Overview of our Corporate Governance - November 2019 - Banco Santander SA
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Overview of our Corporate Governance November 2019
Important Information
Non-IFRS and alternative performance measures (6) our ability to integrate successfully our acquisitions and the challenges inherent in diverting management’s focus and resources from other strategic
opportunities and from operational matters while we integrate these acquisitions; and (7) changes in our ability to access liquidity and funding on acceptable
In addition to the financial information prepared in accordance with International Financial Reporting Standards (“IFRS”) and derived from our financial
terms, including as a result of changes in our credit spreads or a downgrade in our credit ratings or those of our more significant subsidiaries. Numerous factors
statements, this presentation contains certain financial measures that constitute alternative performance measures (“APMs”) as defined in the Guidelines
could affect the future results of Santander and could result in those results deviating materially from those anticipated in the forward-looking statements.
on Alternative Performance Measures issued by the European Securities and Markets Authority (ESMA) on 5 October 2015 (ESMA/2015/1415en) and other
Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
non-IFRS measures (“Non-IFRS Measures”). The financial measures contained in this presentation that qualify as APMs and non-IFRS measures have been
calculated using the financial information from Santander Group but are not defined or detailed in the applicable financial reporting framework and have Forward-looking statements speak only as of the date of this presentation and are based on the knowledge, information available and views taken on such
neither been audited nor reviewed by our auditors. We use these APMs and non-IFRS measures when planning, monitoring and evaluating our performance. date; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking
We consider these APMs and non-IFRS measures to be useful metrics for management and investors to facilitate operating performance comparisons from statement, whether as a result of new information, future events or otherwise.
period to period. While we believe that these APMs and non-IFRS measures are useful in evaluating our business, this information should be considered as
supplemental in nature and is not meant as a substitute of IFRS measures. In addition, other companies, including companies in our industry, may calculate No offer
or use such measures differently, which reduces their usefulness as comparative measures. For further details of the APMs and Non-IFRS Measures used,
including its definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where
statements prepared under IFRS, please see 2019 3Q Financial Report, published as Relevant Fact on 30 October 2019 and 2018 Annual Financial Report, relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person’s
filed with the Comisión Nacional del Mercado de Valores of Spain (CNMV) on 28 February 2019. These documents are available on Santander’s website own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having
(www.santander.com). taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in this
presentation. No investment activity should be undertaken on the basis of the information contained in this presentation. In making this presentation available
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments
included businesses and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends whatsoever.
shown for our geographic segments may differ materially from those of such subsidiaries.
Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering
Forward-looking statements of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom.
Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition
Santander cautions that this presentation contains statements that constitute “forward-looking statements” within the meaning of the U.S. Private Securities
on financial promotion in the U.K. Financial Services and Markets Act 2000.
Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expect”, “project”, “anticipate”, “should”, “intend”, “probability”,
“risk”, “VaR”, “RoRAC”, “RoRWA”, “TNAV”, “target”, “goal”, “objective”, “estimate”, “future” and similar expressions. These forward-looking statements are found Historical performance is not indicative of future results
in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic
performance and our shareholder remuneration policy. While these forward-looking statements represent our judgment and future expectations concerning Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including
the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially earnings per share) for any period will necessarily match or exceed those of any prior period. Nothing in this presentation should be construed as a profit
from our expectations. The following important factors, in addition to those discussed elsewhere in this presentation, could affect our future results and could forecast.
cause outcomes to differ materially from those anticipated in any forward-looking statement: (1) general economic or industry conditions in areas in which
Third Party Information
we have significant business activities or investments, including a worsening of the economic environment, increasing in the volatility of the capital markets,
inflation or deflation, and changes in demographics, consumer spending, investment or saving habits; (2) exposure to various types of market risks, principally In particular, regarding the data provided by third parties, neither Santander, nor any of its administrators, directors or employees, either explicitly or implicitly,
including interest rate risk, foreign exchange rate risk, equity price risk and risks associated with the replacement of benchmark indices; (3) potential losses guarantees that these contents are exact, accurate, comprehensive or complete, nor are they obliged to keep them updated, nor to correct them in the case
associated with prepayment of our loan and investment portfolio, declines in the value of collateral securing our loan portfolio, and counterparty risk; (4) that any deficiency, error or omission were to be detected. Moreover, in reproducing these contents in by any means, Santander may introduce any changes it
political stability in Spain, the UK, other European countries, Latin America and the US (5) changes in laws, regulations or taxes, including changes in regulatory deems suitable, may omit partially or completely any of the elements of this presentation, and in case of any deviation between such a version and this one,
capital and liquidity requirements, including as a result of the UK exiting the European Union and increased regulation in light of the global financial crisis; Santander assumes no liability for any discrepancy.
1 Santander at a glance.................... ... 4
2 Corporate governance...................... 12
Index 3 Remuneration policy......................... 22
4 Risk management & control......... 27
5 Responsible banking......................... 31
6 Annexes..................................................... 39
Page 3
1 Santander
at a glance
Page 4
1. Santander at a glance
1.1 The Our purpose Our stakeholders
Santander To help people and businesses prosper. By building loyalty, and acting responsibly, we generate
value for all of them.
vision ,0
1 7
m
n
Our aim as a bank
1
4
20
14
Our success is based on one
purpose, one aim and one way of To be the best open financial services People Customers
platform, by acting responsibly and A more ...earning customer
doing things. We are creating a
earning the lasting loyalty of our committed loyalty drives quality
more responsible bank. people, customers, shareholders and team... results…
communities.
18
20 n
Our how
4m
in
eople helped
Everything we do should be Simple, Communities Shareholders
Personal and Fair. ...leading to
…and supporting our
stronger financial
np
communities
results…
m
2.5
Data as at 30 September 2019. Page 5
1. Santander at a glance
1.2 Balanced Primary segments – Operating areas
Our distribution in 3 regions allows for a better and faster execution
Group functions and Corporate
Centre activities
diversification
throughout the Group.
Our corporate centre supports and drives our local
Europe banks and global businesses.
Spain, SCF2 ,
Portugal, Poland
and United
Structure based on 3 geographic Kingdom
Audit Risk
segments (with 10 core markets)
plus Santander Global Platform,
North
supported by global business America Communication,
Corporate
segments, the corporate centre United Compliance Universities
Marketing and
States and
and other functions servicing the Mexico Research
South
whole Group. America Santander
General
Brazil, Chile, Global Secretariat and
Argentina, Uruguay, Platform1 Costs
Human
Andean region
Resources
Secondary segments – Global businesses Technology Financial
Our global businesses bring profit-making capacity and competitive and Accounting Finance
advantage to our local banks. Operations & Control
Retail Banking
Santander Corporate & Investment Banking Exec.
Strategy,
Chairman´s
Santander Wealth Management & Insurance Corporate Dev.
Office &
Santander Global Platform1 & Financial
Responsible
Planning
1. Creation of Santander Global Platform (SGP) to accelerate progress towards the best open financial services platform. Our digital
Banking
services are consolidated under a single unit - Openbank and Open Digital Services (ODS) - Global Payments Services - Digital Assets.
2. Santander Consumer Finance (SCF) with presence in Austria, Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Page 6
Norway, Poland, Portugal, Spain, Sweden, Switzerland and the UK.
1. Santander at a glance
Group Subsidiaries
1.3 Group
subsidiary Board
of directors
Presence of Grupo Santander
governance Board
of directors
in the subsidiaries’ boards of
directors establishing guidelines
for board dynamics and
model Group
executive
effectiveness.
chairman1
Our model of autonomous
subsidiaries, in liquidity and
Group CEO Reporting of the CEO/country
capital, limits the possibility of CEO / heads to the Group CEO/regional
contagion between the Group's Country head heads and Group executive
Regional
heads2 committee.
units, reducing systemic risk.
Control, Control, Interaction between the
management management Group and subsidiaries control,
and business and business management and business
functions3 functions3 functions.
1. First executive.
2. Europe, North America and South America, reporting to Group CEO.
3. Internal Audit, Risk & Compliance, Finance, Financial Accounting & Control, IT & Operations, Human Resources, General Secretariat, Marketing, Communications, Strategy, Santander Corporate & Investment Banking,
Wealth Management & Insurance, Digital & Innovation and Global Platforms.
Page 7
1. Santander at a glance
1.4 Group – Consistent governance across the Group following the subsidiary governance model
subsidiary
interaction Best practices and Group A common set of corporate
talent sharing across the
frameworks and policies
whole Group and among
across the Group adapted to
subsidiaries is key to our
our local markets’ conditions.
A balanced Group – subsidiary success.
model adding value to the
sum of the parts. Multiple point of entry
structure that has been Enabling the identification of
demonstrated to be a key synergies and economies of
resilience instrument and is scale across the Group.
a result of our diversification
strategy.
Definition and implementation
Continuous collaboration
of new initiatives, both at
and day-to-day interaction
Group and local levels, to keep
between local and corporate
developing our management and
teams.
control model.
Subsidiaries
Page 8
1. Santander at a glance
Highlights 9M 2019
1.5 A unique 1 Scale
We have consistently delivered growth, profitability and strong
business
Our scale provides
potential for organic balance sheets.
growth.
Profitability and efficiency
model +
Underlying RoTE 11.86%
EPS EUR 0.202
Cost-to-income 46.9%
Best-in class efficiency
vs. peer average
Business Income statement
2
Santander is a retail bank with a
9M’19 Profit attributable to the parent EUR 3,732 mn
unique business model driven by model 2018 Profit attributable to the parent EUR 7,810 mn
3 strengths. Unique personal banking
relationships strengthen
Market capitalisation #1 bank
customer loyalty. EUR 62,094 mn in the Eurozone
by market cap
+ Solvency
Fully loaded CET1 11.30%
NPL 3.47%
3
Diversification Growth
Our geographic and business Loyal customers: +10%
Loyal customers 21.0 mn
diversification and our
Digital customers 36.2 mn
Digital customers: +20%
subsidiaries model make us Sep´19 vs. Sep´18
more resilient under adverse
circumstances.
Balance sheet
Loans and advances to customers
=
We have delivered predictable
EUR 916,003 mn
Customer deposits EUR 814,285 mn
Total assets EUR 1,517,885 mn
and profitable growth Data as at 30 September 2019. Page 9
1. Santander at a glance
1.6 Shareholders Shares
Shareholder
4,025,074 16,618,114,582
base
More than 4 million shareholders
worldwide support our strategy. 1.06% Board of
directors1
39.05%
Retail
shareholders
Rest
Americas Europe
of the world
20.13% 78.63% 1.24% 59.89%
Institutional
investors
1. Shares owned or represented by directors, including shares owned by Fundación
Botín (of which Mr Javier Botín is the chairman) and shares syndicated under the
Data as at October 2019. shareholders' agreement entered into by various persons linked to the Botín family.
Data as at October 2019.
Page 101. Santander at a glance
1.7 Share Santander Market cap vs. European banks index
performance
Increasing the gap vs. the
Eurozone bank index since
the Investor Day 2015.
100%
European banks
index
SAN Market cap Sept 2015 Oct 2019
relative performance
vs. European banks index +0% +19%
Note: Source: Bloomberg from 24-Sep-15 to 30-Oct-19.
European banks index: Stoxx Europe 600 Banks (SX7P). Relative performance of Santander Market capitalization vs. the European banks index performance. Page 112 Corporate
governance
Page 122. Corporate governance
2.1 As a Core strengths in our corporate governance
responsible
bank we have
clear, robust Diversified and
well-balanced
Effective engagement with our shareholders:
▲▲ Physical General Shareholders' Meetings,
Effective board of directors:
▲▲ Majority of independent directors.
Focus on responsible
business practices
governance
shareholder base. and attention to all
with online participation permitted. stakeholders' interests:
▲▲ Balanced, qualified and diverse
▲▲ High participation. composition in the boardroom. ▲▲Publicly communicated
responsible banking
AGM quorum ▲▲ Separate and complementary
targets.
roles of Chairman and CEO,
This is key for guaranteeing a
68.51% and leadership of our lead ▲▲Thematic responsible
sustainable business model over independent director. banking, sustainability
64.55% 2019
64.03% and culture committee
the long term. Best practices on ▲▲ Strong committee structure
in full coordination with
2018 The highest figure supporting the board.
robust governance are chanelled 2017 recorded in the Bank's the other committees.
recent history. ▲▲ Good long-standing practices in
to all subsidiaries. corporate governance embedded
▲▲ Commitment to quality of information. in our Board Regulations.
▲▲ Transparency of remuneration with
performance metrics aligned with
shareholder interest.
Page 132. Corporate governance
2.2 Board
composition Number
of directors
Directors Percentage of
women on the board
Independent
board members
Strong commitment to ensuring
ongoing board effectiveness,
balanced tenure and diversity.
15 from
5 40% 60%
Directors are appointed
for a 3-year term
Nationalities
Spanish, US,
40% to 60% 3.29
Portuguese, British new gender equality target average years on
1/3 and French. for 2021. board vs. 11.1 years
in 2011.
of the board is put for
reelection each year.
Page 14
Data as at November 2019.2. Corporate governance
2.3 Board
Mr José Antonio Ms Ana Botín-Sanz Mr Bruce
Álvarez Álvarez de Sautuola y O’Shea Carnegie-Brown
Vice chairman & chief Group executive Vice chairman and lead
members
executive officer chairman independent director
Executive director Executive director Non-executive director
(Independent)
Majority of independent
directors (60%) which
ensures the board's Mr Rodrigo Mr Guillermo de la Ms Homaira Ms Sol Daurella Ms Pamela
independence criteria. Echenique Gordillo Dehesa Romero Akbari Comadrán Ann Walkden
Non-executive Non-executive Non-executive director Non-executive director Non-executive director
director director (Independent) (Independent) (Independent)
Mr Ignacio Benjumea Mr Javier Botín-Sanz Ms Esther Giménez- Ms Belén Mr Ramiro Mato
Cabeza de Vaca de Sautuola y O’Shea Salinas i Colomer Romana García García-Ansorena
Non-executive director Non-executive director Non-executive director Non-executive director Non-executive director
(Independent) (Independent) (Independent)
Executive committee
Innovation and technology committee
Responsible banking, sustainability
and culture committee
Audit committee Mr Henrique Mr Álvaro Cardoso Mr Jaime Pérez
Nominations committee de Castro de Souza Renovales
Remuneration committee
Non-executive director Non-executive director General secretary and
Risk supervision, regulation
(Independent) (Independent) secretary of the board
and compliance committee Page 152. Corporate governance
Board refreshment
2.4 Continued
Greater transparency and improved
At least one independent director appointed disclosure of information
improvements
every year for the last four years. In 2018, we took a significant leap forward in terms of improved disclosure; with
regard to corporate governance, in particular, and also in general, as evidenced by
Ms Pamela Ann Walkden
our redesigned annual report.
Appointed in 2019
in corporate
Independent. Broad experience in
the banking industry and significant
international and audit experience. New gender equality target for 2021
governance
In February 2019, we replaced our target for the representation of women on our
Mr Henrique de Castro board from 30% to the new target of 40-60% by 2021. We have already achieved
Appointed in 2019 this new target.
Independent. Broad experience in the
technological and digital industry.
Strong commitment to pursuing
Improvements in the Rules and regulations
best international practices. Mr Álvaro Cardoso de Souza
of the board of directors
Appointed in 2018
Independent. He strengthens the On 26 February 2019, the Rules and regulations of the board were revised with
international diversity of the board and the following aims:
reinforces the overall risk management
(i) To adapt them to several regulatory guidelines issued by the EBA, ESMA, ECB
and accounting skills within the board.
and CNMV.
Mr Ramiro Mato García-Ansorena (ii) To reflect our long-standing best practices in corporate governance, including
Appointed in 2017 the full independence of our audit committee and the transfer of the main
Independent. Adds considerable value to responsibility for corporate governance to our nominations committee.
the board thanks to his broad finance, risk
and international banking management
experience . Board responsible banking, sustainability
Ms Homaira Akbari and culture committee
Appointed in 2016 New committee created in June 2018 to intensify the board's involvement in the
Independent. Broad experience in the development of corporate culture and its commitment to responsible business
Internet of Things and Big Data. practices in relation to diversity, inclusion and sustainability.
Page 162. Corporate governance
Shareholders are at Balanced composition
2.5 Corporate the top of the decision of board committees
governance making process
framework Board of directors Remuneration committee
40%
Annual General Meeting 13.3% 60% 26.7% 60% 40%
Our strong commitment to (Annually) Board of directors
(typically monthly)
continuously strengthening our
A Executive committee Nominations committee40%
corporate governance framework B
is key to successfully fulfilling 28.6% 42.8% 28.6% 60% 40%
our mission of becoming a more C
responsible Bank in an era of Board Committees Risk supervision, regulation Innovation and
(typically monthly) and compliance committee technology committee
disruption. D
80% 20% 25% 50% 25%
Executive Committee
(typically weekly)
Responsible banking,
sustainability and culture
Audit committee committee
100% 12.5% 75% 12.5%
Executive Independent Other Page 172. Corporate governance
2.6 Separated
roles and
responsibilities
A clear separation of the roles of Role of Group Role of chief Role of lead
the chairman, CEO and LID
is key in our governance
executive chairman executive officer independent director
structure. The chairman is the highest-ranking officer of The chief executive officer is entrusted with the Engages with shareholders and other investors
the Bank and the main Group representative vis- day-to-day management of the business. with the purpose of gathering information on
à-vis the regulators, authorities and other major their concerns, in particular, with regard to the
Accordingly, the chief executive officer’s direct
stakeholders. Bank´s corporate governance.
reports are the senior managers in charge of
The chairman´s direct reports are the CEO the businesses (heads of the regional -Europe, Facilitates discussion and open dialogue among
and the senior managers in charge of long- North America and South America- and global the independent directors, including by coordinating
term strategy of the Bank (such as Corporate businesses) and of the functions supporting meetings of non- executive directors and generally
Development), the corporate functions (such the business (such as finance, financial control engaging with them to canvas their views.
as Communications and General Secretariat) and IT & operations).
Directs the regular assessment of the chairman
and control (including Risk and Internal Audit)
of the board of directors and coordinates her
and those areas not directly related to the
succession plan.
day-to-day management of the business.
Replaces the chairman in the event of absence
The chairman also leads the appointment and
and has key rights like the ability to call board
succession planning of the senior management
meetings under the terms set down in the
of the Bank.
Rules and regulations of the board of directors.
Chairs the nominations committee and plays
a key role in Governance.
Page 182. Corporate governance
Executive Independent Other
2.7 Board
Non-executive
Esther Giménez-Salinas
Guillermo de la Dehesa
Bruce Carnegie-Brown
Independent Director)
(Vice Chairman - CEO)
Pamela Ann Walkden
Ana Botín (Chairman)
José Antonio Álvarez
(Vicechairman ,Lead
skills and
Henrique de Castro
Rodrigo Echenique
Ignacio Benjumea
Álvaro de Souza
Homaira Akbari
Belén Romana
Ramiro Mato
Sol Daurella
Javier Botín
diversity SKILLS AND EXPERIENCE
THEMATIC SKILLS
matrix
Banking (86.7%)
Other financial services (66.7%)
Accounting, Auditing & Financial Literacy (93.3%)
Retail (86.7%)
Digital & IT (33.3%)
Risk management (86.7%)
Business strategy (80%)
Our board composition ensures Responsible business & Sustainability (80%)
the right balance of knowledge, HR, Culture, Talent & Remuneration (93.3%)
Legal (26.7%)
capabilities, qualifications, Governance & Control (86.7%)
Europe (86.7%)
diversity and experience. International experience
US/UK (86.7%)
Latam (60%)
Others (46.7%)
HORIZONTAL SKILLS
Top management (93.3%)
Government, Regulatory & Public Policy (33.3%)
Academia & Education (53.3%)
Significant directorship tenure (93.3%)
DIVERSITY
Female (40%)
Europe (73.3%)
US/UK (53.3%)
Geographical provenance/
International education Latam (6.7%)
Others (6.7%)
BOARD TENURE
0 to 3 years (33.3%)
4 to 11 years (40%)
12 years or more (26.7%)
Page 19
Data as at November 2019.2. Corporate governance
2.8 Board
assessment Board assessment
Succession plan
and directors'
▲▲ Annual assessment of the board.
▲▲ External assessment at least once every three ▲▲ Succession planning for the main
succession
years (last one in 2017). directors is a key element of the
Bank’s good governance, ensuring an
orderly leadership transition whilst
▲▲ 2018 self-assessment scope:
maintaining continuity and stability of
plan
the board.
▲▲ Functioning of the board and all
committees.
▲▲ Board succession planning continues
to be a key area for the nominations
▲▲ Performance of the executive chairman, committee and the board, with
Annual assessment of the the chief executive officer, the lead appropriate and robust plans in place
board to achieve our objectives independent director, the secretary of the that are regularly revisited.
board and each director.
and solid succession planning
which guarantees the stability ▲▲ The directors acknowledged the significant
of our business. positive efforts to date to enhance meeting
management and quality of information
provided, enabling directors to focus on
key strategic and business issues and
constructively challenge management.
Page 202. Corporate governance
Action plan for 2019 How we have delivered
2.9 Action ▲▲ Strengthen the composition of the ▲▲ Priority areas of desired expertise have been incorporated into board
plan for 2019
board with international experience and succession and recruitment planning. The Board nomination committee will
experience in technology, sustainability continue to review potential candidates to enhance overall skills as part of its
and environmental matters. ongoing work.
▲▲ Engagement with regional executives and site visits to the Group's main geographies
As a result of the self- ▲▲ Enhance director's induction and
have been included in the induction programme for new directors. Also a more solid
development programme.
assessment, in February 2019, ongoing development programme for directors has been put in place.
the board approved an action
plan with improvements in the ▲▲ Review the board's annual agenda to ▲▲ Thematic forward looking agenda has been successfully
ensure appropriate scheduling and time implemented for the audit, risk, nomination and remuneration
following areas. allocation to business strategy and to board committees. Learning and disciplines will be shared with
review the Bank's major risks. the remaining committee chairs to implement as appropriate.
▲▲ Consider increasing the frequency of the ▲▲ The committee has concluded that the number of meetings per year envisaged
meetings of the responsible banking (4) is appropriate, although frequency could be flexible if business needs require
committee and greater coordination with it. Guiding principles for subsidiaries have been established to ensure that the
countries. responsable banking agenda is embedded across the Group.
▲▲ Continue to provide opportunities for the ▲▲ The Board and the executive team have been provided with a number of
Board to interact with the executive team opportunities to engage outside the boardroom (e.g. Board dinners regularly held
and strengthen relations. with the wider executive team, Young Leaders Programme and Board's visit to
Mexico). Further opportunities for engagement will be considered through the
remainder of the year.
▲▲ Continue to focus on gender diversity. ▲▲ With a view to driving gender diversity, all proposed appointments are
now accompanied by a diversity impact analysis as part of the suitability
assessment. The Group subsidiaries shall also ensure their respective boards
remain focused on composition with a view to enhance gender diversity, in
line with the Group's target. Page 213 Remuneration
policy
Page 223. Remuneration policy
3.1 Board General lines Executive fixed components
of directors' ▲▲ Remuneration of directors is based on the positions held
Gross
▲▲ Consistent with the level of
remuneration
by the directors on the collective decision-making body, responsibility within the Bank with
membership and attendance of the various committees, the goal of retaining professionals
and such as other objective circumstances that the board annual and attracting the best talent.
may take into account. salary
▲▲ The board resolved that Ms Ana Botín,
Ms José Antonio Alvarez and Mr
The director remuneration ▲▲ The components of the remuneration are: Rodrigo Echenique would maintain
policy is submitted each their same gross annual salaries for
2019 as in 2018.
year as a separate point of
the agenda at the General Annual allotment Attendance fees
Meeting of Shareholders. In
2019 it received the support
of 91.64% of votes. ▲▲ Benefits systems: Defined contribution
Other plans (including fixed and variable
components).
fixed
▲▲ Fixed salary supplement (as a
components replacement for the previous
disability supplementary benefits).
▲▲ Social welfare benefits proportion of
their total compensation.
Page 233. Remuneration policy
Executive variable remuneration
3.2 Executive
directors'
Aligned with
our strategic goals
Alignment with
▲▲ Annual bonus determined
B
remuneration by both financial and non- shareholder interests
financial metrics, with 80%
▲▲ 50% of all variable
of them being shareholder-
remuneration is in shares.
related metrics, and 20%
customer-related metrics. A
Annual bonus for executive Performance is assessed ▲▲ Shareholding policy: 200% net
tax amount of gross salary.
directors subject to meeting both quantitatively and
qualitatively to ensure that
financial and non-financial how we achieve our financial ▲▲ 60% of variable remuneration
targets. results is as important as is deferred over a 5-year period,
with share based payments
what financial results we
achieve. subject to a one year holding
period after vesting.
▲▲ Long-term targets related
to earning per share (EPS)
growth, relative total
shareholder return (TSR) and C Alignment with
regulatory requirements
regulatory capital (CET1).
▲▲ Including malus and
clawback policy.
Page 243. Remuneration policy
3.3 Executive 2018 variable remuneration for executive
directors (structure)
variable
Individual
benchmark variable
remuneration Immediately
remuneration
following 40%
performance year 2019
12%
scheme Quantitative metrics
and qualitative
Deferred (malus)
2020
12%
assessment 2021
Variable remuneration is 12%
deferred over five years. 2022
Long-term
performance 2023 12%
Individual
performance deferral
12%
2024
100%
▲▲ Variable remuneration is paid 50% in cash 50% in shares.
Final
individual variable ▲▲ 40% of the incentive is paid in the following year and the deferred
remuneration portion (60%) in five equal parts over the next five years.
▲▲ The last three payments are additionally subject to long-term objectives.
Page 253. Remuneration policy
3.4 Executive
Total remuneration as % Variable remuneration
directors’ of attributable net profit as % of cash dividends
remuneration
2012 1.12% 2012 1.07%
Executive directors'
remuneration is aligned with
2013 0.50% 2013 1.17%
shareholder interests.
2014 0.41% 2014 1.17%
2015 0.45% 2015 0.65%
2016 0.42% 2016 0.60%
2017 0.42% 2017 0.56%
2018 0.36% 2018 0.44%
Page 264 Risk
management
and control
Page 274. Risk management and control
4.1 Risk Aligned with the Group’s business model, enabling us to fulfill
our strategic goals
principles 1. Advanced risk
3. Clearly defined three-
lines-of-defence model
5. Information and data
management processes
that allow all risks to
management with a that enables us to identify, be identified, assessed,
forward-looking approach manage, control, monitor managed and reported
Are the cornerstone of our that ensures a medium-low and challenge all risks. at appropriate levels.
risk management and control risk profile, based on our risk
appetite framework defined
model. by the board.
6. Risks are managed by
the units that generate
them based on a clear
2. Risk culture 4. Autonomous subsidiaries structure that separates this
that is followed model with local robust risk management from the
by all employees governance aligned with Group risk control functions.
throughout the and in full compliance with local
Group. regulation.
Page 284. Risk management and control
4.2 Risk Sound risk management and control processes Advanced risk management tools
processes and Planning
Is the process of setting
The Group carries out
the identification and Risk Profile
tools
business objectives assessment of the Assessment
considering the levels of various risks that is (RPA)
risk that the business is exposed to.
willing and able to accept. Identification
Risk identification is a key
Risk management and control component of effective
processes supported by solid risk management and Risk Definition of the
Assessment control. appetite amount and type
advanced risk management To determine likelihood, & of risks that are
structure
tools. impact and materiality of
risks. of limits
considered prudent
to assume.
Decision-making &
execution
Decisions are required to Analysis of impacts
manage the business’s triggered by different
Monitoring risk profile within the scenarios, in which Scenario
An essential business-as- limits agreed. the Group operates, Analysis
usual activity to detect to assess its resilience
any deviation from plan. and identify mitigating
actions.
Mitigation
Reporting If performance deviations
The risk reporting process are detected, mitigation Risk Complete, precise
includes the production actions are considered to Reporting and recurring
and submission bring performance back Framework information.
of accurate and within acceptable levels. (RRF)
relevant management
information.
Page 294. Risk management and control
4.3 Risk Underpinned by our three-
lines-of-defence model
With a robust structure of committees
governance
1
st All business functions and
business support functions Board of
Our strong governance that originate risks and have directors
framework continuously primary responsibility in the
management of those risks.
pursues the effective Risk Management Risk Control
management and control
of the risk profile, clearly
2
separating both functions. These are the Risk Control,
nd and Compliance and Conduct Executive
Risk supervision,
regulation
functions. The role of these committee and compliance
functions is to provide committee
independent oversight
and challenge to the risk
management activities of the
first line of defence.
3
Internal Audit function. This Executive Risk
rd function controls and regularly
risk committee control committee
checks, that the policies and
procedures are adequate and
effectively implemented in the
management and control of Chair: Chair:
CEO Group CRO
all risks.
Independent direct report Page 305 Responsible
banking
Page 315. Responsible banking
5.1 Challenge I Challenge II
Responsible b u sine
ss envi
ro
n e and s
ustaina
bl
and
e
siv
w
m
gro
Ensuring we have the Supporting small businesses
Ne
en t
Inclu
right culture, skills, to create new jobs and
w th
sustainable
Solutions governance, digital and helping people access finance,
business practices to meet supporting finance the low-
stakeholders’ expectations. carbon economy and fostering
A bank that aspires to be sustainable consumption.
governance
Simple, Personal and Fair. Delivering our purpose.
Culture steering Inclusive and sustainable banking steering
Everything we do should
be Simple, Personal and
Board of directors
Fair.
Board of responsible banking, sustainability & culture committee (RBSCC)
Governance
Corporate responsible banking unit
Responsible banking network in countries and global areas (Risk, SCIB, SCF, WM, Openbank and Digital)
Page 325. Responsible banking
Risk culture
As a bank, managing risks is
5.2 Challenge I
an essential part of our daily Strong corporate culture
business. We have a robust risk The Santander Way defines our purpose, our aim
management model and risk and how we do business, by being Simple, Personal
culture to ensure we operate in and Fair in everything we do.
a prudent and responsible way.
New business environment.
93% of employees claim that they 83% of employees feel motivated
are able to identify and feel 6 1 to contribute to building a bank that is
responsible for the risks they Simple, Personal and Fair.1
face in their daily work.1
Shareholder value
To meet the challenge Talented and motivated team
The more prepared and motivated
We have clear and robust 5 of the new business 2 our workforce is, the stronger their
governance. Risks and opportunities commitment to helping people
are prudently managed; and environment, we’re and businesses prosper will be. Our
long-term strategy is designed workforce is diverse in terms of
to safeguard the interests of our focusing on... expertise and gender.
shareholders and society at large.
4
86% of employees are proud to
Total dividend per share:
3 work for Santander.1
4.5%
increase vs. 2017
(+9% cash per share)
Responsible procurement
Responsible business practices
Our procurement processes are based on
We develop our products and services
ethical, social and environmental criteria
responsibly, and aspire to deliver excellent
to ensure we operate in a sustainable way
customer service. Protection of customer
throughout our operations.
data is one of our main priorities.
+50K Top 3 bank in 7 countries for
providers asked to customer satisfaction.2
self-assess against
responsible practices. 1. Global engagement survey 2019.
2. Source: Customer satisfaction study (customers and non-customers) audited by Stiga / Conento. Page 335. Responsible banking
5.3 Challenge II Inclusive growth Sustainable growth
Inclusive and sustainable By meeting customer needs, helping By financing renewable energies,
entrepreneurs start companies and supporting smart infrastructure in the
growth. create jobs, strengthening local developing world, as well as agrotech
economies, tackling financial exclusion and green tech. We actively support the
and supporting people to receive the transition to a low-carbon economy.
education and training they need.
6,689 Mw
EUR 117,420 1,235 of renewable
million in loans Agreements with 0.5% energy financed
to SMEs and universities and other
self employed academic institutions Teq CO2 reduction
professionals in 33 countries from 2017 to 2018
+1mn
EUR 1 bn
+ 273,000 people helped through
Green bond issued
programmes designed
Micro-entrepreneurs to tackle social in 2019 by Banco
supported in 2018 EUR 16,658 exclusion Top 3 bank Santander SA
Million in total taxes for renewables
contribution financing in 20181
Activity in 2018. Page 34
1. In the last ten years, Santander has been eight times within the top three banks in renewable project financing, and always within the top five.5. Responsible banking
Cumulative target From... to...
5.4 2018 2019 2020 2021 2022 2023 2024 2025
Santander’s Top 10 company to work for1 4 6
New business
environment
Responsible
Women on the Board 33% 40% - 60%
Banking
Women in senior leadership positions2 (%) 20% 30%
Equal pay gap3 3% ~0%
public Financially empower people4 10MM
commitments Inclusive & sustainable
Green finance raised and facilitated5 (euros) 120Bn
Electricity used from renewable energy sources6 43% 60% 100%
growth
Unnecessary single use plastic free in corporate buildings
and branches 0 tons
Scholarships, internships & entrepreneurs programmes7 200K
*We will report our progress in these
People helped through our community programmes8 4MM targets in our Annual Report.
(1) According to a well-known external source in each country (Great Place to Work, Top Employer, Merco, etc.), (2) Senior positions represent 1% of total workforce, (3) Calculation of equal pay gap compares employees
of the same job, level and function, (4) Financially empowered people (mostly unbanked and underbanked), through products and services and social investment initiatives, to get access to the financial system, receive
tailored finance and increase their knowledge and resilience through financial education, (5) Includes Santander overall contribution to green finance: project finance, syndicated loans, green bonds, capital finance,
export finance, advisory, structuring and other products to help our clients in the transition to a low carbon economy. Commitment from 2019 to 2030 is 220Bn, (6) In those countries where it is possible to certify
renewable sourced electricity for the properties occupied by the Group, (7) People supported through Santander Universities initiative (students who receive a Santander scholarship, will achieve an internship in an
Page 35
SME or participate in entrepreneurship programmes supported by the Bank), (8) People helped through our community investment programmes (excluding Santander Universities and financial education initiatives).5. Responsible banking
5.5 Corporate
policies
Commercialisation
of products and Tax policy
Code of conduct services and consumer
protection
Responsible and Sector policies
Climate change (defence, energy,
sustainable policies General sustainability and environmental
mining & metals and
policy management policy
guiding our activity. soft commodities)
Policy for funding Conflicts Policy in other
political parties of interest policy sensitive sectors
Corporate culture
Corporate
Human rights policy policy (Including D&I
volunteering policy
principles)
Corporate frameworks policies and principles1
1. All corporate policies, principles and frameworks are accessible to employees in our single global portal, ensuring strong governance and consistency across the Group.
Page 365. Responsible banking
5.6 Climate Our policies prohibit worldwide financing of: What we see from the
application of the policies:
change New coal power
New thermal coal
mine projects
related
▲▲ Bankers reduced their activity in
plants projects
relation to these opportunities.
policies and
▲▲ 3 coal operations withdrawn by
Business in 2019.
progress
▲▲ Improvement in Banktrack* fossil
fuel rankings over last 3 years:
now ranked 31st out of 33 banks.
Updated on yearly basis.
Ranking evolution of total fossil fuel
financing for periods of three years
Criteria of 2016 - 2018 2015 - 2017 2014 - 2016
evaluation (33 Banks) (36 Banks) (37 Banks)
New customers New customers
with coal-fired with thermal coal Total fossil fuel
financing 31 > 27 > 24
power plants mine projects
…and require enhanced due diligence for certain high-impact activities *Banking on Climate Change 2019.
Page 375. Responsible banking
5.7
Independent
recognition for
our progress
In 2019 Santander Banco Santander Santander Banco Santander, Above industry In 2019 Santander In 2019 Banco
is the world is also listed on has also been world leader in average scores received Top Santander has
leader, ranking the FTSE4Good participating as the Bloomberg and in most Employers been included
first among the 25 index since 2003. CDP signatory Gender- Equality cases improving Europe 2019 for the first time
banks in the index since 2007. Index (GEI). the performance certification which by Great Place
this year. In 2017 absolute over the acknowledges the to Work in its list
score in the ESG With an last year at working conditions of the 25 best
rating of 4.5 evaluation of Sustainalytics, companies companies to
points (five being 95.32 points out Vigeo Eiris, MSCI create for their work for in the
the maximum of 100. and ISS-oekom. employees. world, a survey
score). in which more
Likewise, in 2018 than 8,000
Santander ranked organisations
in the top 3 of have participated.
the best financial
institutions to work
in Latin America,
according to Great
Place to Work.
Msci: the use by Banco Santander, S.A. Ofany msci esg research llc data, and the use of msci logos, trademarks, service marks or index names herin, do not constitute a sponsorship, endorsement or promotion
of [entity] by msci or any of its affiliates. Msci services and data are the property of msci or its information providers. Msci and msci esg research names and logos are trademarks or service marks of msci or its
affiliates.
Page 386 Annexes
Page 396. Annexes
6.1 Our
▲ Nationality: Spanish. Born in 1960 in Santander, Spain. the Empieza por Educar Foundation (the Spanish subsidiary of
the international NGO Teach for All) and she sits on the advisory
▲ Education: Degree in Economics from Bryn Mawr College
board of the Massachusetts Institute of Technology (MIT).
board -
(Pennsylvania, United States).
▲ Positions in other Group companies: (non-executive in all
▲ Experience: She joined Banco Santander after working at JP
cases and director unless otherwise indicated): Santander
Morgan (New York, 1980-1988). In 1992 she was appointed
UK plc., Santander UK Group Holdings plc., Universia España,
resumes
senior executive vice president. Between 1992 and 1998 she
Red de Universidades, S.A. (chairman), Universia Holding, S.L.
led the expansion of Santander in Latin America. In 2002, she
(chairman) and Santander Holding USA, Inc.
was appointed executive chairman of Banco Español de Crédito,
Ms Ana Botín-Sanz S.A. Between 2010 and 2014 she was chief executive officer of ▲ Membership of board committees: Executive committee
de Sautuola y O’Shea Santander UK. In 2014 she was appointed executive chairman (chairman), innovation and technology committee (chairman),
of Santander. and responsible banking, sustainability and culture committee.
Group executive chairman
Executive director ▲ Other positions of note: Member of the board of directors of
Joined the board in 1989 The Coca-Cola Company. She is also founder and chairman of
Board attendance in 2018: 100%
the CyD Foundation (which supports higher education) and of
▲ Nationality: Spanish. Born in 1960 in León, Spain. ▲ Positions in other Group companies: (non-executive in
▲ Education: Graduate in Economics and Business all cases and director unless otherwise indicated): Banco
Administration. MBA from the University of Chicago. Santander (Brasil) S.A.
▲ Experience: He joined Santander in 2002 and was appointed ▲ Membership of board committees: Executive committee and
senior executive vice president of the Financial Management innovation and technology committee.
and Investor Relations division in 2004 (Group chief financial
officer). He also served as director at SAM Investments Holdings
Limited, Santander Consumer Finance, S.A. and Santander
Mr José Antonio Holdings US, Inc. He also sat on the supervisory boards of
Santander Consumer AG, Santander Consumer Bank GmbH and
Álvarez Álvarez
Santander Bank Polska, S.A. He was also a board member of
Vice chairman & chief Bolsas y Mercados Españoles, S.A. (BME).
executive officer ▲ Other positions of note: None
Executive director
Joined the board in 2015
Board attendance in 2018: 100% Page 406. Annexes
6.1 Our
▲ Nationality: British. Born in 1959 in Freetown, Sierra Leone. ▲ Positions in other Group companies: Non-executive director of
▲ Education: Master of Arts in English Language and Literature Santander UK, plc and of Santander UK Group Holdings plc.
from the University of Oxford. ▲ Membership of board committees: Executive committee,
board - ▲ Experience: Previously he was non-executive chairman of nominations committee (chairman) and remuneration
Moneysupermarket.com Group plc, non-executive director committee (chairman), innovation and technology committee.
of Jardine Lloyd Thompson Group plc, non-executive director
resumes Mr Bruce
of Santander UK Group Holding Ltd, non-executive director of
Santander UK, plc. and he held the non-executive chair of AON
UK Ltd. He was also the founder and managing partner of the
quoted private equity division of 3i Group plc., and president and
Carnegie-Brown chief executive officer of Marsh Europe, S.A. He was also lead
Vice chairman. Lead independent director at Close Brothers Group plc. and at Catlin
independent director Group Ltd. He previously worked at JP Morgan Chase for eighteen
Non-executive director years and at Bank of America for four years.
(independent)
Joined the board in 2015 ▲ Other positions of note: He is currently non-executive
Board attendance in 2018: 100% chairman of Lloyd's of London.
▲ Nationality: Spanish. Born in 1946 in Madrid, Spain. ▲ Other positions of note: He is currently a non-executive director
▲ Education: Graduate in Law and State Attorney. of Inditex, S.A. and chairman of the board of trustees and the
executive committee of the Banco Santander Foundation.
▲ Experience: From 1973 to 1976 he held several positions in the
Spanish Public Administration (General Secretary of the Post ▲ Positions in other Group companies: non-executive in all cases and
and Telecommunications Office, Technical Advisor in the Office director unless otherwise indicated): Universia Holding, S.L., Banco
of the Spanish Prime Minister and other positions in the Spanish Santander International (vice-chairman), Universia España, Red de
Tax Authority offices in Pontevedra and Madrid). Former chief Universidades, S.A. and Banco Santander Chile, S.A.
executive officer of Banco Santander, S.A. between 1988 and
▲ Membership of board committees: Nominations committee.
Mr Rodrigo 1994. He served on the board of directors of several industrial
and financial companies, including Ebro Azúcares y Alcoholes,
Echenique Gordillo
S.A. and Industrias Agrícolas, S.A., and was chairman of the
Non-executive director advisory board of Accenture, S.A. He was also non-executive
Joined the board in 1988 chairman of NH Hotels Group, S.A., Vocento, S.A., Vallehermoso,
Board attendance in 2018: 100%
S.A. and Merlin Properties SOCIMI, S.A. He has also been non-
executive chairman of Banco Popular Español, S.A. Page 416. Annexes
6.1 Our
▲ Nationality: Spanish. Born in 1941 in Madrid, Spain. ▲ Positions in other Group companies: None.
▲ Education: Government Economist and head of office of the ▲ Membership of board committees: Executive committee,
Bank of Spain. nominations committee, remuneration committee, and
board - ▲ Experience: Former secretary of state of Economy, secretary innovation and technology committee.
general of Trade, chief executive officer of Banco Pastor, S.A.,
international advisor to Goldman Sachs International, chairman
resumes Mr Guillermo
of Aviva Grupo Corporativo, S.L. and non-executive chairman of
Santa Lucía Vida y Pensiones, S.A.
▲ Other positions of note: He is currently non-executive vice
de la Dehesa Romero chairman of Amadeus IT Group, S.A., honorary chairman of
the Centre for Economic Policy Research (CEPR) of London,
Non-executive director
a member of the Group of Thirty based in Washington and
Joined the board in 2002
Board attendance in 2018: 100% chairman of the board of trustees of IE Business School.
▲ Nationality: Spanish. Born in 1973 in Santander, Spain. ▲ Positions in other Group companies: None.
▲ Education: Degree in Law from the Complutense University of ▲ Membership of board committees: None.
Madrid.
▲ Experience: Co-founder and executive director, Equities division
of M&B Capital Advisers. S.V., S.A. (2000-2008). Previously
he was legal advisor to the International Legal Department of
Banco Santander (1998-1999).
▲ Other positions of note: Executive chairman of JB Capital
Mr Javier Botín-Sanz Markets, Sociedad de Valores, S.A.U. In addition to his work
de Sautuola y O’Shea in the financial sector, he collaborates with several non-profit
organisations. Since 2014 he has been chairman of the Botín
Non-executive director
Joined the board in 2004 Foundation. He is also a trustee of the Princess of Girona
Board attendance in 2018: 100% Foundation.
Page 426. Annexes
6.1 Our
▲ Nationality: Spanish. Born in 1966 in Barcelona, Spain. ▲ Membership of board committees: Nominations committee,
▲ Education: Degree in Business and MBA from ESADE. remuneration committee and responsible banking, sustainability
and culture committee.
▲ Experience: She served on the board of the Círculo de Economía
board - and also as an independent non-executive director at Banco
Sabadell, S.A., Ebro Foods, S.A. and Acciona, S.A. She has also
been the honorary consul general of Iceland in Barcelona since
resumes Ms Sol Daurella
1992.
▲ Other positions of note: She is chairman of Coca Cola European
Partners, plc., executive chairman of Olive Partners. S.A. and
Comadrán holds several positions at companies belonging to the Cobega
Group.
Non-executive director
(Independent) ▲ Positions in other Group companies: None.
Joined the board in 2015
Board attendance in 2018: 100%
▲ Nationality: Spanish. Born in 1952 in Madrid, Spain. ▲ Other positions of note: He is vice chairman of the board
▲ Education: Degree in Law from Deusto University, ICADE E-3 of trustees and member of the executive committee of the
and State Attorney. Financial Studies Foundation and a member of the board of
trustees and the executive committee of the Banco Santander
▲ Experience: Former senior executive vice president, general
Foundation.
secretary and secretary of the board of Banco Santander,
and board member, senior executive vice president, general ▲ Positions in other Group companies: None.
secretary and secretary to the board of Banco Santander de ▲ Membership of board committees: Executive committee,
Negocios, S.A. and of Santander Investment, S.A. He was also remuneration committee, risk supervision, regulation and
Mr Ignacio Benjumea technical general secretary of the Ministry of Employment and compliance committee, innovation and technology committee
Social Security, general secretary of Banco de Crédito Industrial, and responsible banking, sustainability and culture committee.
Cabeza de Vaca
S.A. and director of Dragados, S.A., Bolsas y Mercados
Non-executive director Españoles, S.A. (BME) and of the Governing Body of the Madrid
Joined the board in 2015
Board attendance in 2018: 100% Stock Exchange.
Page 43You can also read
