As set out in BBVA’s Bylaws, the Board Regulations stipulate that one of the powers of the Board of Directors is to approve the remuneration policy of employees whose professional activities have a material impact on the institution’s risk profile and to adopt decisions on directors’ remuneration, and, in the case of executive directors, the remuneration for their executive functions and other conditions set out in their contracts.
The Regulations of the Board of Directors of BBVA set out the internal rules for the operation of the Board and its Committees, which provide assistance on matters within their competence. The Remuneration Committee assists the Board with matters related to remuneration as set out in the Board Regulations, ensuring that the remuneration policy established by the Company is complied with.
As set out in Article 36 of the Regulations of the Bank’s Board of Directors, the Remuneration Committee performs the following functions:
a. Propose, within the framework established in the Company Bylaws, the remuneration system for the Board of Directors as a whole, in terms of both items and amounts and the form in which they are paid.
b. Determine the extent and amount of the remuneration, entitlements and other economic rewards for the Chairman & CEO, the President & COO and, where applicable, other executive directors of the Bank, so that these can be reflected in their contracts. The Committee’s proposals on such matters will be submitted to the Board of Directors.
c. Issue a Report on the directors’ remuneration policy each year. This will be submitted to the Board of Directors, which will in turn inform the Company’s Annual General Meeting each year.
d. Propose to the Board the remuneration policy for senior officers, as well as the basic conditions of their contracts, and directly supervise the remuneration of senior officers responsible for risk management and compliance functions.
e. Propose a remuneration policy to the Board for employees whose professional activities may have a material impact on the institution’s risk profile.
f. Oversee observance of the remuneration policy established by the Company and periodically review the remuneration policy applied to executive directors, senior officers and employees whose professional activities may have a material impact on the institution’s risk profile.
g. Any others that may have been assigned under these Regulations or conferred by a decision of the Board of Directors.
As of the date of this report, the Remuneration Committee was composed of five members, all of them external directors; the majority are independent, including its chairman, and therefore none of its members have executive positions in the entity.
In compliance with its functions, the BBVA Remuneration Committee met six times in 2013 to deal with matters that fall under its responsibility.
In relation to the determination of the remuneration of Identified Staff, the matters analyzed include direct supervision of the remuneration of managers in the Risk and Compliance areas and review of the application of the remuneration policy approved in 2011 for executive directors, the Management Committee and Identified Staff.
The Board of Directors of BBVA also approved on January 30, 2014, as per the proposal submitted by the Remuneration Committee, the Annual Report on Remuneration of BBVA Directors, in accordance with the new framework established by the Spanish Securities and Exchange Commission (CNMV) through Circular 4/2013, dated June 12. This Report was submitted to a consultative vote at the Annual General Meeting held on March 14, 2014, pursuant to the provisions of Section 61 ter of the Securities Market Act, and approved by 92.43% of the votes cast and is available on the Bank’s website (www.bbva.com).
The Annual Report on the Remuneration of BBVA Directors includes a description of the basic principles of the Bank’s remuneration policy with respect to the members of the Board of Directors, whether executive or non-executive, as well as a detailed presentation of the different elements making up their remuneration. It has been prepared in accordance with BBVA’s Bylaws and the Board of Directors’ Regulations. The Report also includes the principles and basic elements of the Bank’s general remuneration policy.
As already indicated, BBVA has a decision-making policy system for this matter in which the Remuneration Committee plays a key role. It is responsible for determining the amount of fixed and variable remuneration for the executive directors and the remuneration policy applicable to the Identified Staff, including the members of the Group’s senior management; it then submits the corresponding proposals to the Board. To perform its functions, in 2013 the Remuneration Committee and the Board of Directors have been supported by the Bank’s internal services and the information provided by one of the leading global consultants on remuneration for board members and senior officers, Towers Watson.
The Remuneration Committee conducts an annual review of the application of the remuneration policy approved by the Bank’s Board of Directors, as established in Article 76 quinquies 1. e) of Royal Decree 216/2008, dated February 15.
In addition, all the decisions relating to share-based remuneration affecting the executive directors and members of the Group’s senior management must be approved by the Annual General Meeting of Shareholders of the Bank. The AGM decides on the essential aspects of the corresponding share-based remuneration plans and is submitted the Annual Report on the Remuneration of BBVA Directors for consideration.
This system ensures an adequate decision-making process on questions of remuneration.
In 2013 the members of the Remuneration Committee received an aggregate total of €278,000 for their work on it. The Report on the Remuneration of BBVA Directors includes a breakdown of the remuneration by item and committee member.
Table 47. Composition of the Remuneration Committee
| Name and surname(s) | Position | Status |
|---|---|---|
| Carlos Loring Martínez de Irujo | Chairman | Independent |
| Ignacio Ferrero Jordi | Member | Independent |
| José Maldonado Ramos | Member | External |
| Juan Pi Llorens | Member | Independent |
| Susana Rodríguez Vidarte | Member | Independent |