Incentive programs

Variable incentives aim to remunerate achievements by directly linking pay to performance outcomes in the short and long term. 

To strengthen the alignment of shareholders’ interest and the interests of management and employees, performance measurement reflects the actual results of the Company overall, the business unit of reference and, of course, the individual.

Executive Incentive System

The annual Sustainable Performance Award System provides for the definition of a target bonus opportunity evaluated at the end of each performance year on the basis of an assessment of achieved results with regards to sustainable group profitability and performance objectives.

A Group Sustainable Profit Condition is applied to the bonus opportunity level, establishing a strong direct link between Group-wide risk-adjusted & cost-of-capital-adjusted profitability and reward levels.

A multi-perspective Performance Matrix Assessment defines operational & sustainability performance objectives for each role. Both internal absolute goals and relative performance based on peers comparison are evaluated to reward the capped maximum bonus only in case of over-performing peers on risk-adjusted indicators, such as Economic Profit and Risk Weighted Assets, as appropriate.

To align incentives with long-term company results, a significant portion of the payout is deferred and phased over a 3 year period, subject to future performance.

Group Long Term Incentive Plan

To further reinforce alignment of shareholder and Senior Management interests over time, our total compensation approach is completed by long term incentives which represent an additional tool to appropriately balance short and long term performance reward and which may be cash-settled or equity-based, as the market, regulatory and organizational context suggest.

The final payout of long-term incentives is subordinate to value creation in a medium and long term perspective, remunerating performance achievements over time. In order to remunerate the achievement of long-term goals not incentivised under annual incentive systems, performance conditions linked to long term plans are based on multiple-year targets including Total Shareholders Return (TSR), as well as additional internal or market-related performance metrics.

Employee Share Ownership Plan – Let’s Share

UniCredit affirms the value of share ownership as a valuable tool for enabling the engagement, affiliation and alignment of interests between shareholders, management and the general employee population. The Employee Share Ownership Plan rewards the continued support and commitment of our people throughout the organization who can make a difference by contributing to our success with day by day decisions, actions, efforts and behaviors.

In October 2008 the Let’s Share Plan was launched in 5 countries (Austria, Bulgaria, Germany, Hungary & Italy) providing eligible employees the opportunity to buy UniCredit shares at a discount and also to get additional free shares, the entitlement to which is subject to the active employment status of the participant at the end of a 3-year holding period.

The Plan will be repeated in 2009 with the goal to consider other countries for participation, taking into account legal, fiscal & operational due diligence considerations.

By joining the Plan, participants will buy UniCredit ordinary shares (called “Investment Shares”), through their contributions between January and December 2009. The Plan is featuring specific advantages compared to buying shares normally on the market; more in particular, through the participation in the Plan, UniCredit will grant to participants:

• one free share (called a ‘Discount Share’) for each 20 Investment Shares they buy through the Plan;

• one further free share (called a ‘Matching Share’) for every 5 Investment and Discount Shares acquired through the Plan.

All free shares (Discount and Matching Share) will be restricted from being sold during a holding period of 3 years and the Matching Shares are subject to forfeiture if participants sell their Investment Shares, or if they leave employment with a Group Company, before the end of the holding period.

Documents:

Information on the assignment of financial instruments to corporate officers, employees and collaborators pursuant to the provisions set forth in Article 114-bis of Legislative Decree no. 58 of February 24,1998, as well as to the provisions of the Issuer Regulation adopted by Consob with resolution no. 11971 of May 14, 1999