Spanish Banks "A look at management remuneration in 2025" Cerezo

Research evidence excerpt

Spanish Banks "A look at management remuneration in 2025" Cerezo

ely, respectively, with this number potentially

being lower (even zero) or higher (with limits) depending on the level of achievement of

targets. The percentage of financial targets linked to variable remuneration range

between 45% (CABK) to 100% (BKT) for short term plans and 55% (UNI) to 100% (also

BKT) for long term, with averages around 70% and 80% respectively. Financial targets

mainly include ROTE/earnings, C/I, CET1 or NPAs for ST plans and metrics like TSR

(absolute/relative), ROTE or CET1 for LT plans. In turn, non-financial targets are mostly

related with customer satisfaction, market share and ESG metrics for short term plans,

whereas long term targets are mostly related with ESG metrics (financial inclusion,

gender equality or decarbonization). All Spanish banks met or exceeded their short term

remuneration targets last year.

How/when is that variable remuneration paid?

When looking at how and when the variable remuneration is paid (rather than accrued),

we'd flag two trends. On short term variable remuneration plans, payments are done

within the next 3-6 years after the accrual year, with the first year concentrating the bulk

of that remuneration (c40-65% of the total) and the remaining part split equally

through the rest of the period. On long-term variable remuneration plans, payments

normally start around 2-3 years after the accrual year as once they start, payments are

carried out through a 3 or 6 year period, so deferral is longer than in the case of short-

term variable remuneration (executives receive this remuneration in full 6-8 years after

the accrual year). Regarding the mix, we observe differences by bank and also by type of