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SANTANDER Remuneration Policy

In this post we will follow with our limited series of Remuneration Policies in Spanish quoted big companies, (we referred previously to BBVA and IBERDROLA). This is the occasion of another big bank, Banco Santander, that will be holding its Shareholder Meeting next March 27th. In his proxy materials the bank includes its remuneration policy as required by legislation.

1.- Introduction

                                   a) Principles.

  1. Compensation for directors will depend on belonging only to the board or any of its committees, assistance, and other objective criteria.
  2. compensation for executive directors: it will be designed so that:
    1. The fixed part is a significant share of total pay.
    2. Variable pay rewards the group`s objectives, (performance)
    3. Compensation is aligned with shareholders`interests, does not push to excessive risk-taking, and is competitive to attract, retain and reward talent.

                                  b) Remuneration for Directors, as a result of being a director. It will consist of a fixed maximum amount voted by shareholders, to be distributed by the Board both as (i) an annual remuneration and (ii) assistance fees. The company will provide directors with an insurance. Directors will also be compensated with shares, stock options or stock appreciation rights is so shareholders approve.

                                 c) Remuneration for Executive Directors. There is no other principle than the necessity of a proposal by the Remuneration Committee approved by the Board.

2.- Remuneration for Directors in 2015.

 

    1. Remuneration for Directors as such. The total amount proposed amounts to € 6 million in pay and assistance fees.
    2. Additionally, the company will provide a civil responsibility insurance.

 

 3.-  Remuneration for Executive Directors in 2015. The different components are:

          a) Fixed components:

  • Salary
  • Other social benefits and retirement plans.

           b) Variable components. They are capped at 200% of the fixed components.

                 (i) Bonus. An anchor bonus is established in case the executive reaches 100% of targets, that are measured through

  1. Quantitative metrics: 75% connected to Net Profit and 25% to Return on Risk Weighted Assets.
  2. Qualitative factors (referred to the quality of profits) that will modify the perceived bonus: risk management, efficient use of capital, benchmarking of customer satisfaction and results, and core capital evolution.
  3. If Net Profit is negative, bonus will be nul, and if it goes down from 2014 levels dramatically, so the bonus will.
  4. Payment: 40% is paid after results have been measured, by halves in cash and equity, and 60% is deferred for 5 years.
  5. Shares will have a 1 year retention period.
  6. Deferred compensation is conditioned to the permanence and certain Malus clauses.

                 (ii) Long Term Incentive, (LTI).

  1. Payment will be done in shares and after the reference period, in 2019.
  2. If excessive risks have been accepted, or any “malus” situation arises, the amount could be reduced or eliminated by the board.
  3. Other Pluria-nnual (2015-2018) should be met,among them:
    1. EPS growth compared to a peer group.
    2. Rote in 2017.
    3. Employee satisfaction
    4. Customer satisfaction
    5. Customer relationship.
  4. The amount will be perceived in shares, at an average price corresponding to the 15 days prior to the board`s approval of bonuses.
  5. The amount is defined starting in 20% of 2015`s anchor bonus, and some parameters will be applied to this amount in relation to EPS, ROTE, (Return on Tangible Equity).

                (iii) Rules applicable to Bonus andLTI.

  1. Hedging is forbidden during deferral and retention periods.
  2. Directors will be compensated for dividends on deferred compensation in shares.

 

 

The Remuneration Policy can be found in the proxy for the 2015 Shareholders Meeting, which can be downloaded in the link below, and on page 154 and successive ones.

 

http://www.santander.com/csgs/StaticBS?ssbinary=true&blobkey=id&SSURIsscontext=Satellite+Server&blobcol=urldata&SSURIsession=false&blobheadervalue1=application%2Fpdf&blobwhere=1278706536900&blobheadervalue2=inline%3Bfilename%3D390\877\Propuestas+de+acuerdos+JGO+2015+%282%29.pdf&blobheadervalue3=santander.wc.CFWCSancomQP01&SSURIapptype=BlobServer&blobtable=MungoBlobs&SSURIcontainer=Default&blobheadername1=content-type&blobheadername2=Content-Disposition&blobheadername3=appID#satellitefragment

 

 

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