Annual report 2019

The Group creates a provision for future liabilities due to retirement, disability and post-mortem benefits, unused annual holiday, restructuring, and for incentive and retention programs. Provisions for retirement, disability and post-mortem benefits are created using the actuarial method, as described in Note 3.f. and 11 hereof.

Employees of the Group are entitled to the following benefits:

Retirement, disability and post-mortem benefits

Retirement benefits classified as post-employment defined benefit plans are available upon retirement (for pensioners or disability pensioners). The term of employment includes all previously completed periods of employment based on an employment contract.

Liabilities due to unused annual holiday

Provisions for unused holiday leave are calculated as the product of the daily basic salary and the number of outstanding leave days as at the end of the reporting period. Provisions for the unused holiday leave are presented in the separate financial statements under “Other liabilities”.

Benefits arising from the variable remuneration program

The Group has implemented the variable remuneration program addressed to the individuals occupying managerial positions that exert a considerable influence on the Group’s risk profile in line with the guidance included in Regulation of the Minister of Development and Finance of 6 March 2017 on the risk management system and internal control system, remuneration policy and detailed method of estimating internal capital in banks.

Performance evaluation of individuals included in the program underlies the calculation of the variable remuneration. Benefits provided under the program have two forms:

  • cash payments accounted for in accordance with IAS 19 Employee Benefits, and
  • phantom shares entitling to cash payments, whose final amount depends on the price of shares of BNP Paribas Bank Polska S.A. settled in accordance with IFRS 2 Phantom share-based payment.

The cash portion is paid:

  • in the current portion – directly after completing a year in service subject to performance evaluation;
  • in the deferred portion – after the deferral PERIOD.

With regard to the first form of benefits, during the deferral period,  the variable  remuneration is  verified  in accordance  with the adopted program assumptions.

The cash payments under the program are recognized in line with the projected unit credit method and settled over the vesting period (i.e. both in  the evaluation period  understood  as the year in service  to  which  the benefit pertains  and  in  the period  of deferring relevant portions of the benefit). The benefit value is recognized as a liability to employees in correspondence with the statement of profit or loss.

For benefits granted in the form of phantom shares, the annual share retention term applies to both the portion granted following the annual performance evaluation and to the deferred portion on terms similar to the cash remuneration (i.e. one-year, two-year and three-year periods). During the retention period, employees granted with the benefit cannot exercise rights arising from the phantom shares.

The fair value of the phantom shares, determined in line with the adopted principles (i.e. based on estimates including the reduction factor) is allocated over the vesting period. The benefit value is recognized as a liability to employees in correspondence with the statement of profit or loss.

Liabilities due to restructuring

In connection with the planned process of group layoffs at BNP Paribas Bank Polska S.A., a provision was created to cover the costs related to severance pay for employees made redundant at the initiative of the employer and for employees covered by voluntary departure schemes.

Liabilities due to incentive – retention programs

The Bank implemented incentive-retention programs related to transformation activities realised by the Bank, which aims to reduce the risk of departing Bank’s employees actively engaged in the process.

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