Remuneration

The remuneration and incentivization policy is fundamental to attract and retain highly-qualified staff. As our business grows in complexity, specialization and internationalization, merely sourcing the necessary skills is not sufficient: what is needed is to pursue criteria based on prudent management, sustainability of costs, and results over time.

Responsible, fair and transparent compensation mechanisms increase and protect reputation, credibility and consensus over time, all of which form the basis for sustainable business development with a view to creating and protecting value for all our stakeholders.

Competitiveness

• Attract and retain talent
• Ensure an adequate pay mix

Reward merit and performance

• Variable remuneration based on documented and sustainable performance
• Strong links between results and remuneration

Avoid pay for failure and promote a long-term approach

• Deferred remuneration component fully subject to performance conditions, malus conditions and clawback clauses
• Significant percentage paid in the form of equity, to ensure that incentives are aligned with the objective of value creation over the long term

Our pay structure is aligned with the most recent Italian and European regulatory framework, the Code of Conduct for listed companies, and the best market practices adopted by national and international operators. Remuneration governance is structured on two levels: governing bodies and organizational units.

Our compensation packages are structured in such a way as to:

• Ensure that fixed and variable remuneration components are balanced over time;
• Adopt a flexible approach to remuneration;
• Encourage staff to take a performance-oriented approach to their work based on their role, without at the same time encouraging them to engage in risky behaviours geared towards short-term profit;
• Review the positioning of the compensation packages offered to our staff relative to the reference market, including with the assistance of specialist advisors.

The fixed salaries reflect staff members’ responsibilities and their technical, professional and managerial capabilities. We monitor fixed salary levels very carefully, adjusting them to the market scenario, among other things in order to avoid excessive reliance on the variable component.

Variable remuneration reflects and rewards the achievement of results and targets, and is determined on a risk-adjusted basis. It is a key motivational driver, and for some business figures (in Wholesale Banking and Wealth Management) can make up a significant proportion of the overall compensation, in line with market practice. Variable remuneration is paid in cash and equity instruments, part upfront and part deferred to subsequent years subject to the achievement of additional performance conditions.

In line with market practice, the remuneration package is complemented with a series of benefits and corporate welfare schemes that reflect Mediobanca’s ongoing concern for its staff’s personal needs and well-being. The benefits are made available to the Group’s entire population and, while differences may apply based on groups of professionals or geographical areas, no individual discretionary systems are applied.

• We apply mechanisms that take due account of risk. Gateways are used, that are related to our Risk Appetite Framework, and overall bonuses are based on economic profit.
• Bonuses are also subject to additional or malus conditions, that can, if triggered, result in them being cancelled.
• Clawback clauses, or contractual mechanisms that require compensation already paid to be repaid, in part or in full, in the event of damage to the company’s equity, profitability, earnings results and/or reputational issues.

• Growth and sustainability are hallmarks of the Mediobanca Group, and play an integral and fundamental role in defining its strategies. The Group’s remuneration and incentivization policies also strive to generate sustainable value over the long period.

• Linked to business targets set at the start of the financial year (budget targets and quantitative KPIs).
• We also set non-financial/qualitative targets to promote the creation of value over the long term.
• We set a cap on short-term remuneration to reduce the appetite for risk.
• The deferral policy is mandatory.

• The performance objectives are intended to ensure a solid capital base, adequate liquidity ratios, strong earnings, and appropriate risk management.
• A one-year holding period is set for both the upfront component (paid in the same financial year in which it is awarded) and the deferred component.
• A new Long-Term Incentive Plan for 2023-26 was approved by the Board of Directors in May 2023 as part of the 2023-26 Strategic Plan.

• No golden parachutes or other forms of special treatment are granted to Directors leaving office.
• The severance pay of executive Directors and MRTs may not exceed 24 months of their salary and is capped at €5m.
• The amount of the severance pay:
  • Is determined on the basis of the regulations in force, of collective or individual contracts, and of market practice in the individual reference markets in which the Group operates
  • Takes account of the Bank’s long-term performance, and cannot be paid in cases where the conduct of staff members has damaged its earnings/financial or reputational situation, whether or not fraud or wilful misconduct is established;
  • Severance pay is seen as part of the processes applied in order to minimize the earnings and reputational risks, present and future, which the Bank might face as a result of legal disputes.

The policy adopted in cases where beneficiaries leave office is described in more detail in the Group Staff Remuneration Report.