Performance share scheme
Through the performance share scheme, we allocate shares to group staff based on the assessment of performance and of the results achieved. This allows us to align the interests of our management and our shareholders, in the creation of long-term value.
The scheme involves the allocation of Mediobanca shares to beneficiaries as the equity component of the variable remuneration awarded to them at the end of annual or long-term performance assessment process, provided the performance conditions set in the remuneration policies are met.
There are two reasons why we have adopted performance shares as the instrument for variable remuneration:
- to bring us into line with regulatory requirements for part of the remuneration to be paid in equity instruments, over a long-term period, subject to performance conditions, i.e. the sustainability of positive results over time
- to align our management's interests with those of our shareholders for the creation of value in the medium/long-term
The current scheme was approved by shareholders in the general meeting of 28 October 2015 and is aligned to the applicable regulations on remuneration, and in particular to the Bank of Italy supervisory instructions of 18 November 2014 on remuneration and incentive policies and practices.
FEATURES OF THE SCHEME
- The shares awarded are actually assigned to the beneficiaries at the end of a vesting period of at least three years – two years for the upfront component – provided that the beneficiaries are still employed by the group
- The shares are allocated if the performance conditions specified in the applicable remuneration policies have been met, as regards the sustainability of the results achieved and of maintenance of the solidity and liquidity of the company and of proper conduct by the individual
- After the performance conditions for the reference year have been checked, the performance shares awarded as a deferred equity component are subject to a further holding period of at least one year prior to their actual allocation, conditional upon the beneficiary continuing to work for the company. The performance shares awarded as an upfront equity component are subject to a holding period of two years prior to their actual allocation, which remains conditional upon the beneficiary continuing to work for the Group
These are identified in the remuneration policies and currently require the following:
- the beneficiary must still be a group employee and must not be serving a period of notice for resignation or dismissal
- the gateway performance conditions must be met in each financial year
- the business units of the beneficiaries must achieve a positive risk-adjusted result net of extraordinary items and the effects of strategic decisions, as ratified by the risk management unit and the control and risks committee
- the beneficiary has not committed any significant compliance breaches (i.e. has not been subject to disciplinary measures under the terms, among others, of Mediobanca’s code of ethics, organisational model, business conduct policy and other internal regulations), and no losses have been incurred that were attributable to their actions
As a result, staff are required, according to their role and business activity, to conduct themselves at all times in such a way as to ensure that Mediobanca retains a solid capital base, a strong liquidity position and control of all risks, as well as positive earnings, to guarantee the long-term sustainability of the remuneration systems.