The Board of Directors of Bankinter, S.A. is formed by ten members, that are characterised by their professional capability, integrity and independent judgement. The Appointments and Remuneration Committee annually verifies the status of each director, which is subject to the approval of the Board of Directors.
Of its ten members, two are executive directors and eight external. Of these eight, five are independent, two are proprietary and one is, in the Board's opinion, neither proprietary nor independent.
In the financial year 2015 the following changes took place in the composition of the Board of Directors: On 18 March 2015, Mr. John de Zulueta Greenebaum announced to the Bankinter Board of Directors his decision to stand down from his role as director.
It will be possible to elect directors for 4-year terms, and re-elect them once these have finished.
Bankinter firmly believes in the importance of balancing power in decisiontaking procedures, and there is, just as shown in the company Articles of association , a clear division of power between the non-executive chairman and the CEO.
The number of independent directors appointed to the Board is very high: The Bankinter Remuneration Committee is just made up of independent directors and the Committee for Auditing and Compliance With Standards, the Risk Assessment Committee and the Appointments and Corporate Governance Committee is made up of a majority of independent directors (75%) and all of these are chaired by independent directors.
Even so at Bankinter there is a division of powers betwen the non-executive Chairman and the CEO, the Bankinter Articles of association envisage the possibility of appointing a co ordinator director among its independent directors,whose powers will be likewise established.
Bankinter establishes clear dedication rules, and sets limits to the number of Boards of other companies which its directors may sit on.
Members of the Bankinter Board of Directors have wide-ranging knowledge and experience, and in gender-equality terms, it should be stressed that 30% of board members are women.
The attendance ratio of Directors to the Board is 100%
The Board has set up an Executive Committee whose powers have been delegated. Furthermore, the Board of Directors has other committees with powers of supervision, notification, assessment and proposal, such as the Committee for Auditing and Compliance with Standards, the Risk-assessment Committee, the Remuneration Committee and the the Appointments and Corporate Governance Committee. In the Regulations of the Board of Directors, available on the company website, the powers assigned to each of these is detailed.
The Composition of said Committees is as follows:
As of 18th of November 2015, the Bankinter Board of Directors passed the selection and succession of directors Policy, according to which, the selection and succession of directors process will be guided by the following general principles:
i. They will guarantee the regulations applicable are complied with and will be carried out respecting the composition characteristics of the Board of Directors's as set out in the Articles of association and in the Board Regulations.
ii. They will encourage there to be a clear majority of independent directors on the Board and make as few executive directors as possible taking into account the complexity of the Group.
iii. They will guarantee that there is an appropriate balance between proprietary and independent directors, hence reflecting, as far as possible, the proportion there is between the share capital with voting rights represented by the proprietary directors and the rest of the share capital.
iv. They will ensure diversity of nationalities, of gender and experiences, so that decision-making is enriched and so that many different points of view are heard for debating matters under their responsibility.
v. They will guarantee the stability of the Board of Directors in line with measures taken by the Company to ensure, whenever possible, that the appointment or the re-election of directors does not affect any more than a quarter of the members of the Board in a financial year.
The process for electing directors must be based on an analysis of the needs the Company has and the organisations that its Group is made up of. Said analysis will be carried out by the Board of Directors on the advice of the Appointments and Corporate Governance Committee.
Candidates for Company directorships must be honourable, ideal and of proven solvency, authoritative, have experience, be qualified,have training, be available and committed to these positions.
The Appointments and Corporate Governance Committee will assess the balance of the responsibilities, skills, knowledge, range and experience necessary for the Board of Directors. According to this, it will define the powers and aptitudes needed for the candidates who will fill each vacancy and it will assess the exact time and dedication needed for their duties to be carried out effectively.
From a general perspective, Bankinter is supported by external advisers to select the candidates who have the potential to sit on the Board of Directors as independent directors.
As for gender-equality, Bankinter is committed to equal opportunities between men and women, which is corroborated by making the selection processes objective, exempt from unfair conditions or bias which may limit the access of women to directorship appointments. Therefore, in each case the independence, professional value, capacity and experience in the sector the candidates have is assessed. In the candidate selection process, there are always women amongst those assessed.
Due to this commitment, in 2010 a woman was appointed to the Board of Directors, as an executive director and was the first female executive director in the company. Later in 2014 and 2015, two women were appointed as independent directors by which a 30% ratio of women on the Board was obtained, having reached in advance the objective agreed to internally in the document “Objective of representing the lesser represented sex on the Board and guidance on how to reach said objective”, taken by the Board of Directors in 2014, and which establishes the Code of Sound Governance of Listed companies for 2020.
In accordance with the Policy approved by the Board in 2015, Board member succession processes will guarantee that the same is carried out in a planned and coordinated fashion, protecting the continuity of the business without any upset.
The Appointments and Corporate Governance Commitee looks to ensure the existence of succession plans and update them for the Chairman and the executive directors of the company and, where applicable, to formulate proposals for the Board of Directors so that this succession is carried out in a planned and orderly way. This analysis is submitted to the Board of Directors on an annual basis.
Board regulations contemplate rules of internal substitution in the event the Chairman of the Board of Administration, for circumstantial reasons finds it impossible to fulfill his duties, as much as when he possesses the executive faculties needed, as when he does not, this is currently the case in Bankinter. In particular, when the Chairman steps down, the Deputy chairman of the Board of Directors will be responsible for convening the Board meeting, as foreseen under the Regulation thereof, at which it will be decided who among its members will occupy the abovementioned position. The Board will endeavour to ensure it posseses the sufficient number of qualified members to carry out these functions. If the Board, when meeting, decides that the candidates should be external ones, it will request that the Appointments and Corporate Governance Committee initiates a selection process to cover the aforementioned position.
The Regulations of the Board of Directors contain an article that includes the functions of the Secretary, attributing all those which the Capital Companies Act says correspond to him and in line with the best corporate governance practices, among which are those of caring for the formal and material legality of the Board's actions, ensuring compliance with corporate governance recommendations assumed by the bank and ensure that the procedures and rules of governance are respected and regularly reviewed.
On 16 December 2015, the Board of Directors approved a process for the preparation of Board meetings and their committees, assigning to the Secretary of the Board, among others, the functions related to assisting the Chairman to ensure that directors receive information relevant to the performance of their duties in good time and in the appropriate format.
According to the Regulations, the Board shall, before the start of each financial year, approve the programme of meetings for the following year and the schedule planned for them, with the Directors being entitled to propose additional items for the agenda. The schedule and agenda may be amended by the Board or by decision of the Chairman, who shall report the modification to the Directors well in advance except in urgent cases. The minimum number of meetings will be 10 per year (well above the legal requirement to hold meetings once a quarter).
Accordingly, the Board of Directors of Bankinter has met fourteen times during 2015.
Moreover, as has been indicated in the previous section, in 2015, the Board of Directors approved a method of preparing Directors' meetings and their committees following a proposal from the Appointments and Corporate Governance Committee. Notice shall be given well in advance of the date of the session, except in cases of urgency or need. The above-mentioned procedure includes among others the following aspects:
It is guaranteed that Directors receive the necessary information to carry out a suitable assessment of corresponding operations or decisions prior to the holding of the Board's meetings and Committees, so that they can reasonable prepare for the meetings and actively participate in the debates.
The Board of Directors has either directly or through its committees fully exercised its supervisory role in 2015. It has taken timely note of and has been constantly aware of the progress and activity of the different business areas of the Bankinter Group, and of general affairs specific to its own scope of supervisory functions, and, most prominently, the definition of the strategic objectives of the organisation, which have been analysed in this exercise by the Board in monographic sessions. Similarly, members of the Board have been informed about the conclusions of the different internal and external audit reports, among many other matters dealt with, such as the management and control of risks associated with the Bankinter Group.
Directors are required to devote to their duties the time and effort necessary for the effective performance of the same and always respect the limitations on the maximum number of Boards they may belong to as established by law.
Directors must ensure that absences at meetings of the Board of Directors and the Committees of which they are members are reduced to cases where it is indispensable.
These requirements have been adequately met by all members of the Board of Bankinter, with an attendance rate of 100% and full commitment to the analysis and discussion of the issues that have been placed before them through the study of the supporting documentation and such other information required to that effect.
The powers of the Board include that of conducting the annual evaluation of its performance and that of its committees and propose, on the basis of its results, an action plan to correct any deficiencies.
Significant weaknesses have not been detected in the latest evaluations which have obliged to the Board to adopt corrective measures; even so, some suggestions which have surfaced as a result of the latest auto-assessments have been put in practice by the company.
The Board of Directors has decided, following recommendations from corporate governance, that at least every 3 years this evaluation be carried out by external advisers. In 2015, this was not carried out externally due to the recent incorporation of new board members and compositional changes in commitees, the latter require an operational period which would then allow an external evaluation to really contribute added value to the company.
Description of the remuneration system.
Principles and components of Directors' compensation packages can be consulted in the Policy on directors' remuneration and in the Annual Report on Directors' compensation packages which is subject to a vote by the General Meeting.
Bankinter, as part of its policy of good governance, from its very entry into force decided to implement and enforce recommendation 40 of the then Unified Good Governance Code of listed companies by submitting its report on the remuneration policy of directors to the General Meeting as a separate item on the agenda and for consultation purposes. Thus from 2008 the bank's shareholders have the opportunity of pronouncing expressly on the above-mentioned remunerations report. Currently, the report on the remuneration of Directors is regulated by the Law on Corporations, which makes it mandatory for listed companies to submit this to a consultative vote at the Shareholders' Meeting.
-The external advisers do not receive variable remuneration.
-Bankinter's variable compensation package is limited, and is defined in absolute amounts.
-The deferral period for variable remuneration is three (3) years in the variable compensation package.
-Bankinter has established recovery mechanisms (clausulas malus and clawback) for variable remuneration.
-There are no indemnity packages. In the case of the CEO, the indemnities provided for in the contract with the company because of her prior employment in Group companies apply exclusively in terms similar to those for ordinary labour relations in Workers' Statute cases.
-Bankinter has approved a long-term incentive plan with quantifiable objectives that provide its payees with a long-term vision of the bank thus generating a culture of sustainability.
The Shareholders' Meeting is the competent body to approve the maximum annual amount due as compensation to all the Directors in their capacity as such. This amount remains in effect as long as the Shareholders' Meeting does not agree to its modification, although the Board may reduce the amount in the years when it is deemed warranted.
The specific amount that corresponds to the concepts identified in the Articles of Association to each of the directors and the payment will be subject to decision by the Board of Directors. To this end, it shall consider the positions held by each director on the body itself and their membership and attendance on the various Committees.
Currently, this remuneration has two components: i) a fixed annual allocation and ii) attendance allowances.
Directors are entitled to remuneration (salaries, incentives, bonuses, pensions, insurance and severance payments) that, proposed by the Remuneration Committee and agreed to by the Board of Directors, are deemed appropriate for performance relative to other features in the Company, whether executive or not, other than those that entail supervision or decision taking as members of the Board.
The variable components of the compensation package will be set in such a way that an appropriate ratio between fixed and variable components emerges from the total compensation package.
The variable components do not exceed one hundred percent of the fixed components of the total of each director's remuneration, unless the general meeting approves a higher ratio, which in no case is to exceed two hundred percent of the fixed component of total compensation, under the terms established by law.
In the notes to the financial statements, the remunerations received by each director are disclosed, on an individualised basis and detailing the amounts corresponding to each item of remuneration. Additionally these items appear individually in the report as well as the remuneration which corresponds to the executive functions entrusted to the company's executive directors.
