UBI Banca Group

PART I – Share-based payments
A. Qualitative information
In implementation of the “UBI Banca Group remuneration and incentive policies” (the
“Policy”), which were approved on 25 th February 2011 by the Supervisory Board, after prior
consultation with the Remuneration Committee, in compliance with “Supervisory
provisions on the remuneration and incentive policies and practices of banks and banking
groups” issued by the Bank of Italy, on 30 th April 2011 an ordinary shareholders’ meeting
of UBI Banca approved the payment of the variable component of bonuses to be made by
the use of shares for top management and the highest management level of the control
functions.
Incentive schemes for 2011 are described in detail in the “2011 Annual report to the
shareholders’ meeting on remuneration and incentives policies” which may be consulted.
They are subject to specific trigger conditions which guarantee the capital stability (core
tier one) and liquidity (net stable funding ratio) of the UBI Banca Group, as well as the
ability to generate value by the Group and the single companies belonging to it (economic
value added). The calculation of bonuses is related to the degree to which set objectives are
achieved, each being weighted on the basis of their importance.
The following was performed with regard to top management and the highest management
level of the control functions:
‐ deferment of payment of a portion (according to the role performed) of between 40%
and 60% of annual bonuses if they are due;
‐ the grant of financial instruments, by the assignment of ordinary shares of the
Parent, UBI Banca, for a portion equal to at least 50% of variable remuneration,
setting an adequate period of personnel retention for this, in order to align the
incentives to the Bank' s medium to long-term interests.
As a consequence of the above, the first portion of share-based bonuses should be
assigned in the third year following the reporting year (2014), while the second portion
should be assigned in the fifth year following the reporting year (2016). In order to ensure
the Group's value generation capability over time, the second deferred portion is also
subject to the achievement of set conditions relating to the creation of value corrected for
risk, and that is to profit.
B. Quantitative information
According to IFRS 2 “share-based payments”, the scheme in question constitutes an
“equity settled” operation where payment is based on shares and made using equity
instruments. On this basis, because the objective of IFRS 2 is to recognise the impact on
profit and loss of the remuneration paid by means of equity instruments in the income
statement in the form of personnel expense, UBI Banca and the subsidiaries involved in
the scheme recognised the cost for the year within the item 150a “Administrative
expenses: personnel expense” against an increase in equity made by posting the amount to
a separate reserve in equity because the obligation of the company will be extinguished by
the delivery of equity instruments and that obligation will be settled in any event by the
Parent.
As concerns the quantification of the cost of the scheme, since it is impossible to measure
the value of the services provided by employees with precision, in compliance with IFRS 2
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