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Compensation at Bonum Bank Plc

Compensation Programme

Decision-making process used in the specification of the compensation programme:

The Bank’s Board of Directors is responsible for compensation matters. The Bank does not have a compensation committee appointed by the Board for the management of the compensation programme. It was not considered necessary due to the narrow scope of the Bank’s business. The Bank’s Board of Directors monitors the compensation programmes and annually assesses their effectiveness.   

Bonum Bank’s compliance function verifies at least once a year whether the remuneration scheme, as approved by the Board of Directors, has been complied with. The compensation of control functions’ personnel is independent of the business area being supervised. 

Relationship between compensation and result 

The compensation programme shall be in line with the Bank’s business strategy, objectives and values and support the Bank’s long-term benefit. The compensation programme shall also be in harmony with the Bank’s proper and effective risk management and risk-bearing capacity and promote them. The compensation programme must also support good corporate governance.

Criteria used in the assessment of performance, risk-based changes to the amount of compensation, postponement practices and compensation payment criteria 

The variable remuneration of a beneficiary in the bank cannot exceed EUR 50,000 during an earning period of one year. The Bank may decide not to pay any variable compensation either partially or at all in the event that the financial position of the bank has weakened to the extent that this would be unreasonable considering the situation of the bank.

Severance pay or other compensation payable to an employee can be paid if employment terminates prematurely. The principles of Act on Credit Institutions chapter 8 are taken into account in payment, and the payment criteria are laid down so that compensation is not paid for failed performance.

Fixed and variable compensation  

The variable compensation under the compensation programme may be no more than 50 per cent of the fixed annual salary. 

Key parameters and criteria applied in the specification of variable compensation and other fringe benefit  

The Bank’s variable compensation is subject to the following principles: 

  1. The payment grounds of variable compensation are determined and communicated to compensation beneficiaries ahead of time. However, without payment grounds determined and communicated ahead of time, the Board of Directors can reward an employee for exceptional performance with compensation that is equivalent of the employee’s salary of one month.  
  2. The compensation must be based on an overall assessment of the performance of the compensation beneficiary and the business unit in question. When assessing performance, the long term result must be considered. 
  3. At a minimum, known and future risks, capital costs and liquidity at the time of assessment must be taken into account when determining the compensation amount. 
  4. The compensation beneficiary may be entitled to variable compensation, which can be only paid if the compensation beneficiary has not violated the regulations, instructions or operating principles and procedures defined by the credit institutions, which generate obligations to the credit institution, or contributed to such action through their acts or failure to act. It must also be possible to not pay or to recover the variable compensation if the credit institution becomes aware of such action only after the compensation has been determined or paid. 
  5. The Bank may commit to unconditional payment of compensation (non-recoverable compensation) only for particularly weighty reasons and provided that the promised compensation only targets the first year of employment of the compensation beneficiary. 

Aggregate information on compensation to the management and members of personnel who have a significant impact on the bank’s risk profile   

The Bank maintains a list of the following persons and the compensation paid to them: 

  1. CEO and members of the management team, 
  2. Other persons whose actions have a significant impact on the risk position of the central institution or amalgamation, 
  3. Persons who work in the risk control function, risk management tasks, compliance function or internal audit function, 
  4. Another person whose total amount of compensation is not significantly different from the total amount of compensation of the persons referred to in items 1 and 2.