As specified above, the amount of variable remuneration received by BBVA Identified Staff is determined by the following factors:
- The Group’s financial results.
- The financial results and strategic projects in each business area.
- The financial results and the unit’s own indicators (not financial).
- The individual’s financial and non-financial targets.
The ordinary variable incentives of the executive directors depend on the Group’s results, based on the recurrent EVA without one-offs, net attributable profit without one-offs and the recurrent efficiency ratio without one-offs. The purpose of the incentives system is to ensure that the amount of variable remuneration associated with each indicator does not vary in the event that the same result is obtained as in the previous year; if the results of the previous year are repeated for one indicator, in standardized terms, the bonus associated with it will be the same.
Similarly, the ordinary variable incentives of the Management Committee are linked to both the Group’s results and those of their management area.
For the rest of the members of the Identified Staff, the amount of variable remuneration depends on individual performance, results in the area in which they provide their service, and the Group’s results overall.
In 2013, the Group’s earnings (net attributable profit and recurrent EVA without one-offs) determined 50% of the final incentives for the Management Team in 2013. The other 50% is determined by Total Shareholder Return (TSR), which as indicated for the incentive for 2013 was measured over a period of two years, which increases to three for the 2014 incentive.
In addition, as mentioned earlier, among the “malus clauses” it has been established that if in one year the BBVA Group had negative financial results (presented losses), not including one-off results, the beneficiaries will not receive either the Annual Variable Remuneration corresponding to the year of the losses, or the deferred amounts that were payable for the year in which the annual accounts reflecting these negative results were approved.
However, any variable remuneration that is pending payment will always be paid, provided that such payment is sustainable in terms of the situation of the BBVA Group as a whole.
By using the selection of indicators and calculation method explained above, BBVA has brought the remuneration system for its management team into closer alignment with shareholder interests; it strengthens prudent risk management by incorporating recurrent EVA as an indicator; and it determines a direct relationship between the variable remuneration of its executives and the Bank’s long-term results, by taking into account the multi-year calculation of TSR and applying recurrent EVA, which includes adjustments for current and future risks and the cost of capital.