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The Supervisory Board comprises eleven members elected at the General Meeting as shareholders’ representatives and six employees’ representatives delegated by the Employees’ Council. Here there is a deviation from Rule 52 of the Austrian Code of Corporate Governance 2006, which stipulates a maximum of ten Supervisory Board members in addition to staff representatives. This deviation is explained, under the “comply or explain” principle, by reference to an agreement between the shareholders.
The internal rules for the Supervisory Board lay down its responsibilities and competencies in overseeing the company. Four committees assist the plenum in carrying out its duties: the audit committee, the credit committee, the strategy and nominations committee, and the Management Board affairs committee (compensation committee).
The audit committee is responsible for the audit, and the preparation of the adoption, of the financial statements and consolidated financial statements, the proposal for the appropriation of profits and the management report (of the Group) and for matters related to the auditors.
The strategy and nominations committee prepares basic decisions for the Supervisory Board, in cooperation with the Management Board and, if required, using the services of experts. The strategy and nominations committee also submits proposals to the Supervisory Board for appointments to the Management Board when positions become vacant and it deals with issues of successor planning.
The Management Board affairs committee (compensation committee) is responsible for all matters relating to the relationship between the company and Management Board members, especially for matters relating to the compensation of Management Board members and for the contents of employment contracts with Management Board members. As in previous years, the remuneration of Management Board members is divided into fixed and performance-linked components in accordance with Rule 30. The performance bonus is linked to key performance indicators (e.g. divisional net profit, EVA, cost/income ratio, etc.) which are individually specified in a scorecard on an annual basis within the framework of UniCredit Group. The target bonus range is determined by external benchmarks. The bonuses paid depend on the degree to which targets are met. This system has been used since 2006. Previously the bonus was determined by a formula using the BA-CA Group’s consolidated net income as a key factor. For the term of the employment contract of a Management Board member, payments into a pension fund are made on the basis of a defined-contribution plan. In addition, cover is provided against disability risk, also via a pension fund. Employment contracts of Management Board members are concluded for a term of 3 years. If there are no reasonable grounds for removing a Management Board member, the contract must be paid in full. In addition there are severance payment arrangements based on the legal provisions applicable to the severance payment scheme for employees. In the case of a public takeover bid, there are no arrangements for the Management Board that deviate from the above.
The credit committee of the Supervisory Board is responsible for approving loans above a specified amount and for overseeing Bank Austria Creditanstalt’s risk position. As part of its responsibility for overseeing risk management, the credit committee discusses the structure of the loan portfolio and principles of risk policy, and reports to the Supervisory Board.
Under the general clause contained in Rule 53 of the Austrian Corporate Governance Code, a Supervisory Board member is deemed to be independent if that member does not have any business or personal relations with the company or its Management Board that constitute a material conflict of interest and are therefore suited to influence the behaviour of the member. At its meeting on 3 May 2006, the Supervisory Board, on the basis of this general clause, defined the criteria of independence; they have been published on the company’s website. In the Supervisory Board’s view, if two of the elected members of the Supervisory Board and of the committees are independent, this is a sufficient number. Of the 11 elected members of the Supervisory Board, Karl Samstag, a former Chairman of the Management Board of Bank Austria Creditanstalt AG, does not meet the independence criteria. Seven members of the Supervisory Board hold leading positions at the parent company UniCredit.
The compensation schedule for Supervisory Board members provides that the Chairman of the Supervisory Board receives double, and the Deputy Chairman one and a half times, the compensation received by a Supervisory Board member. Members of the credit committee receive additional compensation.
A list of the members of the Supervisory Board and of the Supervisory Board committees is given at Boards.