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 for directors for submission to the General Meeting, for senior executives and for employees whose professional activities may have a material impact on the Entity’s risk profile and to determine directors’ remuneration, and, in the case of executive directors, the remuneration for their executive functions and other terms and 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 compliance with the remuneration policy established.
As set out in Article 36 of the Regulations of the Bank’s Board of Directors, the Remuneration Committee performs the following functions:
- Propose to the Board of Directors, for submission to the General Meeting, the remuneration policy for directors, in terms of items and amounts, the parameters for its determination and the payment system. It will also submit its corresponding report as set out in applicable law.
- Determine the extent and amount of the individual remuneration, entitlements and other economic rewards, as well as the contractual terms and conditions, for the executive directors, submitting the relevant proposals to the Board of Directors.
- Propose on an annual basis to the Board of Directors the annual report on the remuneration of the Bank’s directors, which will be submitted to the Annual General Meeting as set out in applicable legislation.
- Propose to the Board of Directors the remuneration policy for senior executives and those employees whose professional activities may have a material impact on the Company’s risk profile.
- Propose to the Board the basic terms and conditions of the contracts of senior executives and directly supervise the remuneration of senior officers responsible for risk management and compliance functions in the Company.
- Oversee enforcement of the remuneration policy established by the Company and periodically review the remuneration policy applied to directors, senior officers and employees whose professional activities may have a material impact on the Company’s risk profile.
- Verify the information on the remuneration of directors and senior management contained in the different corporate documents, including the annual report on director remuneration.
- Any others that may have been assigned under these Regulations or conferred by a decision of the Board of Directors or by applicable legislation.
As of the date of this report, the Remuneration Committee was composed of five members, all of them non-executive directors; the majority are independent, including its chairman. In compliance with its functions, the BBVA Remuneration Committee met seven times in 2015 to deal with matters that fall under its responsibility.
Table 77: Composition of the Remuneration Committee
| Name and surname(s) | Position | Status |
|---|---|---|
| Carlos Loring Martínez de Irujo | Chairman | Independent |
| Tomás Alfaro Drake | Member | Independent |
| Ignacio Ferrero Jordi | Member | External |
| Ramón Bustamante y de la Mora | Member | External |
| Juan Pi Llorens | Member | Independent |
The matters analyzed include the proposal to the Board for submission to the General Meeting of the Remuneration Policy for BBVA directors, in accordance with article 529 r of the Corporations Act and the proposal for the remuneration policy applicable to Identified Staff, in line with the foregoing.
The Remuneration Policy for BBVA directors, which was approved by the General Meeting held on March 13, 2015 with 95.41% of the votes and applies to the years 2015, 2016 and 2017, maintains most of the elements of the previous system for settlement and payment of variable remuneration that the Bank was already applying to the Identified Staff (such as payment of a percentage in shares, the deferment of a percentage of variable remuneration, mandatory withholding periods for the shares, malus clauses, etc.), including also elements aimed at better aligning the remuneration with the Group’s long-term profitability, recurrence, liquidity, funding and solvency goals, strengthening the principle of prudent risk management, and seeking greater correspondence between variable remuneration and the sustainability of earnings in the medium and long term, with the aim of increasing transparency. The new elements include:
- An increase in the number and types of indicators used to calculate variable remuneration.
- Greater correspondence between variable remuneration and the risk metrics, reinforcing their alignment with prudent risk management.
- A greater weight of the multi-year indicators in the determination of variable remuneration and the reinforcement of the assessment of long-term results.
- Reinforcement of the deferred period for variable remuneration payment.
- Increased transparency in the calculation of variable remuneration.
The text of the Remuneration Policy for BBVA directors is available on the Company’s website (www.bbva.com).
In addition, over the year the Committee has supervised the remuneration of the heads of the Risks and Compliance areas and reviewed the application of the remuneration policy for Identified Staff, including the directors and members of senior management, as set out in article 33.2 of the aforementioned Act 10/2014.
The Board of Directors of BBVA also approved on February 2, 2016, as per the proposal submitted by the Remuneration Committee, the 2015 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 will be put to the vote at the Annual General Meeting, as set out in article 541 of Royal Legislative Decree 1/2010, dated July 2, which approves the amended text of the Corporations Act (hereinafter the “Corporations Act”), and is available on the Company’s website (www.bbva.com) from the date of calling the General Meeting.
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 and amounts making up their remuneration, based on the Remuneration Policy for BBVA directors and 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 system for remuneration matters 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 2015 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 is also assisted by the Board’s Risk Committee, which in accordance with article 39 of the Board Regulations has participated in the establishment of the remuneration policy, checking that it is compatible with adequate and effective risk management and does not offer incentives for assuming risks that exceed the Company’s acceptable level.
Lastly, the decisions related to the remuneration of executive directors, when required by law, are submitted to the Bank’s Annual General Meeting for approval.
This system ensures an adequate decision-making process on questions of remuneration.
In 2015 the members of the Remuneration Committee received an aggregate total of €282,000 for their work on it. In addition, the Report on the Remuneration of BBVA Directors includes a breakdown of the remuneration by item for each director.