Decision-making process to determine the remuneration
By virtue of CEB’s Group Remuneration Policy, the key elements of the governance structure for the fixing, execution and evaluation of the remuneration management are as follows: CEB’s Supervisory Board is responsible for the establishment, execution and evaluation of the Group Remuneration Policy and it monitors the proper implementation by the Managing Board. The HR and Remuneration Committee (a subcommittee of the Supervisory Board, described in more detail below) meets at least each quarter and prepares the decision-making process for the Supervisory Board, taking into account the long-term interests of CEB’s internal and external stakeholders.
Remuneration of identified staff (defined in the Group Remuneration Policy and determined as described in the Assessment of Identified Staff Procedure) is determined by the Supervisory Board. The remuneration of non-identified staff is determined and implemented by or on behalf of the Managing Board, although the ultimate responsibility for the remuneration policy of non-identified staff lies with the Supervisory Board. For senior managers in the HR, compliance, internal audit, and risk-management control functions, remuneration is directly supervised by the HR and Remuneration Committee.
As a general principle, CEB’s Group Remuneration Policy authorizes the Supervisory Board under certain conditions to revise or reclaim the variable remuneration of (a group of) employees, as defined in the policy.
Link between performance and pay
One of the key elements of CEB’s Group Remuneration Policy is the description of the appraisal process, a summary of which is given here:
On the basis of predetermined and assessable objectives comprising financial and non-financial elements, and on the basis of annually determined company focus objectives and competences, an employee’s overall performance assessment is determined at least once per year. The non-financial objectives form a substantial portion (at least 50%) of the total set of objectives for an employee.
Each year, the Managing Board formulates its own financial and non-financial objectives and presents them for approval to the Supervisory Board. The approved objectives are then partially assigned to the relevant identified staff and employees. Pursuant to the Group Remuneration Policy, financial objective-setting for employees in control functions may not be based on the commercial objectives of CEB; that is, the objectives for these employees are set independently from the financial targets or results of the business they control.
The financial performance of an employee is assessed in the context of CEB’s financial stability and own-fund requirements as well as the long-term interests of shareholders and other stakeholders. Financial performance is evaluated based on (a) Divisional or departmental profitability, calculated on financial criteria such as net income and (b) The department’s attribution or claim to CEB’s risk profile.
A web-based performance-management system generates an overall performance rating. The three performance categories and their weighting within the overall score are competencies (40%), company focus (20%), and objectives (40%). The performance ratings vary as follows: “exceptional performance,” “exceeds expectations,” “job well done,” “needs improvement,” and “far below expectations.”
Performance evaluation of identified staff considers performance over several years, and appraisals for employees in control functions take into account the countervailing function of these staff members.
Most important characteristics of the remuneration system
Apart from the governance structure and appraisal process, the CEB Group Remuneration Policy also incorporates rules and guidelines for the setting and determination of fixed and variable remuneration of employees.
In CEB, fixed salary levels are conservatively aligned in comparison to similar functions in the banking industry nationally and internationally, validated by an external benchmark organization in respect of the Dutch bank. In the coming years, other CEB group banks will also be included.
One of the basic principles for granting variable pay (if any) is that it may never exceed 100% of the fixed salary. Also, guaranteed variable remuneration to identified staff is not permitted.
Phantom Share Plan
In 2021, CEB’s applied its Phantom Share Plan, which describes the terms and conditions for the granting of phantom shares to identified staff. The plan states that variable remuneration awarded to an identified staff member will be 60% unconditional and 40% deferred. If an identified staff member is awarded a total of more than EUR 300,000 gross (or equivalent), 40% will be unconditional and 60% deferred. At least 50% of the variable remuneration, whether deferred or unconditional, is in the form of financial instruments whose value is determined by or derived from the value of CEB shares, i.e., phantom shares. These financial instruments are rights, not shares.
The deferred part of the variable remuneration vests over three years. Furthermore, vested phantom shares (whether deferred or unconditional) are subject to a retention period of one year. Vesting and the exercise of the phantom shares is subject to the fulfilment of certain conditions. For example, the holder’s performance rating must be at least “job well done.”
Contrary to previous years, the bank incorporated a change to its existing policy. Identified staff receiving variable remuneration below EUR 25,000 gross are exempted from deferrals and phantom shares. This change was made possible under CRD V, which aims to lower the complexity and operational burden of variable remuneration for companies.
In addition, CEB’s remuneration policy was updated as per December 31, 2021, which means that the updated Phantom Share Plan will be implemented as of 2022.
Most important parameters and motivation for variable remuneration
Pursuant to the Group Remuneration Policy, the granting of any variable remuneration depends on CEB’s performance in a year. Additionally, the granting of variable remuneration may not restrict CEB’s ability to reinforce its regulatory capital, solvency ratio, or funds. CEB has no other non-cash benefits or variable remuneration elements.
Aggregate quantitative information on remuneration per business segment
In 2021, CEB paid out EUR 46,897,288 to employees working in the wholesale/corporate banking segment and EUR 8,962,452 to employees in the retail banking segment.
Aggregate quantitative information on remuneration for identified staff and senior managers
CEB has identified 62 identified staff members and 20 senior managers. In 2021, the total amount of remuneration paid out to identified staff and senior managers amounted to EUR 13,269,486, split into EUR 10,895,988 for identified staff and EUR 2,373,498 for senior managers. This total remuneration was split into EUR 12,724,762 fixed salary (for identified staff EUR 10,510,549 and EUR 2,214,213 for senior managers) and EUR 544,724 variable remuneration (EUR 385,439 for identified staff and EUR 159,285 for senior managers). Please note that this variable remuneration was distributed according to the guidelines described above. In 2021, there were no identified staff members who were classified as high earners.
The total amount of awarded and outstanding (vested and unvested) deferred remuneration in 2021 for the variable remuneration over the performance year 2020 amounts to EUR 946’605.
As part of CEB’s Group Remuneration Policy, variable remuneration packages for all employees are granted based on the financial and non-financial performance over the respective reporting year and are paid out in the form of cash or phantom shares, both unconditional and conditional, in the following years. This Remuneration Report refers to the performance year of 2020, with the related bonus payment executed in 2021.
By virtue of the rules in the Group Remuneration Policy, in 2021 there will be no “less than awarded” deferred payouts due to an unsatisfactory performance adjustment.
In the reporting year 2021, CEB on a consolidated basis paid severance payments to a total of 5 employees, of which 1 was identified staff. The severance payment did not exceed one year’s fixed salary for any of these staff members. In total, CEB paid EUR 217,523 severance in 2021, EUR 13,948 of which went to identified staff members. CEB did not pay sign-on or entry awards to any identified staff member in 2021.