Compensation, profit sharing and loans
Content of profit-sharing plans and determination of compensation
The Compensation Policy Rules as well as the Risk Policy Framework Rules of VP Bank require that compensation plans and personnel management be designed to minimise personal conflicts of interest and risks of improper conduct.
The Nomination & Compensation Committee proposes principles for the compensation as well as the level of compensation paid to the members of the Board of Directors and the Executive Board.
The Board of Directors approves these principles and fixes the amount of compensation of its GEM members.
Board of Directors
The Members of the Board of Directors receive compensation in consideration of the duties and responsibilities imposed upon them by law and the Articles of Association (art. 20 of the Articles of Association). The amount of compensation is determined anew each year by the Board of Directors on the basis of a proposal submitted by the Nomination & Compensation Committee.
Compensation paid to Members of the Board of Directors varies according to the respective Members’ functions on the Board and its committees or other corporate governing bodies (for example pension fund). Three quarters of this compensation is paid in cash and one quarter in the form of freely disposable registered shares A in VP Bank. The number of shares depends upon the market value upon receipt.
VP Bank has not entered into any understandings with respect to severance compensation with the Members of its Board of Directors.
Group Executive Management
Compensation paid to management consists of four components:
A fixed base salary that is contractually agreed between Nomination & Compensation Committee and the individual members. In addition to the base salary, VP Bank pays proportionate contributions to the management insurance scheme and the pension fund.
A Performance Share Plan (PSP), a long-term variable management participation (in the form of registeres shares A of VP Bank Ltd). The basis thereof are the risk-adjusted profit (operating annual result adjusted for non-recurring items, less capital costs), weighted over three years as well as the long-term commitment of management to a variable compensation component in the form of equity shares. At the end of the plan period and depending upon performance, 0-200 percent of the allocated vested benefits are transferred in the form of shares. This vesting multiple results from the weighting of an average return on equity (RoE) and the average cost-income ratio (CIR). Until the time of transfer of ownership, the Board of Directors reserves the right to reduce or suspend the allocated vested benefits in the case of defined occurrences or in extraordinary situations. The share of the PSP makes up half of the total variable performance-related remuneration.
A Restricted Share Plan (RSP), which is based upon a risk-adjusted profit weighted over three years and is settled in equal annual instalments in the form of equity shares over a three-year plan period. Until the time of transfer of ownership, the Board of Directors reserves the right to reduce or suspend the allocated vested benefits in the case of defined occurrences or in extraordinary situations. The share of the RSP makes up a quarter of the total variable performance-related remuneration.
A cash compensation which also depends on the risk-adjusted profit weighted over three years. The share of this performance-related participation amounts to one quarter of the total variable performance-related remuneration.
The Board of Directors lays down each year the planning parameters of the performance-related remuneration (PSP, RSP and cash-based compensation) for the following three years. The target share of total compensation varies according to function and market customs. In the 2014-2016 programme, a target bonus of between 109-114 percent of the fixed annual base salary is calculated in the event that the annual and three-year goals are met.
In 2016, 23.477 shares with a market value on the date of allocation of CHF2,098,843.80 were transferred to management as part of the 2013-2015 management equity participation plan and the RSP 2014-2016. The vested benefits from previous management equity participation plans (2014-2016, 2015-2017 as well as 2016-2018) will continue to run unchanged until the end of the plan period.
VP Bank has concluded no agreements on severance compensation with members of the Executive Board.
An external advisor who has no other mandates from VP Bank Group was commissioned to structure the compensation mode
Transparency of compensation, profit sharing and loans of issuers with registered offices in other countries
As a SIX Swiss Exchange listed issuer domiciled abroad, VP Bank discloses information on compensation, shareholdings and loans within the context of Article 5.2 of the Notes on the Corporate Governance Directive dated 1 September 2014, i.e. analogous to Art. 663bbis of the Swiss Code of Obligations.