory Board members, as well as for key executives, enabling the bank to attract, retain and appropriately motivate individuals with the competencies necessary to properly lead and supervise the bank.

The structure of total remuneration is in line with market practices, while remuneration levels are in line with banking sector standards, taking into account the scale of the bank’s operations.

The bonus system for Management Board members makes the level of remuneration conditional on an assessment of the company’s long-term financial position, the long-term growth of shareholder value and the stability of the company’s operations and the acceptable level of risk.

On the basis of the indicators and the assessment of the achievement of individual objectives from the WHAT, HOW and RISK categories and the respective weights assigned to these objectives, a score is determined, which is adjusted by a factor resulting, inter alia, from the assessment of the 3-year outlook proposed by the Remuneration Committee of the Supervisory Board and finally approved by the Supervisory Board.

On 27 April 2022, Santander Bank Polska introduced Incentive Programme VII by Resolution no. 30 of the Annual General Meeting. This programme is addressed to employees of the bank and to employees of the bank’s subsidiaries (Santander Bank Polska Group) who make a significant contribution to the growth of the bank’s value. The aim of the programme is to motivate participants to achieve business and quality objectives, in line with the Group’s long-term strategy , by creating an instrument that ensures their stronger connection with the Group and encourages them to take great care of its long-term prosperity.

The programme has been introduced for a period of five years (2022 – 2026), with share buybacks and transfers to participants being implemented until 2033, due to the deferral of variable remuneration payments.

Participants in the programme are obligatorily all individuals with the status of Identified Staff members of the Santander Group. The list of other key participants will be drawn up by the Management Board Members and approved by the bank’s Supervisory Board, with the participation of other employees in the Programme being voluntary.

As part of the Programme, upon fulfilment of the conditions described in the Participation Agreement and the Resolution, participants will be granted the right to receive an award constituting a variable remuneration component in the form of the bank’s own shares. To this end, Santander Bank Polska will acquire up to 2,331,000 Own Shares between 1 January 2023 and 31 December 2033.

The total amount of variable remuneration granted for a calendar year to Management Board Members may not exceed 100% of the fixed remuneration granted for the calendar year. In exceptional cases, this limit may be increased to a maximum of 200% of the fixed remuneration subject to the approval of the bank’s General Meeting. The decision to determine the maximum ratio of fixed remuneration components to variable components of the remuneration in the Santander Bank Polska Group was taken by the Annual General Meeting on 27 April 2022.

Variable remuneration – awarded on the basis of the bonus regulations – is paid in cash and in the form of financial instruments. The payment in the form of financial instruments may not be less than 50% of the total variable remuneration payment. Until 2022, the financial instrument in question used to be phantom shares.

Starting with the variable remuneration for 2022, the financial instrument is Santander Bank Polska shares awarded under Incentive Programme VII.

Payment of no less than 40% of each component of the variable remuneration is deferred for a period of 5 years.

In the case of the deferred portion of the variable remuneration payable in cash or in the form of a financial instrument that has not yet been paid, a malus clause may be applied if certain circumstances arise in the period prior to the entitlement to such remuneration. The circumstances in which malus clauses apply will be linked in each case to the performance or to risk-generating situations or changes in the level of risk applicable to the company, business unit or activities of the employee concerned.

In the event that a Management Board member’s mandate expires due to dismissal from the Management Board or non-appointment to a new term of office, Management Board members are entitled to a one-off severance payment. The severance payment is not due in the event of an offer of further employment within the bank’s structures, dismissal for reasons of gross breach of duties or standards of integrity, personal culture and professional conduct, as well as in the event of resignation from the Management Board or failure to discharge the Management Board member’s duties.

The bank does not offer members of the Management Board, Supervisory Board or senior management any special retirement benefits. The bank does not have any pension or benefit obligations of a similar nature in relation to former management and supervisory personnel.

In 2022, the ratio of the remuneration of the highest-paid person at Santander Bank Polska S.A. to the median remuneration of all the organization’s employees (excluding this highest-paid person) was 1 to 0.02. Putting it simply, it can be said that the remuneration of the organization’s highest-paid person was about 50 times higher than the median remuneration of other employees.

For detailed information on the remuneration of the Management Board and Supervisory Board members, see Santander Bank Polska S.A.’s Corporate Governance Statement in 2022.