13. HR development

13.1. Changes in employment

At the end of 2014 the total employment in mBank Group was 6,318 FTEs compared to 6,073 FTEs a year before (+4.0% or +245 FTEs).

At the end of 2014 employment at mBank amounted to 4,895 FTEs and rose by 199 FTEs compared to 2013 (+4.2%). Rising employment resulted mainly from implementation of strategic projects: Orange Finance and development of relations with SME (for more information please see section 3.1. mBank Group Strategy in 2012-2016).

mBank's employees are relatively young: 52% are below the age of 35. They are also well-educated: 83% are graduates of higher education institutions. Many employees undertake post-graduate studies and internal MBA studies, thus acquiring new professional qualifications.

At the end of 2014 employment in Group subsidiaries amounted to 1,422 FTEs compared to 1,377 a year before (+3.3%).

The chart below illustrates the employment structure in mBank Group, by subsidiaries, and in mBank, by areas of operation:

13.2. Training and development

In 2014 development activities were determined by business priorities – they developed skills and broadened knowledge needed by teams in order to effectively achieve the goals set for the organisation. Plans developed jointly by development specialists and managers responsible for particular teams representing all levels of management in the organisation (together with Members of the Management Board supervising the business lines) were the basis for undertaking the activities. Special development programmes supported activities of project teams performing key business initiatives for mBank.

Apart from specialised tailor-made training programmes run by experienced Polish and foreign experts (e.g. IESE, DC Gardner), the plans for 2014 also included a number of activities performed internally. It was a consistent continuation of activities started in previous years under the mBank Group’s Strategy whose purpose is to fully use the knowledge and skills in the organisation.

The management staff were invited to take part in a development project designed by a consortium of training companies. The programme was adapted to the current challenges faced by the organisation at every management level, adequately to the diversified level of experience in team management. It focused on improving skills of development work with a subordinate team. The programme will be continued in 2015.

Our people make the difference

In 2014, the Bank organised the third edition of the "Our People Make the Difference" development programme. For the first time all the subsidiaries of mBank Group were invited to the programme. The programme directly supports development of organisation culture based on the following values - client-centricity, looking ahead, simplifying, commitment and professionalism.  The purpose of the programme is an integration of the Group employees as regards the values, forming a team and key attitudes for achievement of strategic goals of the organisation. In 2014, out of all candidates put up by the Bank employees, 28 persons were awarded.

The Young Talents Programme

The Young Talents Programme, started 4 years ago, is mBank’s response to the current and future needs of the organisation and expectations of candidates – students and graduates.

The programme is a part of mBank Group’s strategy of creating the image of an attractive employer in the group of students and graduates. The purpose of the programme is to acquire talented people entering the job market and prepare them to take up independent tasks at the Bank. Consequently, it facilitates the access to the entry-level posts for the candidates, which optimises the recruitment process and increases the importance of internal recruitment.

The Young Talents Programme consisting of internships and traineeships is addressed to students and graduates who intend to work in the banking sector in the future. The programme participants acquire practical skills and knowledge and obtain ongoing support of their supervisor. Moreover, interns and trainees work under an employment contract and have access to employee benefits.

The Young Talents Programme consists of two programmes, which interpenetrate and complement each other. These include:

  • Traineeship programme, consisting of traineeships conducted with a flexible course, so that trainees may easily combine work and studies or other obligations. Owing to the traineeship programme the participants can become familiar with one area of the Bank’s operations. In 2014, 89 students and graduates participated in the traineeship programme at the Bank.
  • Internship programme of mBank is addressed to people who are open, committed and full of enthusiasm, who gained previous experience as trainees or as members of students’ scientific associations and student organisations. Cooperation within the internship lasts from 9 to 12 months and the interns work full-time. The internships in Łódź and Warsaw are conducted on a rotational basis, which makes it possible for an intern to become familiar with several areas of the Bank - interns have the opportunity to support three organisational units. Candidates applying for an internship choose one profile determining the leading competence during the internship. In 2014 internships of an analytical, business, legal, business and investment, HR as well as business and marketing profiles were introduced under which cooperation with 15 interns was established. In addition, in 2014, all the interns who completed the previous editions of the internship programme conducted in 2013 found employment with the Bank. 

13.3. mBank Group’s incentive system

The incentive system of mBank is based on the remuneration policy and intangible elements (e.g. possibility of career development). The incentive system plays a key role in developing corporate culture and builds a competitive advantage by acquiring and retaining competent employees.

The remuneration policy at mBank covers both the base salary (fixed component) as well as the variable part depending on the objectives achieved by the whole organisation and by individual employees.

In 2014, incentive programmes both for the Management Board Members and Key Managers were implemented at mBank Group.

Incentive Programme for the Management Board Members of the Bank

On March 14, 2008, the Ordinary General Meeting of mBank adopted an incentive programme for the Management Board Members of mBank.

Under the programme, the Management Board Members of the Bank have the right to take up bonds with pre-emptive right to take up shares of mBank and, as originally planned, to take up shares of Commerzbank AG. In 2010, the programme was changed in the part concerning shares of Commerzbank, so that the Management Board Members may obtain the right to receive a cash equivalent corresponding to the value of the shares of Commerzbank calculated on the basis of the average share price on the date when the right to receive the equivalent originated.

All the rights under payments settled in cash equivalent based on shares of Commerzbank and all the rights under payments settled in mBank shares have already been granted. Payments are settled in three equal deferred tranches and the last settlements of the programme are scheduled for 2015.

The bonds may be acquired by the Management Board Members over the years 2010 – 2018, provided that their employment continues.

On December 7, 2012, the Supervisory Board decided to replace the 2008 incentive programme with a new incentive programme. Under the new programme, the Management Board Members of the Bank have the right to receive a bonus, including a “non-cash bonus”, paid in the Bank’s shares, including phantom shares (i.e. virtual shares).

The non-cash bonus, under which the Management Board Members are eligible to take up bonds with pre-emptive right to take up shares has been granted under the programme for the years 2012-2013. The right to take up bonds can be exercised in three equal deferred annual tranches. The terms of the entitlement and the amount of the outstanding deferred tranche under the granted non-cash bonus depend on assessment of the financial position of the Bank by the Remuneration Committee and on appraisal of the performance of a Management Board Member over a time horizon which is longer than one financial year.

The bonds may be acquired by the eligible people over the years 2010 – 2018.

On March 31, 2014, the Supervisory Board acting in line with the recommendation of the Remuneration Committee approved the mBank S.A. Incentive Programme Rules which replaced the mBank S.A. Incentive Programme Rules of December 7, 2012.

Under the programme, the Management Board Members of the Bank are eligible to receive a bonus, including a non-cash bonus paid in Bank shares, including phantom shares.

The basis of the acquisition of the right to receive a bonus and of the calculation of the bonus amount for a financial year includes:

  • net return on equity (net ROE) of mBank Group;
  • monthly remuneration of the Management Board Memeber at December 31, of the financial year for which the bonus is to be awarded.

One part of the base bonus is the equivalent of 50% of the base amount calculated depending on the ROE. As the remaining 50% of the base amount, the Remuneration Committee of the Supervisory Board may award the other part of the bonus if it decides that the Management Board Member has achieved the annual/multi-annual business development target. The decision whether to award the other part of the bonus is made at the sole discretion of the Remuneration Committee of the Supervisory Board, which uses its own judgment to confirm whether the MbO are achieved, taking into account the situation on the financial markets in the previous financial periods.

The two parts of the bonus constitute the base bonus of the Management Board Member for the financial year. 40% of the base bonus is not deferred and is paid in the year when it is determined, as follows: 50% in cash and 50% in Bank shares, or bonds with a pre-emptive right to take up shares, or phantom shares.

The remaining 60% of the base bonus is deferred and paid in three equal tranches in three subsequent years after the year when the base bonus is determined, as follows: 50% of each deferred tranche in cash and 50% of each deferred tranche in Bank shares, or bonds with a pre-emptive right to take up shares, or phantom shares.

The Supervisory Board acting on the basis of a recommendation of the Remuneration Committee of the Supervisory Board may decide to withhold the full amount or to reduce the amount of the deferred tranche depending on later assessment of the performance of the Management Board Member in a time horizon longer than one financial year, i.e., for a period of at least 3 years, taking into account the Bank’s business cycle as well as the risk inherent in the business of the Bank but only if the action or omission of the Management Board Member had a direct and negative impact on the financial results and the market position of the Bank in the period of the assessment, and only if at least one of the elements covered by the score card is not achieved.

The Remuneration Committee of the Supervisory Board may decide to withhold the full amount or to reduce the amount of the non-deferred and deferred bonus for the financial year, including the deferred tranches not yet paid, in cases referred to in Article 142.1 of the Banking Law Act. Withholding the full amount or reducing the amount of a non-deferred and deferred bonus or any deferred tranche by the Remuneration Committee of the Supervisory Board may also apply to a deferred and non-deferred bonus, including a deferred tranche not paid to a Manager following the expiration or termination of the contract.

Employee Programme for the Key Staff of mBank Group

On October 27, 2008, the Extraordinary General Meeting of the Bank adopted an incentive programme for the key staff of mBank Group. In 2010, the Management Board of the Bank decided to launch the programme and approved the list of programme participants for Tranche III. Within Tranche III, 13,000 options were granted. In 2011, within Tranche IV and V of the programme, 20,000 options and 19,990 options were granted, respectively. The rights started to be exercised in 2012 for Tranche III, in 2013 for Tranche IV, and the process will last until December 31, 2019. The rights under Tranche V may be exercised after meeting specific conditions concerning the acquisition of rights in the period from May 1, 2014 to December 31, 2019. The conditions for acquiring the rights refer to:

  • Being in an employment relationship throughout the term of the Tranche.
  • Achieving an economic ratio of mBank Group specified by the Management Board.
  • Obtaining a specific annual appraisal of the programme participant in each year of the Tranche.

In 2011, the programme was suspended and the remaining tranches were not activated.

On April 11, 2013, the Extraordinary General Meeting of the Bank adopted a resolution concerning a new incentive programme for key staff of mBank Group, which replaced the 2008 incentive programme; however, for persons who acquired bonds or were granted the right to acquire bonds, the programme will be carried out under the existing principles.

The aim of the programme is to ensure growth of the Company’s shares value by linking the interest of the key staff of mBank Group with the interest of the Company and its shareholders and implementing variable components of remuneration of persons holding managerial positions in the Group in accordance with the Resolution of the Polish Financial Supervision Authority.

The bonds may be acquired by the eligible persons within the duration of the programme but not later than December 31, 2019. The Management Board of the Bank/the Supervisory Board of a subsidiary where the Program is carried out may decide to suspend the programme in whole or to reduce the number of bonds or the number of bonds deferred in a given tranche for an eligible person in justified cases.

On March 31, 2014, the mBank Supervisory Board acting in line with the recommendation of the Remuneration Committee approved a resolution amending the employee programme rules, which replaced the 2013 employee incentive programme for key staff of the mBank Group; however, for persons who acquired bonds or were granted the right to acquire bonds in Tranche III, IV, V or VI, the programme will be carried out under the existing principles.

The aim of the programme is to ensure growth of the Company’s shares value by linking the interest of the key staff of mBank Group with the interest of the Company and its shareholders and implementing an mBank Group policy of variable components of remuneration of persons holding managerial positions in mBank Group.

Starting with Tranche VII, the right to acquire bonds granted to an eligible person will be divided into four parts exercisable as follows: one part – non-deferred bonds representing 50% of 60% of the discretionary bonus amount granted for the financial year in the year when the right was determined, and then subsequent three equal parts – deferred bonds representing 50% of 40% of the discretionary bonus amount granted for the financial year on the lapse of 12, 24, and 36 months after the date that the right was granted, in accordance with internal regulations of mBank Group governing the rules of variable remuneration for mBank risk-takers.

The Management Board of the Bank/the Supervisory Board of a subsidiary may decide to suspend the programme in whole or to reduce the number of non-deferred or deferred bonds in a given tranche for an eligible person in cases referred to in Article 142.1 of the Banking Law Act, i.e., occurrence or risk of a balance-sheet loss, risk of insolvency or bankruptcy, conditions laid down in agreements with programme participants under which work or other services are provided to the Bank and the subsidiaries.

Detailed information on the incentive programmes is presented in Note 44 to the mBank S.A. Financial Statements for 2014 under the International Financial Reporting Standards.

13.4. MbO (Management by Objectives) - planning and appraisal system

In the current economic environment the basis for a strong and stable growth as well as a competitive advantage is an effective and efficient Organisation Management System. In 2011 mBank implemented a fully developed, established and, additionally, very flexible System of Management by Objectives (MbO), which in 2014 covered not only mBank employees, but also employees of all the key subsidiaries of mBank Group.

On the basis of more than 4 years of experience, at the end of 2014 the process of setting and cascading objectives for 2015, both in mBank and in selected Group subsidiaries started — strong emphasis was placed on solidarity and integration objectives driving cooperation within the entire mBank Group. It is a long-term process which will, in effect, provide mBank Group with a lasting competitive advantage and a tool which supports its long-term strategy on an ongoing basis.

Knowledge of strategic goals will allow mBank Group to focus employees' involvement on the most important issues, improving their effectiveness and saving time.

The MbO system has the following functions in the organisation:

  • It translates directly into mBank's and mBank Group’s performance by imposing discipline and involving the entire organisation in the achievement of results,
  • It forms a direct communication platform which enables sharing of information on the role and involvement of an individual employee in developing the organisation and achieving the strategic goals of mBank.