45. Transactions with related entities

mBank S.A. is the parent entity of mBank S.A. Group and Commerzbank AG is the ultimate parent of the Group as well as the direct parent of mBank S.A.

All transactions between the Bank and related entities were typical and routine transactions concluded on terms, which not differ from arm’s length terms, and their nature, terms and conditions resulted from the current operating activities conducted by the Bank. Transactions concluded with related entities as a part of regular operating activities include loans, deposits and foreign currency transactions.

The Group provides standard financial services to the Bank’s key management personnel, Members of the Supervisory Board of the Bank and close members of their families, which comprise i.e.: maintaining bank accounts, taking deposits, granting loans or other financial services. In the Bank’s opinion, these transactions are concluded on market terms and conditions.

Pursuant the Banking Law, the extension of a loan, cash advance, bank guarantee or other guarantee to the Members of the Management Board and Supervisory Board of the Bank, persons holding managerial positions at the Bank as well as at entities related financially or organisationally therewith, is governed by the By-Laws adopted by the Supervisory Board of mBank S.A.

The By-Laws set out detailed rules and debt limits for loans, cash advances, bank guarantees, and other guarantees in relation to aforementioned persons and entities, which are consistent with the Bank's internal regulations defining the competences of granting credit decisions concerning retail and corporate clients of the Bank. A decision to grant a loan, cash advances, bank guarantee or other guarantee to a Member of the Management Board and Supervisory Board of the Bank, person holding managerial position at the Bank or an entity related financially or organisationally therewith in excess of the limits set by the Banking Law is taken by the resolution of the Management Board and by the resolution of the Supervisory Board.

The terms and conditions of such loans, cash advances, bank guarantees or other guarantees, including in particular those related to interest rates as well as fees and commissions, cannot be more advantageous than the terms and conditions offered by the Bank to its retail or corporate clients, respectively.

The table below presents the values of transactions between the Bank and companies of mBank Group and: Members of the Supervisory Board and the Management Board of mBank, key executive management of mBank, Members of the Supervisory Board and the Management Board of Commerzbank and other related persons and entities, as well as Commerzbank AG Group entities. The amounts of transactions include assets, liabilities and related costs and income as at 31 December 2014 and 31 December 2013 and for the respective periods then ended are as follows.

 

 
PLN (000's) Supervisory Board, Management Board and key management personnel of mBank S.A. as well as Supervisory Board and Management Board of Commerzbank AG Other related persons * Commerzbank AG
As at the end of the period 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013
Statement of Financial Position            
Assets 7 700 24 810 110 055 59 390 907 869 948 518
Liabilities 34 764 21 184 2 652 3 403 15 852 630 18 245 291
Income Statement            
Interest income 884 813 8 476 3 822 162 714 113 713
Interest expense( (910) (1 597) (73) (114) (332 127) (345 291)
Fee and commission income 328 85 70 38 - -
Fee and commission expense - - - - - -
Other operating inccome 629 7 26 781 3 378 320
Overhead costs, amortisation and other operating expenses (359) - (67) (70) (9 532) (9 022)
Contingent liabilities granted and received            
Liabilities granted 1 084 885 2 617 915 1 309 589 1 278 880
Liabilities received - - - - 836 870 717 528
prev next

Other related persons and entities include: close members of the family of Members of the Supervisory and the Management Board of mBank, key executive management of mBank, Members of the Supervisory Board and the Management Board of Commerzbank, entities controlled or jointly controlled by above mentioned persons and mBank’s subsidiaries not consolidated by acquisition method.

In 2014 and 2013 no provisions were created in connection with credits granted to related entities.

Management Board Remuneration

At the end of 2014, the Supervisory Board of mBank S.A. has been working in the seven person team with the following members:

1. Cezary Stypułkowski – President of the Management Board, Chief Executive Officer,

2. Lidia Jabłonowska-Luba – Vice-President of the Management Board, Chief Risk Officer,

3. Przemysław Gdański – Vice-President of the Management Board, Head of Corporate and Investment Banking,

4. Jörg Hessenmüller – Vice-President of the Management Board, Chief Financial Officer,

5. Hans-Dieter Kemler – Vice-President of the Management Board, Head of Financial Markets,

6. Cezary Kocik – Vice-President of the Management Board, Head of Retail Banking,

7. Jarosław Mastalerz – Vice-President of the Management Board, Head of Operations and IT.

Information on the salaries, bonuses and benefits paid and due to the Members of the Management Board of the Bank who were performing their functions at the end of 2014, as at 31 December 2014 and 31 December 2013, is presented below.

 

 
  Remuneration paid in 2014 (in PLN)
Basic salary Other benefits Bonus for 2013

Cash settlement of the
incentive program
based on Commerzbank
shares*

Cezary Stypułkowski 2 091 963 155 478 1 294 010 279 935
Lidia Jabłonowska-Luba 1 200 000 131 749 520 000 -
Przemysław Gdański 1 200 000 127 515 720 000 860 734
Joerg Hessenmueller 1 263 000 161 860 720 000 -
Hans-Dieter Kemler 1 217 190 372 506 600 000 891 308
Cezary Kocik 1 200 000 91 772 760 000 -
Jarosław Mastalerz 1 200 000 109 274 760 000 983 029
Total 9 372 153 1 150 154 5 374 010 3 015 006
prev next

* For Mr Przemysław Gdański, Mr Hans-Dieter Kemler and Mr Jarosław Mastalerz, the settlement relates to an incentive programme for members of the Management Board of 2008, in a part based on the shares of Commerzbank. In 2014, the listed Members of the Board received a cash equivalent for Commerzbank shares in settlement of the third tranche of the incentive programme for 2010 and the second tranche of the incentive programme for 2011. For Mr Cezary Stypułkowski, the settlement relates to deferred, based on the shares of Commerzbank part of the bonus for 2010.

Remuneration of the former Management Board Members paid in the year 2014.

 

 
  Remuneration paid in 2014 (in PLN)
Basic salary

Other benefits, payoff
and compensations

Bonus for 2013

Cash settlement of the
incentive program
based on Commerzbank
shares*

Remuneration of the former Management Board Members who ceased performing their functions in the year 2013
1. Wiesław Thor - - 248 800 -
Remuneration of the former Management Board Members who ceased performing their functions in the year 2012
1. Christian Rhino - - - 217 510
Remuneration of the former Management Board Members who ceased performing their functions in the year 2010
1. Mariusz Grendowicz - - - 91 491
  Total - - 248 800 309 001
prev next

* The settlement relates to an incentive programme for members of the Management Board of 2008, in a part based on the shares of Commerzbank. In 2014, eligible Members of the Board received: Mr Mariusz Grendowicz a cash equivalent for Commerzbank shares in settlement of the third tranche of the incentive programme for 2010; Mr Christian Rhino a cash equivalent for Commerzbank shares in settlement of the first tranche of the incentive programme of 2012.

In 2014, Mr. Wiesław Thor, who acted as Vice-President of the Bank until 11 April 2013, was paid bonus for 2013 in the amount of PLN 248 800 thousand.

Remuneration paid in the year 2013.

 

 
  Remuneration paid in 2013 (in PLN)
Basic salary Other benefits Bonus for 2012

Cash settlement of the
incentive program
based on Commerzbank
shares*

1. Cezary Stypułkowski 2 100 225 155 865 1 400 000 -
2. Lidia Jabłonowska-Luba 872 359 162 339 - -
3. Przemysław Gdański 1 200 000 130 807 800 000 78 635
4. Joerg Hessenmueller 1 263 000 161 693 620 000 -
5. Hans-Dieter Kemler 1 202 623 414 864 600 000 80 783
6. Cezary Kocik 1 200 000 91 802 700 000 -
7. Jarosław Mastalerz 1 200 000 111 943 800 000 90 294
  Total 9 038 207 1 229 313 4 920 000 249 712
prev next

* The settlement relates to an incentive programme for members of the Management Board in 2008, in a part based on the shares of Commerzbank. In 2013, eligible Members of the Board received a cash equivalent for Commerzbank shares in settlement of the third tranche of the incentive programme for 2009, the second tranche of the incentive programme for 2010 and the first tranche of the incentive programme for 2011.

Remuneration of the former Management Board Members paid in the year 2013.

 

 
  Remuneration paid in 2013 (in PLN)
Basic salary Other benefits, payoff and compensations Bonus for 2012 Cash settlement of the incentive program based on Commerzbank shares*
Remuneration of the former Management Board Members who ceased performing their functions in the year 2013
1. Wiesław Thor 488 346 1 535 023 1 000 000 291 128
Remuneration of the former Management Board Members who ceased performing their functions in the year 2012
1. Christian Rhino - - 249 315 -
Remuneration of the former Management Board Members who ceased performing their functions in the year 2010
1. Mariusz Grendowicz - - - 91 515
  Total 488 346 1 535 023 1 249 315 382 643
prev next

* The settlement relates to an incentive programme for members of the Bank Management Board in 2008, in a part based on the shares of Commerzbank. In 2013, entitled former Members of the Management Board received: Mr. Wiesław Thor - cash equivalent for Commerzbank shares in settlement of the third tranche of the incentive programme for 2009, the second and third tranche of the incentive programme for 2010 and the first, second and third tranche of the incentive programme for 2011; Mr. Mariusz Grendowicz - cash equivalent for Commerzbank shares in settlement of the second tranche of the incentive programme for 2010.

In 2013, Mr. Wiesław Thor, who acted as Vice-President of the Bank until 11 April 2013, was paid bonus for 2012 in the amount of PLN 1 000 000 thousand. In 2013, was also paid bonus for 2012 in amount of PLN 249 315 thousand for Mr. Christian Rhino who acted as the Member of the Board until 31 March 2012.

The total compensation of members of the Management Board consists of: basic salary, bonuses, termination payments of management agreement, prohibition of competitiveness payment, insurance costs, accommodation costs.

The above mentioned benefits are short-term employee benefits.

In accordance with the Bank's remuneration system in force, the members of the Management Board of the Bank may be eligible to receive bonuses for the year 2014, which would be paid out in 2015. As a result provision created for the cash bonus payment for the members of the Management Board for 2014 amounts to PLN 6 613 898 as of 31 December 2014. The final decision concerning the level of the bonus will be taken by the Remuneration Committee of the Supervisory Board by 30 March 2015.

In 2014 and 2013, the members of the Management Board of mBank S.A. did not receive compensation for their role as members of the management boards and supervisory boards of the Bank’s related companies.

The total amount of remuneration received in 2014 by Bank’s Management Board members was PLN 18 911 323 (2013: PLN 18 751 729).

Information on the rules of payment other component of remuneration (severance payment) for the members of the Management Board

From the date of appointment of the members of the Management Board for the new term, i.e. from the date of General Shareholders Meeting approving the financial results for the year 2012 all members of the Management Board, in case of cancellation the managers from the Management Board before the expiration of the term, have got the severance payment in the amount which depends on years spent with the organization and is calculated as follows: (i) 4 monthly salaries if the member held his post for a period shorter than 1 year, (ii) 8 monthly salaries if the member held his position for more than 1 year but less than 2 years and (iii) 12 monthly salaries if the member held his post for more than 2 but less than 5 years, (iv) 18 monthly salaries if the member held his post for more than 5 years. If not appointed for next term of the office, the Management Board members are entitled to severance in the amount of 12 monthly salaries.

Supervisory Board Compensation

On 31 March 2014, the XXVII Ordinary General Meeting of mBank S.A. appointed the 12-member Supervisory Board of mBank S.A. for a joint term of three years, with the following members:

1. Maciej Leśny – Chairman of the Supervisory Board, Chairman of the Executive Committee, Member of the Risk Committee, Member of the Audit Committee, Member of the Remuneration Committee,

2. Martin Zielke - Deputy Chairman of the Supervisory Board, Member of the Remuneration Committee,

3. Andre Carls – Member of the Supervisory Board, Chairman of the Remuneration Committee, Member of the Executive Committee, Member of the Audit Committee,

4. Stephan Engels - Member of the Supervisory Board, Chairman of the Audit Committee,

5. Dr Stefan Schmittman - Member of the Supervisory Board, Chairmen of the Risk Committee,

6. Martin Blessing - Member of the Supervisory Board, Member of the Executive Committee,

7. Thorsten Kanzler- Member of the Supervisory Board, Member of the Risk Committee,

8. Teresa Mokrysz – Member of the Supervisory Board, Member of the Executive Committee,

9. Waldemar Stawski – Member of the Supervisory Board, Member of the Audit Committee,

10. Jan Szomburg – Member of the Supervisory Board, Member of the Executive Committee,

11. Marek Wierzbowski – Member of the Supervisory Board, Member of the Remuneration Committee.

12. Wiesław Thor - Member of the Supervisory Board,

On 20 October 2014, Mr Maciej Leśny, Chairman of the Supervisory Board of mBank S.A., received from Mr Jan Szomburg, Member of the Supervisory Board of mBank S.A. and Member of the Executive Committee, a letter of resignation from his function as of 27 October 2014. The resignation is related with Mr Jan Szomburg being proposed for the post of a new advisory functions in the Commerzbank AG Group.
Under the Resolution from 27 October 2014, in place of Mr Jan Szomburg, the resigning Member of the Supervisory Board, on 28 October 2014 Mrs Agnieszka Słomka-Gołębiowska was appointed as a new Member of the Supervisory Board for the period until the end of the current term of the Supervisory Board. Mrs Agnieszka Słomka-Gołębiowska, was also posted as a Member of the Risk Committee of the Supervisory Board of mBank S.A.

Information about the Supervisory Board members’ salaries, bonuses and benefits paid as at 31 December 2014 and 31 December 2013 is presented below.

 

 

Remuneration paid in 2014 (in PLN)

Remuneration paid in 2013 (in PLN)

Maciej Leśny 366 006 365 832
Martin Zielke - -
Andre Carls 252 000 252 000
Stephan Engels 216 000 216 000
Stefan Schmittmann - -
Martin Blessing - -
Thorsten Kanzler 216 000 216 000
Teresa Mokrysz 220 202 220 054
Agnieszka Słomka-Gołębiowska 54 906 -
Waldemar Stawski 221 406 221 231
Wiesław Thor 138 522 109 680
Marek Wierzbowski 198 000 144 000
Jan Szomburg* 184 500 221 231
Dirk Wilhelm Szchuh** 54 000 216 000
Ulrich Sieber*** - 180 500
Total 2 121 542 2 370 528
prev next

* On 27 October 2014, Mr Jan Szomburg resigned from the office.

** Mr Dirk Wilhelm Schuh posted the office until 31 March 2014.

*** On 30 November 2013, Mr Ulrich Sieber resigned from the office.

In accordance with the wording of paragraph 11(j) of the By-laws of mBank S.A. the General Meeting determines remuneration for members of the Supervisory Board in a resolution. Remuneration of the Management Board members is determined by the Supervisory Board (paragraph 22.1(e) of the By-laws of mBank S.A.

The total compensation of Members of the Supervisory Board, the Management Board and other key executive management of the Bank that perform their duties in 2014 amounted to PLN 26 219 666 (2013: PLN 25 275 930).

Information regarding proprietary position in Bank shares by Members of the Management Board and by Members of the Supervisory Board

As at 31 December 2014, the Bank shares were held by three Members of the Management Board: Mr Cezary Stypułkowski – 2 034 shares, Mr Przemysław Gdański – 2 000 shares and Mr Hans-Dieter Kemler – 1 000 shares.

As at 31 December 2013, the Bank shares were held by one Member of the Management Board, Mr. Przemysław Gdański – 1 000 shares.

As at 31 December 2014, the Bank shares were held by one Member of the Supervisory Board of mBank S.A., Mr. Wiesław Thor – 3 000 shares.

As at 31 December 2013, the Bank shares were held by one Member of the Supervisory Board of mBank S.A., Mr. Wiesław Thor – 6 463 shares.

As at 31 December 2014 and 31 December 2013, the Members of the Supervisory Board of the Bank had no Bank’s shares.