2024 Remuneration Policy for Zagrebačka
banka Group
Table of Contents
POLICY REQUIREMENT AND PURPOSE 2
APPLICABILITY AND SCOPE 2
MINIMUM GOVERNANCE REQUIREMENTS 2
- ROLES AND RESPONSIBILITIES 66
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POLICY REQUIREMENT AND PURPOSE
This document (hereinafter also "ZABA Group Remuneration Policy" or "Policy") defines the principles and rules that have to be applied to ensure the setting, monitoring and controlling of the compensation systems and practices adopted by Zagrebačka Banka Group (Zagrebačka banka d.d., Zagreb Nekretnine d.o.o. (ZANE), ZANE BH and UniCredit Leasing d.o.o. (UCLC).
In particular, this Policy describes the Group mission and values in Group compensation approach, the pillars of compensation, the corporate and organizational governance structures and processes, as well as the compliance requirements; it supports the use of benchmarking for market practices; it indicates the compensation approaches that have to contribute to the sustainability of the Group; it details the total compensation elements, as well as sets the pay-mix guidelines; it provides the guidelines for the definition of the Group incentive systems, for the assignment of benefits and for the application of compliance drivers.
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APPLICABILITY AND SCOPE
The Policy meets the requirements of the Circular n. 285 of 17th December 2013, First Part, Title IV, Chapter 2, Section 1 and 2 on compensation and incentive systems policies and practices issued by Bank of Italy which states that the Parent Company, in the exercise of its direction and coordination power, produces the remuneration policy document of the entire Banking Group, ensuring its overall consistency. The Parent Company also ensures that the remuneration practices in the Group Companies comply with the principles and rules contained in this Chapter and, in the case of Foreign Companies, that they are not in conflict with the national law of the Country in which they are established.
This document also meets the requirements of Directive 2019/878/EU (CRD V) with respect to remuneration requirements. In accordance with CRD V, institutions have to apply the remuneration requirements at group, parent and subsidiary levels, including within subsidiaries that are not themselves subject to the CRD V, unless they are themselves subject to specific remuneration requirements on an individual basis under other Union acts or would be subject to such requirements if they were established in the Union. However, under Article 109(5) of CRD V, the remuneration provisions may still apply to individual staff members of certain subsidiaries. As a general principle, and taking into account applicable specific remuneration requirements, remuneration policies of different group entities within the scope of prudential consolidation should be consistent with the group's remuneration policy set by the consolidating institution. The remuneration policy needs to comply with CRD V provisions, EBA guidelines on sound remuneration policies of 2nd July 2021, and additional requirements set out in national company, labour and other relevant laws.
The principles of the Group Remuneration Policy are valid across the entire organization and shall be reflected in the remuneration practices applying to employee categories across businesses, including staff belonging to external distribution networks, considering their remuneration peculiarities.
Furthermore, local remuneration and incentive policies and practices are completely aligned with requirements of local regulations, i.e. Croatian National Bank Decision on staff remuneration No 31/2017 from 13th of April 2017, No 57/2017 from 6th of June 2017 with amendments No 4/2021 from 15th of January 2021, No 145/2021 from 29th of December 2021 and 51/2023 from 12th of May 2023.
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MINIMUM GOVERNANCE REQUIREMENTS
Overview and principles
The set of values of UniCredit is based on integrity, ownership and caring as sustainable conditions to transform profit into value for stakeholders. A simple guiding purpose to empower communities to progress ensures we live these values every day.
By upholding the standards of sustainable behaviors and values which drive the Group's purpose, the compensation strategy represents a key enabler to enhance and protect its reputation and to create long-term value for all Group stakeholders. Specifically, the remuneration policy contributes to the business strategy, long-term interests and sustainability of UniCredit.
Now more than ever, sustainability forms a central part of everything UniCredit does and is fully integrated into the business and decision-making process: leading by example in UniCredit's business, helping clients through a just and sustainable transition, contributing to a better society. It is a key lever for the future business strategies and a critical component of the bank's success.
Through appropriate compensation mechanisms, UniCredit aims to create a best-in-class inclusive work environment, fostering and unlocking individual potential to attract, retain and motivate a highly qualified global workforce capable of creating a competitive advantage for the Group. Individuals are rewarded based on merit and performance in terms of sustainable results, behaviors and adherence to Group values.
UniCredit believes in inclusion as a strategic business driver and is committed to creating an inclusive, positive, and barrier-free environment for its diverse workforce, where everyone has the opportunity to perform and grow. Employees are expected to contribute to creating and maintaining a work environment that is respectful, safe and inclusive, and where any difference, whether it is gender identity, age, race, ethnicity, sexual orientation, ability, background, religious or ethical values system and political beliefs or any other category protected by law in the local jurisdiction, is embraced and promoted.
Relying on the governance model of UniCredit, the Group Remuneration Policy sets the framework for a coherent and consistent design, implementation and monitoring of compensation practices across the entire Group.
Within this common policy framework, guidelines are defined to implement compensation programs and plans that reinforce sound risk management policies and the long-term strategy and generally pursue long-term value creation and sustainability of the company. In doing so, the Group effectively meets the specific and evolving needs of the different businesses, market contexts and employee populations while ensuring that business and people strategies are always appropriately aligned with the remuneration approach, including external networks and agents, where applicable, as foreseen by regulation.
To ensure the competitiveness and effectiveness of remuneration as well as transparency and internal equity, the principles of sustainable conduct and performance define the key pillars of the Group Remuneration Policy.
Remuneration Policy alignment to sustainability strategy
At UniCredit value creation means more than just generating financial value. It also means ensuring sustainability is at the heart of all that the Group does.
In 2024, UniCredit announced its 2030 target for the steel sector, which forms part of the bank's commitment to reach its 2050 goal of Net Zero on its lending portfolio and enhances its own 2030 targets for the three most carbon intensive sectors which include Oil & Gas, Power Generation and Automotive sectors, communicated to the market in 2023. This is in line with the Net Zero commitment the bank signed in October 2021 and its continued support for a more sustainable global economy.
2023 was a year characterized by significant progress on our ESG ambitions with Net Zero sector targets and ongoing support to clients and all our stakeholders in a just and fair transition. Please also refer to the Integrated Report available on the corporate website for further details on the Sustainability Strategy in UniCredit.
The Remuneration Policy contributes to the UniCredit strategy, the pursuit of long-term interests and sustainability over time. UniCredit has a remuneration structure in place that is based on risk-adjusted/related performance and does not encourage excessive risk-taking, including with respect to sustainability risks.
Further, one of the pillars of the Group Remuneration Policy addresses sustainable pay for sustainable performance, by maintaining consistency between remuneration and performance, and between rewards and long-term stakeholder value creation, as well as enhancing both the actual results achieved and how they are achieved.
Several processes and initiatives support the link between the remuneration policy and sustainability.
The Group Incentive System is supported by the annual performance management process assuring coherence, consistency, and clarity of performance objectives and behavioral expectations aligned with business strategy. The setting of annual objectives (known as Goal Setting) is the initial phase of this process and is supported by a structured framework that includes a catalogue of performance indicators (the "KPI Bluebook"), annually reviewed
by relevant Group key functions (e.g. People & Culture, Finance, Risk Management, Group Strategy & ESG), and guidelines. The framework is in line with regulatory provisions and Group standards as verified by Compliance. In particular, among other things, this is characterized by:
the use of risk-adjusted/related goals (e.g. at least one KPI in the goals cards);
the link with ESG and Diversity, Equity & Inclusion ("DE&I") strategies (e.g. at least one ESG KPI for all Group Material Risk Takers with a particular focus on DE&I KPIs for staff reporting to Group Executive Committee and their direct reporting line);
the use of sustainability goals for value creation over time (e.g. about half of the goals shall be related to sustainability). For selected individuals (see chapter 5.1.4) ESG goals are included as additional long term conditions;
the use of goals related to business, corporate values, conduct and compliance/risk culture, with a focus on:
− adherence to and spreading of Group culture, values and purpose;
− setting the proper tone from the Top and tone from the Middle on Compliance culture and Risk mindfulness.
Details For further details, please refer to the paragraphs 5.1 2024 Group Incentive System and
5.2 Performance Management Framework.
FOCUS
Diversity, Equity and Inclusion (DE&I)
At UniCredit Diversity, Equity and Inclusion are strategic assets for our business, growth, innovation, and performance, acting as an integral part of our corporate culture and firmly engrained in our ESG roadmap.
We are building a culture that puts our Values of Integrity, Ownership and Caring at the heart of our decision-making and in everything we do. Our Culture and these Values embody what we stand for, determine how we act, and shape the decisions that we make every day, guiding all our actions and behaviours.
This also helps ensure a more sustainable growth in the long-term and new business opportunities, a strong drive for innovation and creativity, as well as a general improvement of the work environment with positive impact on productivity, well-being, and engagement of our people.
To further promote a culture of inclusion based on equal opportunities and non-discrimination, UniCredit has a dedicated DE&I Global Policy in place that sets clear guidelines and principles for employees as well as third parties. The Policy applies to every key moment of the employee journey, from recruiting and onboarding, to learning and development, performance management and compensation, ensuring bias-free, merit and competency-based decisions as well as pay equality, regardless of diversity traits.
Our Code of Conduct highlights the principles of inclusion encompassing the criteria of objectivity, competence, professionalism, and equal opportunities both in people-related processes laying down the procedures by which any instances of discrimination, mobbing or bullying are dealt with, and in external relations with counterparties.
Within the framework provided by the Group Remuneration Policy, UniCredit is committed to an equal pay principle, ensuring fair treatment in terms of remuneration based on the role covered, the scope of responsibilities, performance outcomes and the overall quality of the contribution to business results, regardless of gender identity, age, race, ethnicity, sexual orientation, ability, and cultural background. UniCredit adopts gender-neutral Remuneration and Incentive policies that contribute to pursuing true equality among staff. They ensure that equal work is matched by equal pay, giving people the same access to opportunities, regardless of their diversity strands.