2012 Registration document and annual financial report - BNP Paribas

4CONSOLIDATEDFINANCIAL STATEMENTS - YEAR ENDED 31 DECEMBER 2012Notes to the financial statements47.e SHARE-BASED PAYMENTSShare-based loyalty, compensation andincentive schemesBNP Paribas has set up several share-based payment schemes for certainemployees:■ a Global Share-Based Incentive Plan including:■■performance shares plans,stock subscription or purchase option plans;■ deferred share price-linked, cash-settled long term compensationplans, mainly for employees whose activities are likely to have animpact on the Group’s risk exposure.Global Share-Based Incentive PlanUntil 2005, various stock option plans were granted to Group employeesby BNP Paribas and BNL, under successive authorisations given byShareholders’ Meetings.In 2006, BNP Paribas set up a Global Share-Based Incentive Plan for someGroup employees, including stock options and performance share awards.The aim of the Plan was to actively involve various categories of managersin creating value for the Group, and thereby encouraging the convergenceof their interests with those of the Group’s shareholders. The managersselected for these plans represent the Group’s best talent, including thenext generation of leaders: senior managers, managers in key positions,line managers and technical experts, high-potential managers, highperformingyoung managers with good career development prospects,and major contributors to the Group’s results.The option exercise price under these plans is determined at the time ofissuance and no discount is offered. Since the 2005 plan, the life of theoptions granted has been reduced to 8 years.Until 2008, the vesting period for performance share plans was 2 or 4years depending on the case. Performance shares awarded since 2009vest after a period of 3 or 4 years, depending on the case and provided theemployee is still a member of the Group. The compulsory holding periodfor performance shares is two years for French employees.Since 2010, the conditional portion granted is set at 100% of the totalaward for members of the BNP Paribas Group Executive Committee andsenior managers and 20% for other beneficiaries.The performance condition for the contingent portion of performanceshares awarded up to 2011 is based on earnings per share.In 2012, only performance shares were awarded. The performancecondition has been revised and is now similar to the one used in the pastfor stock option plans, in other words, performance of the BNP Paribasshare relative to the Dow Jones Euro Stoxx Bank index.Under stock option plans set up between 2003 and 2011, the performancecondition was not fully met on six of twenty-seven occasions and theadjustments described above were therefore implemented. Underperformance share plans awarded since 2009, the performance conditionwas not met on one of seven occasions and the relevant contingentportion therefore lapsed.All unexpired plans settle in subscription or purchase of BNP Paribasshares.Deferred share price-linked, cash-settledcompensation plansAs part of the Group’s variable remuneration policy, deferred annualcompensation plans offered to certain high-performing employees or setup pursuant to special regulatory frameworks may entitle beneficiariesto variable compensation settled in cash but linked to the share price,payable over several years.As of 2009, variable compensation for employees, subject tospecial regulatory frameworks.Since the publication of the Decree by the French ministry of finance on13 December 2010, the variable compensation plan applies to Groupemployees performing activities that may have a material impact onthe Group’s risk profile. The scope of application was more restricted in2009, as it primarily concerned trading staff.Under these plans, payment is deferred over time and is contingent onthe performance achieved by the business lines, core businesses andGroup.Sums are paid mostly in cash and are linked to the increase or decreasein the BNP Paribas share price. In addition, since 2011, in accordancewith the Decree of 13 December 2010, some of the variable compensationgranted over the year in respect of the performance of the previousyear will also be indexed to the BNP Paribas share price and paid tobeneficiaries during the year of attribution.Deferred variable compensation for other Group employeesSums due under the annual deferred compensation plans for highperformingemployees are paid all or part in cash and are linked to theincrease or decrease in the BNP Paribas share price.1722012 Registration document and annual financial report - BNP PARIBAS