43. Administration costs

43.1 Personnel expenses

The breakdown of the balance under this heading in the accompanying consolidated income statements is as follows:

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		Millions of euros
Personnel Expenses	Notes	2015	2014	2013
Wages and salaries		4,868	4,108	4,232
Social security costs		733	683	693
Defined contribution plan expense	24	84	63	80
Defined benefit plan expense	24	57	58	70
Other personnel expenses		531	498	513
Total		6,273	5,410	5,588

The breakdown of the average number of employees in the BBVA Group in the years ended December 31, 2015, 2014 and 2013 by professional categories and geographical areas, is as follows:

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Average Number of Employees by Geographical Areas	Average Number of Employees
	2015	2014	2013
Spanish banks
Management Team	1,026	1,079	1,127
Other line personnel	22,702	21,452	22,375
Clerical staff	4,033	3,793	4,474
Branches abroad	747	758	794
Subtotal	28,508	27,081	28,770
Companies abroad
Mexico	29,711	28,798	28,309
United States	9,969	10,193	10,689
Turkey	11,814	-	-
Venezuela	5,183	5,221	5,292
Argentina	5,681	5,368	5,229
Colombia	5,628	5,464	5,033
Peru	5,357	5,312	5,171
Other	4,676	4,829	5,056
Subtotal	78,019	65,184	64,779
Pension fund managers	332	278	2,181
Other non-banking companies	17,337	16,695	16,859
Total	124,196	109,239	112,589

The breakdown of the number of employees in the BBVA Group as of December 31, 2015, 2014 and 2013 by category and gender, is as follows:

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Number of Employees at the period end Professional Category and Gender	2015		2014		2013
	Male	Female	Male	Female	Male	Female
Management Team	1,493	365	1,579	358	1,675	363
Other line personnel	38,204	38,868	24,103	21,845	24,375	21,828
Clerical staff	23,854	35,184	25,601	35,284	25,812	35,252
Total	63,551	74,417	51,283	57,487	51,862	57,443

The breakdown of the average number of employees in the BBVA Group in the years ended December 31, 2015, 2014 and 2013 is as follows:

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Breakdown by Gender	2015		2014		2013
	Male	Female	Male	Female	Male	Female
Average Number of Employees BBVA Group	57,841	66,355	51,724	57,515	53,325	59,263
Of which:
BBVA, S.A.	13,526	11,949	14,742	12,320	15,522	12,339

43.1.1 Share-based employee remuneration

The amounts recognized under the heading “Personnel expenses - Other personnel expenses” in the consolidated income statements for the years ended December 31, 2015, 2014 and 2013 corresponding to the plans for remuneration based on equity instruments in each year, amounted to €38, €68 and €60 million, respectively. These amounts have been recognized with a corresponding entry under the heading “Stockholders’ funds – Other equity instruments” in the accompanying consolidated balance sheets, net of tax effect.

The characteristics of the Group's remuneration plans based on capital instruments are described below.

System of Variable Remuneration in Shares

The remuneration policy of the BBVA Group prevailing until 2014 provided for a System of Variable Remuneration in Shares for the BBVA Management Team, including the executive directors and members of the Senior Management (the "System of Variable Remuneration in Shares" or the "System"). This system was approved by the Annual General Meeting of BBVA shareholders, March 11, 2011, and the conditions for the 2014 financial year approved by the Annual General Meeting, March 14, 2014.

The System was based on a specific incentive for the (approximately 2,200) people comprising Management Team (hereinafter, the “Incentive”), which consisted in the annual allocation to each beneficiary of a number of units which had been the basis for determining how many shares that individual would receive when the Incentive was settled, depending on the level of compliance with indicators set every year by the General Meeting. For 2014 these indicators were: the performance of the Total Shareholder Return (TSR), the Group’s Recurring Economic Profit without one-offs and the Group’s Attributable Profit without one-offs.

This Incentive, together with the variable cash remuneration due to each director (“ordinary variable remuneration”), would constitute their annual variable remuneration (hereinafter, the “Annual Variable Remuneration”).

Once each financial year is closed, the number of units allocated to each beneficiary was divided into three parts indexed to each one of the indicators of the Incentive as a function of the weightings established at any time and each one of these parts was multiplied by a coefficient of between 0 and 2 as a function of the scale defined for each indicator every year.

The shares resulting from this calculation were subject to the following withholding criteria:

• 40% of the shares received were freely transferrable by the beneficiaries from the time of their vesting;
• 30% of the shares received were transferrable once a year has elapsed after the Incentive settlement date; and
• The remaining 30% were transferrable as of two years after the Incentive settlement date.

Apart from this, the Bank also had a specific system for settlement and payment of the variable remuneration applicable to employees and managers, including the executive directors and members of the Senior Management, performing professional activities that may have a significant impact on the risk profile of the entity or performing control duties (hereinafter, the "Identified Staff").

The specific rules for settlement and payment of the Annual Variable Remuneration of executive directors and members of the Senior Management are described in Note 53, while the rules listed below are applicable to the rest of the Identified Staff:

• At least 50% of the total Annual Variable Remuneration of the members of the Identified Staff will be paid in BBVA shares.
• People in the Identified Staff who are not members of the management team will receive 50% of their ordinary variable remuneration in BBVA shares.
• The payment of 40% of their variable remuneration, both in cash and in shares, will be deferred. The deferred amount will be paid in thirds over the following three years.
• All the shares delivered to these beneficiaries pursuant to the rules explained in the previous paragraph would be unavailable for one year after they have vested. This withholding would be applied against the net amount of the shares, after deducting any tax accruing on the shares received. A prohibition was also established against hedging with unavailable vested shares and shares pending reception.
• Moreover, circumstances have been established in which the payment of the deferred Annual Variable Remuneration payable may be limited or impeded ("malus" clauses), as well as the adjustment to update these deferred parts.
• Finally, the variable component of the remuneration corresponding to any one financial year of those in the Identified Staff was limited to an upper threshold of 100% of the fixed component of the total remunerations, unless the General Meeting should resolve to raise this limit which, in any event, may not exceed 200% of the fixed component of the total remuneration.

In this regard, the General Meeting, March 14, 2014, resolved, in line with applicable legislation, that the variable component of the remuneration corresponding to any one financial year of certain employees whose professional activities have a significant impact on the Bank’s risk profile or who perform control functions may be as much as 200% of the fixed component of their total remuneration. This is entirely consistent with the Recommendations Report issued by the BBVA's Board of Directors, January 30, 2014.

When the Incentive for 2014 ended on December 31, 2014, a multiplication factor of 0.4775 was applied to the units initially allocated to each beneficiary on that date, resulting in a total of 3,137,941 shares for the Management Team as a whole, which resulted in a percentage of shares delivered to its beneficiaries, subject to the settlement and payment system described above.

Likewise, during 2015 the shares corresponding to the deferred parts of the Annual Variable Remuneration from previous years, and their corresponding adjustments in cash, were delivered to the beneficiary members of the Identified Staff, giving rise in 2015, of a total of 455,620 shares corresponding to the first deferred third of the 2013 Annual Variable Remuneration were granted, and €187,039 as adjustments for updates of to the shares granted; a total of 525,939 shares corresponding to the second deferred third of the 2012 Annual Variable Remuneration, and €384,615 in adjustments for updates; and a total of 802,343 shares corresponding to the final third of the 2011 Annual Variable Remuneration 2011, with €923,811 in adjustments for updates.

Likewise, in 2015 beneficiaries in the Identified Staff received the shares corresponding to the deferred parts of the 2010/2011 Multi-Year Variable Share Remuneration Programme (hereinafter, the “Programme” or “LTI 2010/2011”), as well as the shares corresponding to long-term incentive programmes in the United States, as outlined below:

2010/2011 Multi-Year Variable Share Remuneration Programme

Once the LTI 2010/2011 approved by the General Meeting, March 12, 2010 ended on December 31, 2011, it was settled by applying the conditions established at its outset.

The above notwithstanding, the settlement and payment system indicated was applied to beneficiaries of the programme who are members of the Identified Staff, as agreed by the General Shareholders Meeting, March 16, 2012, with the result that:

• The payment of 40% of the shares resulting from settlement of the Programme (50% in the case of executive directors and other members of the Senior Management) was deferred to vest in thirds in 2013, 2014 and 2015.
• The shares paid may not be availed for one year as of their vesting date. This withholding is applicable to the net amount of the shares, after deducting the taxes payable on the shares received.
• The vesting of the deferred shares will be subject to the application of the circumstances limiting or impeding payment of the variable remuneration ("malus" clauses) established by the Board of Directors; and
• The deferred shares will be subject to adjustments to update their value.

Thus, for the Identified Staff, pursuant to the conditions established in the Programme, in the first quarter of 2015 a total of 341,684 shares were vested, corresponding to the final third of the deferred part of shares resulting from the programme’s settlement, and €390,880 as an adjustment for the updated value of the shares vested.

The settlement and payment of the shares originating in this Programme for the executive directors and members of Senior Management was conducted according to the scheme defined for this purpose, as described in Note 53.

BBVA Long-Term Incentive in BBVA Compass

When the term of the Long-Term Incentive 2010-2012 Plan for the BBVA Compass Management Team ended, on December 31, 2012, it was settled pursuant to the conditions established when it began.

For those beneficiaries of this programme who are members of the Identified Staff, it was agreed that the same settlement and payment rules would be applied detailed above.

Thus, in 2015 those beneficiaries who are members of the Identified Staff in BBVA Compass have been awarded 6,323 shares, corresponding to the second third of the deferred part of the shares resulting from the settlement of the 2010-2012 Long-Term Incentive Share Plan, and €4,822 in the adjustment to the updated share value, with the final third yet to vest in 2016.

Additionally, BBVA Compass' remuneration structure includes long-term incentive programmes for remuneration in shares for employees in certain key positions. These plans run over a three-year term. On December 31, 2015 there are two coexisting programmes (2013-2015 and 2014-2016). During 2015, 221,143 shares corresponding to the 2012-2014 programme were delivered.

Remunerations policy applicable from 2015 onwards

The Bank has modified its remunerations policy for 2015, 2016 and 2017, in order to align itself more closely with market best practices, regulatory requirements and its internal organisation and strategy. At the end of 2014 the Management Team Incentive (MTI) plan ended, unifying the variable remuneration components into a single annual incentive (the “Annual Variable Remuneration”). This policy for BBVA directors was approved at the General Meeting, March 13, 2015.

The new remuneration policy also contains a specific settlement and payment scheme for Annual Variable Remuneration as it applies to the Identified Staff. The rules are as follows:

• The Annual Variable Remuneration of members of the Identified Staff will be paid in equal parts in cash and BBVA shares.
• The payment of 40% of the Annual Variable Remuneration – 50% in the case of executive directors and Senior Management – both in cash and shares will be deferred in its entirety for three years. Its accrual and payment will be subject to compliance with a series of multi-year indicators related to share performance and the Group’s basic control and risk management metrics measuring solvency, liquidity and profitability, which will be calculated throughout the deferral period (hereinafter “Multi-Annual Assessment Indicators”). These Multi-year Performance Indicators may lead to a reduction in the amount deferred, and might even bring it down to zero, but they will not be used under any circumstances to increase the aforementioned deferred remuneration.
• All the shares vesting to these beneficiaries pursuant to the rules explained previously will be unavailable during a certain period since their delivery. This withholding will be applied against the net amount of the shares, after deducting the tax accruing on the shares received. A prohibition has also been established against hedging with unavailable vested shares and outstanding shares.
• Moreover, circumstances have been established in which the payment of the deferred Annual Variable Remuneration payable may be limited or impeded ("malus" clauses), and the adjustment to update these deferred parts has also been determined.
• Lastly, the variable component in the remuneration corresponding to any one financial year for people in the Identified Collective will have a maximum threshold of 100% of the fixed component of total remuneration, unless those cases in which the General Meeting agrees to raise this threshold. However, under no circumstances may it exceed 200% of the fixed component of total remuneration.

On this issue, the General Meeting, March 13, 2015, resolved to enlarge the set of staff members whose professional activities have a significant impact on the Group’s risk profile or who perform control functions, and whose variable remuneration will be subject to the maximum threshold of 200% of the fixed component of their total remuneration. This is entirely consistent with the Recommendations Report produced by the BBVA's Board of Directors on February 3, 2015.

The first disbursement in shares under this new policy will be the initial payment of the Annual Variable Remuneration for 2015 to be paid in shares, which will take place in the first quarter of 2016.

43.2 General and administrative expenses

The breakdown of the balance under this heading in the accompanying consolidated income statements is as follows:

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General and Administrative Expenses	Millions of euros
	2015	2014	2013
Technology and systems	625	585	714
Communications	281	271	294
Advertising	249	213	336
Property, fixtures and materials	1,021	911	920
Of which: Rent expenses (*)	591	461	470
Taxes other than income tax	466	418	421
Other expenses	1,922	1,606	1,428
Total	4,563	4,004	4,113

(*) The consolidated companies do not expect to terminate the lease contracts early.