UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February, 2021

Commission file number: 1-10110

 

 

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

(Exact name of Registrant as specified in its charter)

BANK BILBAO VIZCAYA ARGENTARIA, S.A.

(Translation of Registrant’s name into English)

 

 

Calle Azul 4,

28050 Madrid

Spain

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F   ☒             Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐             No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐             No  ☒

 

 

 

Annual Report on the Remuneration of BBVA Directors

REFERENCE FINANCIAL YEAR 2020

REPORT APPROVAL DATE 8 FEBRUARY 2021

 

Table of contents

 

Executive Summary: 2020 Remuneration					2
1.  Introduction					5
2.		BBVA Group Remuneration Policy			6
2.1.		General principles			6
2.2.		Remuneration Policy for the Identified Staff			7
3.  Directors’ Remuneration Policy applicable in 2020					9
3.1.		Non-executive directors remuneration system			9
3.2.		Executive directors remuneration system			10
3.2.1.		Elements of the executive directors’ remuneration system			10
3.2.2.		Main terms and conditions of the executive directors’ contracts			12
3.3.		Application of the 2020 Policy			14
3.3.1.		Activities carried out in 2020 by the Remunerations Committee			14
3.3.2.		Remuneration of non-executive directors 2020			16
3.3.3.		Remuneration of executive directors 2020			20
3.3.4.		Other information relating 2020 financial year			25
3.4.		CNMV statistical Appendix			26
4.  Directors’ Remuneration Policy applicable in 2021					39
4.1.		Remuneration system for non-executive directors			41
Determinations for the 2021 financial year					42
4.2.		Remuneration system for executive directors			42
Determinations for financial year 2021					43
Annex 1: Peer group used for remuneration purposes					53
Annex 2: Alignment with the Format set out in Circular 1/2020					54

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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Executive Summary: 2020 Remuneration

Remuneration of executive directors 2020

 

(EUR thousand and shares)

 

		FIXED												VARIABLE
		Annual Fixed Remuneration				Other Items								2020 AVR								2017 Deferred AVR(2)
Executive directors						In kind				Other (1)				Cash				Shares				Cash(3)				Shares
Group Executive Chairman (Carlos Torres Vila)			2,453				228				—				0				0				411				83,692
Chief Executive Officer (Onur Genç)			2,179				132				1,254				0				0				307				39,796

 

(1)	Fixed amounts in cash corresponding to cash in lieu of pension and mobility allowance.

(2)

In 2021, the 2017 Deferred AVR (60% of the total 2017 AVR) vesting is 60% in the case of the Group Executive Chairman and the whole of it in the case of the Chief Executive Officer, as set out in section 3.3.3 of this Report. For the calculation of the Chief Executive Officer’s 2017 Deferred AVR in euros the closing exchange rate of January 2021 has been used (1.2136 USD/EUR).

(3)	Including year-on-year CPI actualization.

Pension system contributions in 2020

 

						(EUR thousand)
Director		Pension systems
		Annual contribution(1)				Insurance premiums
Group Executive Chairman			1,642	(*)			377
Chief Executive Officer			—				253

 

(1)

15% of the annual contribution to the Group Executive Chairman’s retirement pension of 2019, that is, EUR 246 thousand, was registered in that financial year as “discretionary pension benefits”, which was already declared by the Bank at the end of that financial year. Once 2019 financial year ended, such amount was adjusted by reference to the result of 2019 AVR, which led to an additional contribution of EUR 15 thousand, which was included in the accumulated fund in 2020.

 

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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Remuneration of non-executive directors 2020

Fixed annual amounts

 

																										(EUR thousand)
		Board of Directors				Executive Committee				Audit Committee				Risk and Compliance Committee				Remunerations Committee				Appointments and Corporate Governance Committee				Technology and Cybersecurity Committee				Other positions (1)				Total
José Miguel Andrés Torrecillas			129				111				66				36								115								50				507
Jaime Caruana Lacorte			129				167				165				107																				567
Raúl Galamba de Oliveira (2)			107												71												32								211
Belén Garijo López			129								66								107				46												349
Sunir Kumar Kapoor			129																								43								172
Lourdes Máiz Carro			129								66								43																238
José Maldonado Ramos			129				167																46												342
Ana Peralta Moreno			129								66								43																238
Juan Pi Llorens			129												214								46				43				80				512
Ana Revenga Shanklin (2)			97												71																				168
Susana Rodríguez Vidarte			129				167								107								46												449
Carlos Salazar Lomelín (2)			97																29																125
Jan Verplancke			129																29								43								200
Total			1,588				611				431				606				250				301				161				130				4,078

 

(1)	Amounts received in 2020 by José Miguel Andrés Torrecillas, as Deputy Chair of the Board of Directors, and Juan Pi Llorens, as Lead Director.

(2)	Directors appointed by the General Shareholders’ Meeting on 13 March 2020. Remunerations received in accordance to the date of acceptance of the appointment.

In addition, non-executive directors received remuneration in kind amounting to a total of EUR 95 thousand in 2020.

System of fixed remuneration with deferred delivery of BBVA shares

These shares are delivered after directors cease to hold office, provided that this is on any grounds other than serious breach of duties.

 

Non-executive directors		“Theoretical shares” allocated in 2020(2)				“Theoretical shares” accumulated as of 31/12/2020
José Miguel Andrés Torrecillas			20,252				75,912
Jaime Caruana Lacorte			22,067				31,387
Raúl Galamba de Oliveira(1)			0				0
Belén Garijo López			14,598				62,126
Sunir Kumar Kapoor			7,189				22,915
Lourdes Máiz Carro			10,609				44,929
José Maldonado Ramos			14,245				108,568
Ana Peralta Moreno			10,041				15,665
Juan Pi Llorens			20,676				92,817
Ana Revenga Shanklin(1)			0				0
Susana Rodríguez Vidarte			18,724				141,138
Carlos Salazar Lomelín(1)			0				0
Jan Verplancke			7,189				12,392
Total			145,590				607,849

 

(1)	Directors appointed by the General Shareholders’ Meeting on 13 March 2020.

(2)

The number of “theoretical shares” allocated to each non-executive director is equivalent to 20% of the total allowance in cash received in 2019 by each of them, according to the average closing prices of the BBVA share during the 60 trading sessions prior to the General Shareholders’ Meeting of 13 March 2020, which was of 4.77 euros per share.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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Changes to the Directors’ Remuneration Policy for 2021

At the proposal of the Remunerations Committee, the BBVA Board of Directors has approved a new Directors’ Remuneration Policy, for its application during the 2021, 2022 and 2023 financial years, which will be submitted for approval by the next Annual General Shareholders’ Meeting of the Company,

The main developments with regard to the current Directors’ Remuneration Policy, as detailed in section 4 of this Report, are the following:

 

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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ANNUAL REPORT ON THE REMUNERATION OF DIRECTORS

 

COMPANY NAME: Banco Bilbao Vizcaya Argentaria, S.A.   REGISTERED OFFICE: Plaza de San Nicolás, número 4, 48005 Bilbao (Bizkaia)   TAX ID: A-48265169

 

1.	Introduction

This document has been drafted in accordance with the provisions of Article 541 of the Spanish Corporate Enterprises Act and Circular 1/2020¹, of the Spanish National Securities Market Committee (“CNMV”). Thus, the Board of Directors of Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”, the “Institution”, the “Company” or the “Bank”), at its meeting held on 8 February 2021, on the proposal of the Remunerations Committee, has resolved to approve the Annual Report on the Remuneration of BBVA Directors (the “Remunerations Report” or the “Report”), with the aim of disclosing complete, clear and understandable information on the remuneration policy which was applicable to the members of the BBVA Board of Directors for the closed financial year (2020) and the detail of the individual remunerations accrued by each director throughout such financial year (in EUR thousand) in accordance which such policy (section 3), as well as on the remuneration policy applicable for the current financial year (2021), which will be submitted for approval to the next General Shareholders’ Meeting of the Bank (section 4).

Additionally, since the BBVA Directors Remuneration Policy is aligned and based on the same principles and scheme that drives the BBVA Group Remuneration Policy, this Report contains information on the BBVA Group Remuneration Policy, which includes the Remuneration Policy for the Identified Staff, which is applicable to the categories of staff who have a significant impact on the BBVA Group’s risk profile, including the members of Senior Management.

This Report, as well as the statistical appendix² included in section 3.4, has been disclosed as a other relevant information and will be put to a consultative vote, as a separate item on the agenda at the Bank’s next Annual General Shareholders’ Meeting.

Annex 2 to this Report, “Alignment with the Format set out in Circular 1/2020”, indicates where to find, within this document, the information set out in each section of the standardised electronic format published by the CNMV.

This document should be read in conjunction with Note 54 of the Annual Report of BBVA Group’s consolidated Annual Financial Statements for the 2020 financial year, which contains, among others, a breakdown, by director and remuneration item, of the remuneration received by directors in the 2020 financial year; together with BBVA Directors’ Remuneration Policy, which will be submitted for approval to the next General Shareholders’ Meeting, and the Remunerations Committee Report that accompanies it, which will be made available to shareholders on the Bank’s website upon the calling of such General Shareholders’ Meeting (https://shareholdersandinvestors.bbva.com/corporate-governance-and-remuneration-policy/).

 

 

1

Circular 1/2020, of 6 October, of the National Securities Market Commission, which modifies Circular 5/2013, of 12 June, which establishes the templates for the Annual Corporate Governance Report for listed companies, savings banks and other entities that issue securities traded on official securities markets, and Circular 4/2013, of 12 June, which establishes the templates for the annual report on the remuneration of directors of listed companies and of the members of the Board of Directors and of the control commission of the savings banks that issue securities traded on official securities markets.

2	The statistical appendix included in section 3.4 includes additional comments to those included in the one published by the CNMV for the sake of a better understanding of the information provided.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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2.	BBVA Group Remuneration Policy

 

2.1.	General principles

BBVA has a remuneration policy that applies generally to all employees of the Bank and the companies within its consolidated group (the “BBVA Group” or the “Group”) which focuses on the recurrent generation of value for the Group and seeks to align the interests of its employees and shareholders with prudent risk management.

This policy was designed by the Bank’s Board of Directors, in the scheme of BBVA’s Corporate Governance System, to ensure proper management of the Group and is based on the following principles:

 

•

creating long-term value;

 

•

rewarding results attained through prudent and responsible risk-taking;

 

•

attracting and retaining the best professionals;

 

•

offering rewards in line with level of responsibility and professional career;

 

•

ensuring internal equity and external competitiveness;

 

•

ensuring transparency of the remuneration model.

BBVA has defined the Group Remuneration Policy on the basis of these principles, taking into consideration the need to comply with the legal requirements that are applicable for credit institutions and the different sectors in which it operates, as well as alignment with best market practices. The Policy includes items designed to reduce exposure to excessive risks and adjust remuneration to the Group’s targets, values and long-term interests.

In this regard, the Policy addresses the following requirements:

 

•

it is consistent with and promotes prudent and effective risk management, offering no incentives to take any risks beyond the level tolerated by the BBVA Group;

 

•

it is in line with the BBVA Group’s business strategy, objectives, values and long-term interests, and it includes measures to prevent conflicts of interest;

 

•

it provides a clear distinction between the criteria for determining fixed and variable remuneration;

 

•

it promotes equal treatment of all staff members without distinction based on gender or personal characteristics of any type; and

 

•

it aims to provide remuneration that is based neither exclusively nor primarily on quantitative criteria and that takes into account appropriate qualitative criteria that comply with the applicable regulations.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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2.2.	Remuneration Policy for the Identified Staff

As part of the Group Remuneration Policy, BBVA has a specific policy applicable to those categories of staff whose professional activities have a significant impact on the Group’s risk profile (the “Identified Staff”), among which the members of the BBVA Board of Directors³ and Senior Management are included. The Remuneration Policy for the Identified Staff is in line with the regulations and recommendations applicable to remuneration schemes for these categories of staff, and, in particular, complies with the provisions of Spanish Act 10/2014, of 26 June, on the regulation, supervision and solvency of credit institutions (“Act 10/2014”).

This policy aims to further align BBVA’s remuneration practices with applicable regulations, good governance recommendations and best market practices.

The result is an incentive scheme specifically oriented towards aligning the remuneration of the members of the Identified Staff with the Group’s long-term targets, values and interests; to the creation of value; and to prudent risk management; on the basis of, inter alia, the following key features:

 

•

Balance between fixed and variable components

The fixed and variable components of the total remuneration will be properly balanced, in accordance with the provisions of the applicable regulation, allowing for a fully flexible policy regarding the payment of variable components, which may lead to these being reduced, as applicable, even in their entirety.

For these purposes, the Bank has established “target” ratios between fixed remuneration and variable remuneration, taking into account the functions undertaken and their impact on the risk profile, each being adapted to the current situation of the different countries or functions.

 

•

Determination and award of annual variable remuneration

The annual variable remuneration (“AVR”) for members of the Identified Staff, as well as the one of executive directors, will be linked to the level of achievement of pre-established targets, both financial and non-financial, defined at Group, area and individual levels, which take into account the Group’s long-term interests and is based on effective risk management.

Under no circumstances will the variable remuneration limit the Group’s capacity to strengthen its capital base in accordance with regulatory requirements, and it will take into account current and future risks.

The current incentive model establishes, as a previous condition, that Annual Variable Remuneration of the Identified Staff (including executive directors and members of Senior Management) will only accrue if BBVA fulfils the capital requirements and a minimum threshold of net attributable profit determined by the Board of Directors, which are the same that are applicable to the whole of the workforce.

Similarly, Annual Variable Remuneration for the Identified Staff for each financial year will be subject to ex- ante adjustments, in such a way that it will be reduced upon performance assessment in the event of a downturn in the Group’s results or other parameters, such as the degree of attainment of budgeted targets.

 

 

3

The members of BBVA Board of Directors have their own remunerations policy, which is described below, and therefore are expressly excluded from the scope of application of the Remuneration Policy for the Identified Staff of the BBVA Group, although they are members of the Identified Staff by virtue of the provisions of the applicable regulations.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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The Annual Variable Remuneration for the Identified Staff will be calculated on the basis of:

 

•

annual performance indicators (financial and non-financial), which take into account current and future risks, as well as the strategic priorities defined by the Group;

 

•

the corresponding scales of achievement, according to the weight assigned to each indicator; and

 

•

a “target” annual variable remuneration, which represents the amount of AVR if 100% of pre-established targets are met.

 

•

Specific AVR settlement and payment system

The Annual Variable Remuneration for the Identified Staff, determined as set out above, shall vest and be paid, if conditions are met, subject to the rules listed hereafter. Moreover, the particularities applicable to executive directors and members to the Senior Management are also stated below:

 

o

40% of the AVR for members of the Identified Staff and 60% for executive directors, Senior Management and those members of the Identified Staff with particularly high variable remuneration amounts will be deferred in each case for a period of three years4 (for members of the Identified Staff) and for five years (for executive directors and Senior Management).

 

o

50% of the AVR, for both the upfront payment and the deferred payment, will be established in BBVA shares. For executive directors and members of Senior Management, this percentage will be set at 50% for the upfront payment and 60% for the deferred portion.

 

o

The deferred portion of the AVR may be reduced (ex-post adjustments), but never increased, based on the results of multi-year performance indicators. These indicators are aligned with the Group’s solvency, liquidity, profitability and recurrence of earnings, taking as target the threshold considered by the Board of Directors for each of these parameters over a time frame of three years.

 

o

The shares received as AVR shall be withheld for a period of one year after delivery (except for those shares which sale would be required to honour the payment of taxes accruing on the shares delivered) and will not be subject to update.

 

o

Furthermore, 100% of the AVR for members of the Identified Staff will be subject to malus and clawback arrangements over the entire period of deferral and withholding of the shares.

 

o

The use of personal hedging strategies or insurance in connection with the remuneration and responsibility that may undermine the effects of alignment with sound risk management is expressly prohibited.

 

o

Finally, the variable component of the remuneration for a financial year will be limited to 100% of the fixed component of total remuneration, unless the General Shareholders’ Meeting resolves to increase this limit up to a maximum of 200%.

Therefore, BBVA has been gradually implementing a sound and consistent remuneration policy, which contributes to the business strategy and is aligned with the Institution’s long-term interests, shareholders’ interests and prudent risk management.

 

 

4	This period will be increased up to 4 years once the modifications derived from the transposition into Spanish Law of Directive (EU) 2019/878 (“CRD V”) enter into force.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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3.	Directors’ Remuneration Policy applicable in 2020

Based on the same principles and scheme that guide the Group Remuneration Policy, as described in the previous section, BBVA has a specific remuneration policy for the members of its Board of Directors. Its most recent update was approved by the General Shareholders Meeting held on 15 March 2019, by 94.83% of favourable votes, for the financial years 2019, 2020 and 2021 (the “Directors’ Remuneration Policy”, the “2020 Policy” or, for the purposes of this section 3, the “Policy”). This Policy is available at the Company’s website⁵.

The 2020 Policy was designed in accordance with corporate legislation and specific regulations applicable to financial institutions, and in accordance with the provisions of the Bylaws, also taking into account the best practices and recommendations on this matter both at local and international levels.

In accordance with the Bank’s Bylaws, the 2020 Policy distinguishes between the remuneration system applicable to directors in such capacity (non-executive directors) and the system applicable to executive directors (who are those who carry out managerial functions in the Company), and includes different measures to reduce excessive risk exposures and to adjust remuneration to the long-term interests of the Institution, in accordance with the stated in section 2 above.

 

3.1.	Non-executive directors remuneration system

The remuneration system for non-executive directors, in accordance with Article 33º bis of the Bylaws, is based on the criteria of responsibility, dedication and incompatibilities inherent to the role that they undertake and consists of a remuneration that is exclusively fixed, which comprises the following items:

 

•

An annual fixed allowance in cash which, within the annual maximum amount for all non-executive directors approved by the General Shareholders’ Meeting6, shall be determined by the Board of Directors taking into account the conditions applicable to each director and the roles and responsibilities attributed by the Board to each of them and their membership to the various committees. This may give rise to different remunerations for each of the non-executive directors. The Board is also responsible for determining the frequency and method of payment of this remuneration.

 

•

The insurance and pension systems in force at any given time.

 

•

A deferred fixed remuneration in shares, which is implemented through the annual allocation of a number of BBVA’s “theoretical shares” to each non-executive director, corresponding to 20% of the total annual allowance in cash received the previous financial year. These BBVA shares will be delivered, where applicable, after termination of duty for any grounds other than serious breach of duties.

 

 

 

5	https://shareholdersandinvestors.bbva.com/corporate-governance-and-remuneration-policy/information-related-to-agm-held/#2019

6	The General Shareholders’ Meeting of 16 March 2012 resolved to determine the annual global allocation that the Bank may satisfy to all its directors in such capacity in the amount of EUR 6.000 thousand. This amount will remain in force until the General Shareholders’ Meeting resolves its amendment.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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3.2.	Executive directors remuneration system

The remuneration system for executive directors is defined in accordance with best market practices. Its items are set out in Article 50º bis of the Bylaws and correspond to those generally applicable to members of the Bank’s Senior Management.

The remuneration system for executive directors, established in the 2020 Policy comprises the following items:

 

•

An annual fixed remuneration or salary, which takes into account their level of responsibility and the functions carried out, and constitutes a relevant part of their total compensation (the “Annual Fixed Remuneration”).

 

•

Other fixed remuneration components, such as benefits, complements or remuneration in kind, in line with those that may be recognized to Senior Management.

 

•

A variable remuneration, the amount of which will be determined on the basis of the level of achievement of pre-established targets, linked to the Group’s results, long-term value creation and performance of the functions carried out (the “Annual Variable Remuneration” or “AVR”).

 

•

The incentive systems that may generally be established for Senior Management.

 

•

A welfare portion, which may include appropriate pension systems and insurances.

 

3.2.1.

Elements of the executive directors’ remuneration system

 

Item		Allocation Criteria		Payment		Reference / Amount		Adjustments/Conditions
A. Annual Fixed Remuneration (“AFR”)		•  Functions assigned and level of responsibility •  Competitive in the market		Monthly cash payments		Group Executive Chairman: AFR: EUR 2,453 thousand		N/A
						Chief Executive Officer: AFR: EUR 2,179 thousand
B. Benefits and remuneration in kind		In line with those applicable to Senior Management		Allowances and premiums or payments made by the Bank, attributed as remuneration in kind		For a breakdown of the amounts corresponding to 2020, see below section 3.3.3 B.		N/A
C. Annual Variable Remuneration (“AVR”)		Result of annual performance indicators (financial and non- financial), according to pre-established targets, scales of achievement and weightings, which will be equivalent to a “Target” AVR shall the targets be achieved at 100%		In cash and shares 40% upfront and 60% deferred (5 years)		Group Executive Chairman: “Target” AVR: EUR 2,997 thousand   Chief Executive Officer: “Target” AVR: EUR 2,671 thousand		•  Ex post adjustments: the result of multi-year performance indicators (Deferred AVR downwards adjustments only) •  Malus and clawback clauses over 100% of AVR •  Withholding of shares for 1 year
						•  Scales of achievement limited to 150% •  Maximum of 200% of the fixed remuneration, as resolved by the General Shareholders’ Meeting in 2020

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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Item		Allocation Criteria		Payment		Reference / Amount		Adjustments/Conditions
D. Contribution to pension and insurance systems		Set forth contractually and in the Policy (retirement, death and disability contingencies)		Upon the occurrence of the contingency (either in income or capital in the case of the retirement pension)		Group Executive Chairman: Annual defined contribution of EUR 1,642 thousand plus death and disability premiums		Conditions set out in his contract and, in any case, provided that he does not cease as director for serious breach of duties
						Chief Executive Officer: No retirement pension, just death and disability premiums		N/A
E. Fixed Allowances		Set forth contractually and in the Policy		Monthly payment		Chief Executive Officer: Cash in lieu of a pension (30% AFR) and international mobility allowance of EUR 600 thousand per year		N/A
F. Non- compete clause		Set forth contractually and in the Policy		Monthly payment during the period of non-compete, following termination of contract		2 times AFR (one for each year of the non- compete period)		Conditions set out in their contracts, and in any case provided that they do not do not cease as directors for retirement, disability or serious breach of duties

In addition, the Directors’ Remuneration Policy also establishes “target” ratios between the Annual Fixed Remuneration and the “Target” Annual Variable Remuneration of BBVA’s executive directors, which take into account the functions carried out by each executive director and their impact on the Group’s risk profile, and are aligned with the ratios established, in general terms, for the rest of the Identified Staff members.

The “target” ratios for executive directors established in the 2020 Policy are as follows:

 

Executive Director		Position		Annual Fixed Remuneration				Target Annual Variable Remuneration
Carlos Torres Vila		Group Executive Chairman			45	%			55	%
Onur Genç		Chief Executive Officer			45	%			55	%

According to the 2020 Policy, once the amount of the Annual Variable Remuneration of each executive director is determined, it will be subject to the same settlement and payment system applicable to the Identified Staff, in a manner consistent with effective risk management. However, certain particularities so apply to executive directors, as mentioned above, and thus:

 

•

60% of the AVR of executive directors will be deferred for a period of 5 years. The remaining 40%(which will constitute the “Upfront Portion”), will be divided 50% in cash and in BBVA shares, while the deferred portion (“Deferred Portion” or “AVRD”) will be divided 60% in BBVA shares and the remaining 40% in cash.

 

•

The AVR’s Deferred Portion may be reduced, even in its entirety, but not increased, based on the results of multi-year performance indicators previously established by the Board of Directors, at the proposal of the Remunerations Committee, and prior analysis of the Risk and Compliance Committee. The multi-year performance indicators, are aligned with the Group’s risk management and control core metrics, profitability and the share evolution and recurrence of earnings.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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•

Additionally, the total Annual Variable Remuneration of executive directors will be subject to reduction (“malus”) and recovery (“clawbak”) arrangements, in the same terms as those applicable to the rest of the Identified Staff.

 

3.2.2.

Main terms and conditions of the executive directors’ contracts

As provided for in the 2020 Policy, executive director’s remuneration, rights and financial compensations will be determined in accordance with their responsibility, and the functions they carry out and are competitive with those of equivalent functions in major comparable institutions. Such conditions are contained in their respective contracts, which are approved by the Board of Directors at the proposal of the Remunerations Committee.

Under the 2020 Policy, the main conditions of the executive directors’ contracts are the following:

 

•

They have an indefinite duration.

 

•

They do not establish any notice period, or tenure or loyalty clauses.

 

•

They include a post-contractual non-compete clause.

 

•

They do not include commitments to pay a severance indemnity.

 

•

They contain a welfare portion, according to the individual conditions of each executive director, including appropriate pension systems and insurance.

Pension system commitments in favour of the executive directors

The Bank has undertaken pension commitments to cover the retirement contingencies of the Group Executive Chairman and the former executive director, José Manuel González-Páramo Marínez-Murillo, who ceased to hold office on 13 March 2020. These include the following main features, in line with those undertaken in favour of the rest of Senior Management:

 

•

They are established as defined-contribution schemes, according to which the annual contributions to be made to cover retirement are set in advance.

 

•

They do not provide for the possibility of receiving the retirement pension in advance.

 

•

15% of the agreed annual contributions will be considered “discretionary pension benefits”, pursuant to the applicable regulations.

As regards the Chief Executive Officer, the Bank has not undertaken any retirement commitments, paying out an annual amount in cash instead (“cash in lieu of pension”), which is equivalent to 30% of the Annual Fixed Remuneration. In addition, the Bank has made commitments to cover disability and death contingencies, in the terms detailed below.

The 2020 Policy sets forth the main terms and conditions of these pension systems.

Thus, in the case of the Group Executive Chairman’s pension system:

 

•

He is entitled to retirement benefit when he reaches the legally established retirement age, which amount shall result from the sum of the contributions made by the Bank and their corresponding yields up to said date; to be paid as either income or capital, provided that his leave is not due to serious breach of his duties. In the event the contractual relationship terminates before he reaches retirement age for reason other than the aforementioned, he will retain the right to this benefit, which will be calculated on the basis of the total contributions made by the Bank to that date, plus the corresponding cumulative yield, without the Bank having to make any additional contributions.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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•

The annual contribution to this system, as applicable in 2020, was determined as a result of the transformation of the former “defined-benefit” system into a “defined-contribution” system, and it was established in the amount of EUR 1,642 thousand.

 

 

•

15% of the agreed annual contribution to the pension commitments will be based on variable components and will be considered “discretionary pension benefits”, being delivered in shares and subject to retention and clawback conditions established for these types of benefits in applicable regulations.

 

•

In the event of death while in office, the 2020 Policy establishes the right of the Group Executive Chairman to an annual widow’s pension and an annual orphan’s pension for each of his children until they reach the age of 25, of an amount equivalent to 70% and 25% (40% in the event of total orphanhood), respectively, of the Annual Fixed Remuneration, paid from the total fund accumulated for the retirement pension at that time, with the Bank assuming the corresponding annual insurance premiums to top up the benefits coverage.The cumulative benefits of the widow’s and orphan’s pension may not exceed 150% of the Annual Fixed Remuneration.

 

•

He is also entitled to receive an annual pension in the event of total or absolute permanent disability while in office, of an amount equivalent to the Annual Fixed Remuneration, which will revert to his spouse and children in the event of death in the percentages described above, and with said reversion limited in any case to the disability pension itself. Payment shall be made firstly from the total fund accumulated for the retirement pension at that time, with the Bank assuming the corresponding annual insurance premiums in order to top up the benefits coverage.

 

With regard to the Chief Executive Officer, the Bank has made commitments to cover disability and death contingencies:

 

•

In the event of death while in office, according to the 2020 Policy, the Chief Executive Officer is entitled to an annual widow’s pension and an annual orphan’s pension for each of his children until they reach the age of 25, of an amount equivalent to 50% and 20% (30% in the event of total orphanhood), respectively, of the Annual Fixed Remuneration for the previous 12 months, with the Bank assuming the corresponding annual insurance premiums to guarantee the benefits coverage.The cumulative benefits of the widow’s and orphan’s pension may not exceed 100% of the Annual Fixed Remuneration for the previous 12 months.

 

•

He is also eligible to receive an annual pension in the event of total or absolute permanent disability while in office, of an amount equivalent to 62% of the Annual Fixed Remuneration of the previous 12 months, which will revert to his spouse and children in the event of death in the percentages described above, and with said reversion limited in any case to the disability pension itself, with the Bank assuming the corresponding annual insurance premiums in order to guarantee the benefits coverage.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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In the case of the former executive director, José Manuel González-Páramo Martínez-Murillo, in accordance to his contract and to the 2020 Policy, he is entitled to a retirement benefit when he reaches the legally established retirement age, the amount of which shall result from the sum of the annual contributions made by the Bank and their corresponding yields up to said date. The agreed annual contributions for this commitment were established as 30% of his Fixed Annual Remuneration. As he ceased to hold office on 13 March 2020, the Bank has not made any further contributions since that date.

However, 15% of the agreed annual contribution to the pension commitments will be considered “discretionary pension benefits”, and will be subject to share delivery, retention and clawback conditions established for these types of benefits in the applicable regulations.

Fixed allowances of the Chief Executive Officer

Likewise, the 2020 Policy provides for the following additional fixed remunerations for the Chief Executive Officer, in accordance with his condition of international senior executive:

 

•

An annual cash amount, in lieu of a retirement pension (“cash in lieu of pension”), which amounts to the equivalent of 30% of the Annual Fixed Remuneration in force at any given time; and

 

•

An annual cash amount as a mobility allowance, in line with commitments undertaken with other expatriate members of the Bank’s Senior Management, the amount of which has been established as EUR 600 thousand per year.

Post-contractual non-compete agreements

The contractual framework of executive directors establishes a post-contractual non-compete clause for a period of two years from termination of duties as BBVA executive directors, for which the Bank will award remuneration to an amount equivalent to their Annual Fixed Remuneration for each year of the non-compete agreement, paid monthly, provided that the executive directors do not leave their positions due to retirement, disability or serious breach of duties.

All of the abovementioned terms and conditions are included in the respective contracts of the executive directors.

 

3.3.	Application of the 2020 Policy

Below is a description of how the 2020 Policy was applied in the last financial year, in accordance with the abovementioned systems and conditions, and of the amounts of the remunerations corresponding to each director.

The process in place at BBVA to apply the Directors’ Remuneration Policy and determine each director’s individual remuneration is directed and supervised by the Remunerations Committee. This Committee has carried out, in 2020, the following actions, among others, submitting the corresponding proposals to the Board of Directors for approval, where appropriate.

 

3.3.1.

Activities carried out in 2020 by the Remunerations Committee

During the 2020 financial year, the activities of the Remunerations Committee were affected by the crisis caused by the COVID-19 pandemic, which required the Bank’s corporate bodies to adapt their dynamics in order to ensure the continuity and proper exercise of their functions.

Thus, during the first months of the 2020 financial year, the Remunerations Committee carried out its usual activity regarding remunerations, and in particular:

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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•

The Remunerations Committee determined, for proposal to the Board, the 2019 Annual Variable Remuneration for executive directors and its settlement and payment in accordance with the rules set out in the Remuneration Policy for BBVA Directors, as well as the Deferred Annual Variable Remuneration from previous financial years due to be paid in 2020.

 

•

Similarly, the Committee oversaw the variable remuneration accrued by the members of Senior Management on the basis of their basic contractual conditions.

 

•

In addition, the Remunerations Committee determined, for its proposal to the Board, the scales of achievement for the multi-year performance indicators of the deferred portion of the 2019 AVR and the peer group applicable for the purposes of the Total Shareholder Return (“TSR”) indicator applicable to all Identified Staff.

 

•

The Remunerations Committee presented to the Board, for its submission to the General Shareholders’ Meeting, the raising of the maximum level of variable remuneration up to 200% of the fixed component of total remuneration for a certain number of members of the Identified Staff, likewise proposing to the Board, the Report that accompanies this resolution and which was made available to the Bank’s shareholders.

 

•

Additionally, following the proposal made by the Remunerations Committee, the Board approved the 2019 Annual Report on the Remuneration of BBVA Directors, prepared in accordance with Circular 1/2018 of the National Securities Market Commission, that was submitted to an advisory vote at the 2020 General Shareholders’ Meeting, in compliance with the provisions of Article 541 of the Corporate Enterprises Act, being available on the Bank’s corporate website7 from the date said General Shareholders’ Meeting was called.

 

•

Regarding the 2020 financial year determinations, the Committee determined the annual performance indicators that would be used for the calculation of the 2020 financial year AVR of executive directors and their corresponding weightings, submitting to the Board the corresponding proposals for its approval, as well as the multi-year performance indicators which would be used to determine the deferred part of the 2020 financial year AVR of executive directors and the rest of the members of the Identified Staff, including Senior Management, and their corresponding weightings, which had been previously analysed by the Risk and Compliance Committee, who ensured their adequacy to the Bank’s risk profile.

In March 2020, after the General Shareholders’ Meeting, the health crisis caused by COVID-19 began, which substantially affected the Remunerations Committee’s activities foreseen for the remainder of the financial year; as those of the rest of the Bank’s corporate bodies.

 

 

 

7	https://shareholdersandinvestors.bbva.com/corporate-governance-and-remuneration-policy/information-related-to-agm-held/#2019

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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The above, extraordinarily, led to the cancellation of the approved annual performance indicators that were going to be used for the calculation of the 2020 AVR of the executive directors and their corresponding weightings which remained de facto void, as no AVR would be accrued in this financial year.

However, the multi-year performance indicators, previously approved by the Board -as ex-post adjustments- applicable to the 2020 financial year deferred AVR, remained in force for the purposes of calculating the deferred portion of the 2020 AVR for those members of the Identified Staff who had not completely waived its accrual.

Both the waiving of AVR for the 2020 financial year and the consequences thereof were analysed by the Remunerations Committee and the Board of Directors.

In this context, the Remunerations Committee also analysed the minimum thresholds for Attributable Profit and Capital Ratio established for determining the AVR for the 2020 financial year, if applicable, for the rest of the Group’s staff, all of which was reported to the Board.

In addition, and taking into account the non-determination of parameters for calculating the 2020 AVR for the executive directors—in view of their waiver of it—the Committee established, for its approval by the Board, the calculation model for the 15% of the contributions made to the Group Executive Chairman’s pension system to cover the retirement contingency in 2020 which, in accordance with the applicable regulations and the Policy, shall be considered as “discretionary pension benefits” and will be included in the accumulated fund in the 2021 financial year.

While performing its functions, during 2020 financial year, the Committee, has received information on the impact that COVID-19 has had on the variable remuneration of other banking entities from the Bank’s footprint.

Finally, the Committee has been informed of the main regulatory changes which it was foreseen that would entry into force in 2021 and that may affect the remuneration policies approved by the Bank. In this sense, the Committee has analysed the approaches for the update of the Directors’ Remuneration Policy to adapt it to the regulatory changes and to the most recent market practices and recommendations regarding remuneration, which, in the end, has led to a proposal of a new Policy that will be submitted for approval to the next General Shareholders’ Meeting.

All of the above activities carried out by the Committee, together with other matters within its remit, will be included in the report on the activity of the Remunerations Committee for 2020, which will be made available to all shareholders on the Bank’s website upon the Annual General Shareholders’ Meeting calling⁸.

 

3.3.2.

Remuneration of non-executive directors 2020

In accordance with the provisions of the Bank’s Bylaws, and as stated in section 3.1 above, the non-executive directors’ remuneration system is based on responsibility, dedication and incompatibilities inherent to the role that they undertake and consists of a remuneration that is exclusively fixed, which comprises the following items:

 

 

8	https://shareholdersandinvestors.bbva.com/corporate-governance-and-remuneration-policy/

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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A. Annual Fixed Allowance for the role of Board member and member of the various committees, as appropriate, and for carrying out any other duties or responsibilities within the Corporate Governance System		Monthly cash payments		Overall limit approved by the General Shareholders’ Meeting:   EUR 6 million per year   See amounts received in 2020 in sections A and B below
B. Remuneration in kind (e.g. casualty and healthcare insurance policies)		The Bank pays the corresponding premiums that are allocated to the directors as remuneration in kind
C. Fixed remuneration system with deferred delivery of BBVA shares		Fixed annual allocation of a number of “theoretical shares”, to vest after they cease to be directors, provided that the event of cease is not due to serious breach of duties		20% of the total annual cash allowance received during previous financial year (see section C below)

Amounts corresponding to the annual fixed allowance approved by the Board of Directors

 

Position		In thousands of EUR
Member of the Board of Directors			129
Member of the Executive Committee			167
Chair of the Audit Committee			165
Member of the Audit Committee			66
Chair of the Risk and Compliance Committee			214
Member of the Risk and Compliance Committee			107
Chair of the Remunerations Committee			107
Member of the Remunerations Committee			43
Chair of the Appointments and Corporate Governance Committee			115
Member of the Appointments and Corporate Governance Committee			46
Chair of the Technology and Cybersecurity Committee*			107
Member of the Technology and Cybersecurity Committee			43
Deputy Chair			50
Lead Director			80

 

*	As of the date of this Report, the position of Chair of the Technology and Cybersecurity Committee is not a remunerated role as it is held by the Group Executive Chairman.

These amounts were approved by the Board of Directors on 29 May 2019, at the proposal of the Remunerations Committee, following analysis of relevant market comparisons.

 

Detail of individual remunerations accrued by non-executive directors in 2020

 

A.	Annual fixed allowance 2020

According to the previously referred system, the remuneration received by each non-executive director during 2020 financial year was as follows (EUR thousand):

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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		Board of Directors				Executive Committee				Audit Committee				Risk and Compliance Committee				Remunerations Committee				Appointments and Corporate Governance Committee				Technology and Cybersecurity Committee				Other position (1)				Total
José Miguel Andrés Torrecillas			129				111				66				36								115								50				507
Jaime Caruana Lacorte			129				167				165				107																				567
Raúl Galamba de Oliveira (2)			107												71												32								211
Belén Garijo López			129								66								107				46												349
Sunir Kumar Kapoor			129																								43								172
Lourdes Máiz Carro			129								66								43																238
José Maldonado Ramos			129				167																46												342
Ana Peralta Moreno			129								66								43																238
Juan Pi Llorens			129												214								46				43				80				512
Ana Revenga Shanklin (2)			97												71																				168
Susana Rodríguez Vidarte			129				167								107								46												449
Carlos Salazar Lomelín (2)			97																29																125
Jan Verplancke			129																29								43								200
Total (3)			1,588				611				431				606				250				301				161				130				4,078

 

(1)	Amounts received in 2020 by José Miguel Andrés Torrecillas, as Deputy Chair of the Board of Directors, and Juan Pi Llorens, as Lead Director.

(2)	Directors appointed by the General Shareholders’ Meeting on 13 March 2020. Remunerations received in accordance to the date of acceptance of the appointment.

(3)	Includes the amounts corresponding to the positions of member of the Board and of the various committees during the 2020 financial year. The composition of these committees was modified by resolution of the Board of Directors of 29 April 2020.

In addition, Tomás Alfaro Drake and Carlos Loring Martínez de Irujo, who ceased as directors on 13 March 2020, have received a total of EUR 54 thousand and EUR 111 thousand, respectively, due to their membership to the Board and to the different Committees of the Board in 2020 until the date in which they ceased to hold office.

 

 

These amounts are reflected, for each non-executive director, in section C.1 (a). i. “Remuneration accrued in cash”, “Fixed remuneration” and “Remuneration for membership on Board Committees” of the CNMV statistical Appendix, included as section 3.4 of this Report.

 

 

B.	Remuneration in kind

During 2020, EUR 95 thousand was paid out as remuneration in kind. This amount corresponds to casualty and healthcare insurance premiums for non-executive directors who held office in 2020.

Additionally, EUR 18 thousand have been paid out to Carlos Loring Martínez de Irujo, who ceased to hold office on 13 March 2020, as remuneration in kind, corresponding to casualty and healthcare insurance premiums.

 

 

These amounts are reflected, for each non-executive director, in section C.1 (a). i. “Remuneration accrued in cash”, “Other Items” of the CNMV statistical Appendix, included as section 3.4 of this Report.

 

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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C.	Fixed remuneration system with deferred delivery of BBVA shares

In execution of the fixed remuneration system with deferred delivery of shares provided for in the 2020 Policy⁹, in the 2020 financial year, by resolution of the Board of Directors, the non-executive directors who were beneficiaries of this system have been allocated the “theoretical shares” corresponding to 20% of the annual fixed allowance received by each of them in the 2019 financial year, broken down as follows:

 

Non-executive directors		“Theoretical shares” allocated in 2020				“Theoretical shares” accumulated as of 31/12/2020
José Miguel Andrés Torrecillas			20,252				75,912
Jaime Caruana Lacorte			22,067				31,387
Raúl Galamba de Oliveira(1)			0				0
Belén Garijo López			14,598				62,126
Sunir Kumar Kapoor			7,189				22,915
Lourdes Máiz Carro			10,609				44,929
José Maldonado Ramos			14,245				108,568
Ana Peralta Moreno			10,041				15,665
Juan Pi Llorens			20,676				92,817
Ana Revenga Shanklin(1)			0				0
Susana Rodríguez Vidarte			18,724				141,138
Carlos Salazar Lomelín(1)			0				0
Jan Verplancke			7,189				12,392
Total			145,590				607,849

 

(1)	Directors appointed by the General Shareholders’ Meeting held on 13 March 2020.

(2)

The number of “theoretical shares” allocated to each non-executive director is equivalent to 20% of the total allowance in cash received in 2019 by each of them, according to the average closing prices of the BBVA share during the 60 trading sessions prior to the General Shareholders’ Meeting of 13 March 2020, which was of 4.77 euros per share.

Additionally, 8,984 “theoretical shares” and 18,655 “theoretical shares” have been allocated, respectively, to Tomás Alfaro Drake and to Carlos Loring Martínez de Irujo, who ceased to hold office on 13 March 2020. Both directors received, after they ceased to hold office, a number of shares equivalent to the total number of “theoretical shares” accumulated by each of them until that date (102,571 and 135,046 BBVA shares, respectively) in application of this system.

 

 

BBVA has no option plans in favour of its directors. In order to comply with the CNMV official statistical Appendix, these “theoretical shares” have been equated to “options”, without prejudice to the fact that they are not such an instrument. These shares will only vest after the termination of office of the non-executive directors for any reason other than serious breach of duties. These shares are reflected in section C.1 a). ii. “Table showing the roll forward from remuneration systems based on shares” of the CNMV statistical Appendix, included as section 3.4. of this Report.

 

 

Variation in non-executive directors’ remunerations EUR thousand (in aggregate)		2020				2019
Fixed annual amounts for membership of the Board and committees			4.078				4.134
Remuneration in kind			95				104
Total(1)			4.173				4.238

 

9	Approved by the General Shareholders’ Meeting held on 18 March 2006 and extended by resolution of the General Shareholders’ Meetings held on 11 March 2011 and 11 March 2016 and that will be again extended once the new Policy is approved in 2021 financial year.

 

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(1)	The amounts received by the non-executive directors who ceased to hold office on 13 March 2020, Tomás Alfaro Drake and Carlos Loring Martínez de Irujo, which were EUR 54 thousand and EUR 129 thousand, respectively, have not been included above.

 

 

Year-on-year variation follows from the changes made in the composition of the Board and its committees along the year, and to the redistribution of the amounts to be received for the membership of the committees. However, the amounts corresponding to the positions of member of the Board and member and chair of the various committees of the Board have not been increased since 2007.

 

Non-executive directors have not received variable remuneration or any other remuneration for any other items not included in this section. Likewise, as provided for in the 2020 Policy, the Bank has not made any pension commitments in favour of the non-executive directors.

3.3.3. Remuneration of executive directors 2020

As stated in section 3.2 above, executive directors’ remuneration system is defined in accordance with best market practices. Its main items are set out in Article 50º bis of the Bank’s Bylaws and correspond to those generally applicable to members of BBVA’s Senior Management.

In application of this system, the detail of the individual remunerations accrued by executive directors in 2020, is as follows:

 

A.	Annual Fixed Remuneration 2020

In accordance with the terms and conditions established in their contracts and in the 2020 Policy, the executive directors have received the following remunerations in 2020:

 

Annual Fixed Remuneration executive directors (EUR thousand)
Group Executive Chairman			2,453
Chief Executive Officer			2,179

In addition, the former executive director, José Manuel González-Páramo Martínez-Murillo, who ceased to hold office on 13 March 2020, received as Head of Global Economics & Public Affairs (“Head of GE&PA”), EUR 168 thousand as Annual Fixed Remuneration in 2020, corresponding to the months during which he held office.

 

 

These Annual Fixed Remuneration amounts are reflected in section “C.1 a).i. Remuneration accrued in cash”, “Salary” of the executive directors in the CNMV statistical Appendix, included as section 3.4 of this Report.

 

 

 

Year-on-year variation: there have not been any variations with reference to the Annual Fixed Remuneration accrued by the executive directors in 2019, as it was not updated in 2020.

 

 

B.	Benefits and other remuneration in kind 2020

Executive directors are beneficiaries of healthcare insurance policies subscribed by the Bank, who covers the corresponding premiums that are allocated to directors as remuneration in kind.

In addition, the Bank pays the executive directors other benefits that apply to the Bank’s Senior Management.

The amounts paid in 2020 to executive directors for these items are as follows:

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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Remuneration in kind and other benefits (EUR thousand)
Group Executive Chairman			228
Chief Executive Officer			132

In addition, the former executive director, José Manuel González-Páramo Martínez-Murillo, received in 2020 EUR 33 thousand as remuneration in kind corresponding to the months during which held office.

 

 

These amounts are reflected in section C.1. a). i.“Remuneration accrued in cash” “Other Items” of the CNMV statistical Appendix, included as section 3.4 of this Report.

 

 

 

C.	Annual Variable Remuneration

 

1.

2020 AVR

Executive directors have not been awarded 2020 Annual Variable Remuneration.

 

Executive directors		2020 AVR (EUR thousand)				2019 AVR (EUR thousand)(1)
Group Executive Chairman			0				3,180
Chief Executive Officer			0				2,854

 

(1)	According to the settlement and payment system established in the 2020 Policy, 60% of the 2019 AVR was deferred for a period of 5 years.

 

In the same way as the Group Executive Chairman and the Chief Executive Officer, the former executive director, José Manuel González-Páramo Martínez-Murillo, also waived the entire 2020 Annual Variable Remuneration and, therefore, he has not accrued any remuneration for this item.

 

2.	2017 Deferred Annual Variable Remuneration (“2017 Deferred AVR” or “2017 DAVR”)

Pursuant to the remuneration policies applicable to executive directors in the 2017 financial year¹⁰ and in order to align the remuneration with the long-term risks and results, 60% of the 2017 DAVR for the Group Executive Chairman and the Chief Executive Officer, associated to the roles they held at that time, was deferred for five and three years, respectively, in accordance with the settlement and payment system applicable in each case:

 

10

In the 2017 financial year, the Remuneration Policy for BBVA Directors that was approved by the General Shareholders’ Meeting held on 17 March 2017 was applicable to the Group Executive Chairman, and the BBVA Group Remuneration Policy, which was approved by the Board of Directors on 29 November 2017, was applicable to the Chief Executive Officer.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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Executive directors		Maximum amount 2017 DAVR(1)
		Cash (thousands of EUR)				Shares
Group Executive Chairman			675				139,488
Chief Executive Officer			290				39,796

 

(1)	Amounts associated with previous roles as Chief Executive Officer of BBVA and as President & CEO of BBVA Compass (now BBVA USA), respectively. For the calculation in euros of the Chief Executive Officer’s 2017 Deferred AVR the closing exchange rate of January 2021 has been used (1.2136 USD/EUR).

In addition, the 2017 Deferred AVR of the former executive director, José Manuel González-Páramo Martínez-Murillo, who ceased to hold office on 13 March 2020, was determined in the amount of EUR 105 thousand and 21,654 BBVA shares.

These amounts were subject to ex post adjustments based on the outcome of the following multi-year performance indicators, approved by the Board of Directors in 2017, which were calculated over a period of three years (2018–2020). Multi-year performance indicators are associated with pre-established achievement scales so that in the event that the thresholds set for them are not met, the maximum amount of the 2017 Deferred AVR could be reduced, even in its entirety, but never increased.

The outcomes of each of the 2017 DAVR multi-year performance indicators are detailed below, as well as the threshold for no reduction set for each of them. Neither the thresholds nor the achievement scales initially determined have been in any way modified, in spite of the extraordinary circumstances created by the COVID-19 crisis:

 

2017 DAVR multi-year performance indicators		Solvency								Liquidity								Profitability
		Economic Adequacy: Economic Equity/ ECR				Fully loaded CET1				LtSCD (loan-to-stable customer deposits)				Liquidity Coverage Ratio (LCR)				(Net Margin/ Average Total Assets) — (Cost of Risk/ Average Total Assets)				Return on Equity (ROE)				Total Shareholder Return (TSR)
Weighting			20	%			20	%			10	%			10	%			10	%			20	%			10	%
Threshold for no reduction		>	100	%		>	9,35	%		<	145,0	%		>	99,50	%		>	0,25	%		>	2,5	%			1st to 8th
Result			149,6	%•			11,32	%•			105,3	%•			135	%•			1,10	%•			7,3	%•			7th pos.	•
% reduction			0	%			0	%			0	%			0	%			0	%			0	%			0	%

With respect to the TSR indicator, which measures the evolution of total return for the shareholder, the indicator was compared over the three-year period (1 January 2018 to 31 December 2020) for the same peer group indicated in Annex 1, with BBVA having reached 7th position.

The achievement scale for the TSR indicator approved by the Board, at the proposal of the Remunerations Committee, was as follows:

 

BBVA position in raking		Reduction percentage of deferred amounts
1º a 8º		0%
9º		10%
10º		20%
11º		30%
12º		40%
13º		50%
14º		60%
15º		80%
16º		100%

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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Taking into consideration the outcome of the 2017 DAVR multi-year performance indicators measured in the period from 2018 to 2020, it has been verified that all of the indicators have achieved their respective thresholds and therefore no reduction should be applied to the 2017 DAVR.

 

																						(EUR thousand and shares)
Executive directors		Maximum amount of 2017 DAVR								Reduction (ex-post adjustments)								Final 2017 DAVR amount								2017 DAVR amount to be paid in 2021 (1)
		Cash				Shares				Cash				Shares				Cash				Shares				Cash (2)				Shares
Group Executive Chairman			675				139,488				0	%			0	%			675				139,488				405				83,692
Chief Executive Officer			290				39,796				0	%			0	%			290				39,796				290				39,796

 

(1)

These amounts correspond to the first payment (60% of the DAVR) to the Group Executive Chairman (for whom a 20% payment is still outstanding for 2022 and the remaining 20% for 2023) and the total payment of the DAVR to the Chief Executive Officer, in view of the deferral periods and payment schedules set out in the relevant remuneration policies applicable in 2017 to each of them. For the calculation in euros of the Chief Executive Officer’s 2017 Deferred AVR the closing exchange rate of January 2021 has been used (1.2136 USD/EUR).

(2)	These amounts will be updated with the year-on-year application of the CPI, in the following amounts: EUR 6 thousand for the Group Executive Chairman and EUR 17 thousand for the Chief Executive Officer.

Additionally, in accordance with the provisions of the Directors’ Remuneration Policy in force in 2017, the final result of the 2017 Deferred AVR that is due for payment to the former executive director, José Manuel González-Páramo Martínez-Murillo, in 2021 is EUR 63 thousand and 12,992 BBVA shares (additionally, an amount of EUR 21 thousand and 4,331 shares will be paid in each of the two following years, in case conditions for such payments are met). In addition, the amount resulting from the update in application of the year-on-year CPI to the portion in cash of the 2017 DAVR amount due in 2021 is EUR 0,9 thousand.

 

 

These amounts are reflected in section C.1. a) i. “Remuneration accrued in cash”, “Long-term variable remuneration” of the CNMV statistical Appendix, included as section 3.4 of this Report, and section C.1. a) ii) “Table showing the roll forward from remuneration systems based on shares” given the accrual period for this remuneration ended on 31 December 2020, pursuant to the instructions contained in the official Model of the CNMV Report.

 

 

D.	Contributions to pension systems in 2020 financial year

In the case of executive directors, the pension commitments made in favour of each director are reflected in their respective contracts, which are approved by the Board of Directors and whose main conditions are set out in section 3.2.2 above.

During the 2020 financial year, the Bank has made the following contributions in order to cover the contingencies contractually recognised:

 

						(EUR thousand)
Director		Pension systems(2)				Accumulated funds as of 31/12/2020
		Annual contribution(1)		Insurance premiums		Total
Group Executive Chairman		1,642 (*)		377		23,057
Chief Executive Officer		—		253		0

 

(1)

15% of the annual contribution to the Group Executive Chairman’s retirement pension of 2019, that is, EUR 246 thousand, was registered in that financial year as “discretionary pension benefits”, which was already declared by the Bank at the end of that financial year. Once 2019 financial year ended, said amount has been adjusted by reference to the result of 2019 AVR, which led to and additional contribution of EUR 15 thousand, which had to be contributed to the accumulated fund in 2020.

(2)

Likewise, in 2020 financial year, the Bank made contributions of a total of EUR 89 thousand to honour the commitments regarding pension systems in favour of the former executive director, José Manuel González-Páramo Martínez-Murillo, who ceased to hold office on 13 March 2020. This amount corresponds to the sum of the annual contribution to the retirement pension and the adjustment made to the “discretionary pension benefits” of 2019 financial year, that were to be included in the accumulated fund in 2020 (EUR 52 thousand), and with the death and disability contingencies premiums (EUR 37 thousand). As of the date he ceased to hold office, the total amount of the accumulated fund to cover the retirement commitments made by the Bank was EUR 1,404 thousand, with the Bank not having to make any further contributions since that date, insofar as the former executive director will not accrue additional contributions since the date he ceased to hold office.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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These amounts are reflected in section C.1 a) iii. “Long-term saving systems”, “Remuneration from consolidation of rights to savings system” to “Savings systems with unconsolidated economic rights” in the CNMV statistical Appendix, included in section 3.4. of this Report.

 

 

In 2020, in application of the provisions of the Policy, 15% of the annual contribution of Group Executive Chairman, that is, EUR 246 thousand, has been recorded in that financial year as “discretionary pension benefits”. After year-end, in 2021, these “discretionary pension benefits” have been adjusted following the same criteria as those used to determine the Annual Variable Remuneration of the rest of the Bank’s employees (considering the waiver of the Group Executive Chairman to the AVR corresponding to 2020). Thus, they have been determined in the amount of EUR 148 thousand, after a downwards adjustment of EUR 98 thousand to the initial amount registered. These “discretionary pension benefits”, once adjusted will be allocated to the accumulated fun in 2021 financial year, and will be subject to the conditions provided for them in the BBVA Directors’ Remuneration Policy.

By applying the same criteria as the ones applied with regard to the Group Executive Chairman, “discretionary pension benefits” of the former executive director José Manuel González-Páramo Martínez-Murillo (calculated in proportion to the time during which he held office in 2020 financial year), have been determined in the amount of EUR 5 thousand, after a downwards adjustment of EUR 3 thousand was made. These discretionary pension benefits”, once adjusted will be included in the accumulated fund in 2021 financial year, and will be, equally, subject to the conditions provided for them in the BBVA Directors’ Remuneration Policy.

E. Other fixed allowances of the Chief Executive Officer

In accordance with the provisions of the 2020 Policy, the Chief Executive Officer has received in 2020 the following fixed remunerations:

 

•

An annual amount in cash, in lieu of retirement pension, of EUR 654 thousand; and

 

•

An annual cash mobility allowance of EUR 600 thousand per annum.

 

 

These amounts are reflected in section C.1 a). iv. “Detail other items” in the CNMV statistical Appendix, included in section 3.4 of this Report

 

F. Post-contractual non-compete agreement

The contractual framework of executive directors establishes a post-contractual non-compete clause for a period of two years from termination of duties as BBVA executive directors, for which the Bank will award remuneration of an amount equivalent to their Annual Fixed Remuneration for each year of the non- compete agreement, paid monthly, provided that the executive directors do not leave their positions due to retirement, disability or serious breach of their duties.

In accordance to the foregoing, the former executive director, José Manuel González-Páramo Martínez-Murillo, who ceased to hold office on 13 March 2020, has received in 2020 the amount of EUR 625 thousand as a compensation for his non-compete agreement.

 

 

This amount is reflected in section C.1 a). iv. “Detail of other items” in the CNMV statistical Appendix, included in section 3.4 of this Report.

 

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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3.3.4.

Other information relating 2020 financial year

Payments for termination of the contractual relationship

The Bank has no commitments to make severance payments to directors in the event of the termination of the contractual relationship, nor any kind of payment derived from their early dismissal other than those set out in this Report.

The directors have not accrued or received any payment of this nature during the closed financial year.

Loans, advances and guarantees

In 2020, directors have not accrued any remuneration arising from the award of advances, loans and guarantees.

For transparency purposes, and in line with what was informed in the Annual Report on the Remuneration of BBVA Directors of the previous financial year, it is stated that the loan granted, in employment conditions, by BBVA USA to the Chief Executive Officer in his former capacity of President & CEO of BBVA Compass (Country Manager of United States) has already been cancelled.

There are no other remuneration items other than those described in the preceding paragraphs, nor has any supplementary remuneration been accrued by the directors over the financial year in addition or different to that indicated in this Report.

Application of malus and clawback clauses in 2020

The 2020 Policy establishes arrangements to reduce or recover up to 100% of the Annual Variable Remuneration of executive directors, through malus and clawback clauses, in the same terms applicable to the rest of the Identified Staff. These clauses are detailed in the BBVA Directors’ Remuneration Policy disclosed at the Bank’s website.

In 2020, variable remuneration of executive directors has not been reduced or recovered.

Measures taken to reduce the remuneration of the Identified Group as a result of exposure to excessive risks and to adjust it to the long-term objectives, values and interests of the Company

Actions taken by the Bank, in relation to the remuneration system, to reduce exposure to excessive risks and adjust remuneration to long-term interests have been detailed in section 2 and 3 of this Report, as part of the description of the variable remuneration system applicable to the Identified Group and to the executive directors, including the specific rules for the settlement and payment of the Annual Variable Remuneration.

Moreover, in addition to the waiver to the 2020 Annual Variable Remuneration to which reference has been made in this Report, the Annual Variable Remuneration corresponding to such financial year of the rest of the members of the Identified Staff has also been reduced in order for it to be aligned with the Bank’s financial situation and results.

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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3.4. CNMV statistical Appendix

Overall summary of how the Remuneration Policy was applied in the closed financial year

B.4 Report on the outcome of the consultative vote at the General Shareholders’ Meeting regarding the annual report on the remuneration for the previous financial year, indicating the number of “no” votes cast where applicable:

 

		Number				% of total
Votes cast			4,455,978,237				100
		Number				% of total
Votes against			291,015,234				6.53
Votes in favour			4,120,181,196				92.46
Abstentions			44,781,807				1.00

 

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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C. Details of the individual remunerations received by each director

 

Name		Type		Accrual period in 2020 financial year
Carlos Torres Vila		Group Executive Chairman		From 01/01/2020 to 31/12/2020
Onur Genç		Chief Executive Officer		From 01/01/2020 to 31/12/2020
José Miguel Andrés Torrecillas		Independent Deputy Chair		From 01/01/2020 to 31/12/2020
Jaime Caruana Lacorte		Independent director		From 01/01/2020 to 31/12/2020
Raúl Galamba de Oliveira		Independent director		From 13/03/2020 to 31/12/2020
Belén Garijo López		Independent director		From 01/01/2020 to 31/12/2020
Sunir Kumar Kapoor		Independent director		From 01/01/2020 to 31/12/2020
Lourdes Máiz Carro		Independent director		From 01/01/2020 to 31/12/2020
José Maldonado Ramos		External director		From 01/01/2020 to 31/12/2020
Ana Peralta Moreno		Independent director		From 01/01/2020 to 31/12/2020
Juan Pi Llorens		Lead Director		From 01/01/2020 to 31/12/2020
Ana Revenga Shanklin		Independent director		From 01/04/2020 to 31/12/2020
Susana Rodríguez Vidarte		External director		From 01/01/2020 to 31/12/2020
Carlos Salazar Lomelín		External director		From 01/04/2020 to 31/12/2020
Jan Verplancke		Independent director		From 01/01/2020 to 31/12/2020
Tomás Alfaro Drake		External director		From 01/01/2020 to 13/03/2020
José Manuel González-Páramo Martínez-Murillo		Executive director		From 01/01/2020 to 13/03/2020
Carlos Loring Martínez de Irujo		External director		From 01/01/2020 to 13/03/2020

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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C.1	a) Remunerations of the company subject to this report

 

i)	Remuneration accrued in cash (thousands of EUR)

 

Name		Fixed remuneration				Per diem payments				Remuneration for membership of Board committees				Salary				Short-term variable remuneration				Long-term variable remuneration				Severance pay				Other items				2020 Total				2019 Total
Carlos Torres Vila															2,453				0				411								228				3,092				3,929
Onur Genç															2,179				0				307								132				2,618				3,098
José Miguel Andrés Torrecillas			179								328																				8				515				490
Jaime Caruana Lacorte			129								439																								568				527
Raúl Galamba de Oliveira			107								103																								210				0
Belén Garijo López			129								219																				13				361				362
Sunir Kumar Kapoor			129								43																								172				172
Lourdes Máiz Carro			129								109																				18				256				267
José Maldonado Ramos			129								213																				15				357				354
Ana Peralta Moreno			129								109																				8				246				247
Juan Pi Llorens			209								303																				15				527				507
Ana Revenga Shanklin			97								71																								168				0
Susana Rodríguez Vidarte			129								320																				15				464				461
Carlos Salazar Lomelín			97								29																								126				0
Jan Verplancke			129								72																								201				172
Tomás Alfaro Drake			32								22																								54				215
José Manuel González-Páramo Martínez-Murillo															168				0				64								33				265				1.090
Carlos Loring Martínez De Irujo			32								79																				18				129				463

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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ii)	Table showing the roll forward from remuneration systems based on shares and gross profit from consolidated shares or financial instruments

 

Name

Plan name

Financial instruments at the beginning of the 2020 financial year

Financial instruments granted during the 2020 financial year

Consolidated financial instruments in the financial year

Expired and unredeemed instruments

Financial instruments at the end of the 2020 financial year

Nº. of instruments

Nº. of equivalent shares

Nº. of instruments

Nº. of equivalent shares

Nº. of instruments

Nº. of equivalent/ consolidated shares

Price of consolidated shares

Gross profit from consolidated shares or financial instruments (thousands of EUR)

Nº. of instruments

Nº. of instruments

Nº. of equivalent shares

Carlos Torres Vila

Upfront AVR payment for 2020 in shares

0

0

0

Deferred AVR payment for 2017 in shares

83,692

83,692

4.12

345

83,692

83,692

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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Onur Genç		Upfront AVR payment for 2020 in shares																							0				0				0
		Deferred AVR payment for 2017 in shares																			39,796				39,796				4.12				164								39,796				39,796
José Miguel Andrés Torrecillas		Fixed remuneration system for shares with deferred delivery			55,660				55,660				20,252				20,252
Jaime Caruana Lacorte		Fixed remuneration system for shares with deferred delivery			9,320				9,320				22,067				22,067
Raúl Galamba de Oliveira		Fixed remuneration system for shares with deferred delivery
Belén Garijo López		Fixed remuneration system for shares with deferred delivery			47,528				47,528				14,598				14,598
Sunir Kumar Kapoor		Fixed remuneration system for shares with deferred delivery			15,726				15,726				7,189				7,189

 

This English version is a translation of the original in Spanish for information purposes only. In case of discrepancy, the Spanish original will prevail

 

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