Directors’ Remuneration Report continued Key features of the Policy: Other activities of the Weighting salary to deferred share remuneration rather Remuneration Committee than cash. The majority of the salary will be in deferred Since the Demerger, the Remuneration Committee has shares which vest in tranches over five years from the also considered and awarded the discretionary deferred beginning of the work year. shares for Kaha Kiknavelidze, the sole Executive Director until early 2019. Mr Kiknavelidze’s performance against Paying performance-based remuneration in the form of financial KPIs set pre-Demerger was strong, with targets discretionary deferred shares only. No cash bonus and no met or exceeded except where new external factors LTIP. This will be subject to annual performance targets influenced some of the results against target. The and the discretion of the Remuneration Committee. The Remuneration Committee also took into account non- discretionary deferred shares will vest on a phased basis financial matters as explained further below. Further detail (40% in year two and 60% in year three after award), on the performance targets and the level of performance have a two-year holding period and have total maximum achieved can be found on pages 142 and 143. vesting and holding period of five years. Other activities of the Remuneration Committee Pension contribution by the Company to be the same (2%) have included: as for Group employees: considering the revised UK Corporate Governance • A 2% company pension contribution for Executive Code 2018 and the impact on role and remit of the Directors is proposed in line with that available for the Remuneration Committee; wider workforce, together with an executive benefits reviewing and recommending updated Terms of • package that is reflective of market practice. Reference for the Remuneration Committee; • reviewing the Group companies’ remuneration structures; Shareholding guidelines during and post employment: overseeing the remuneration of, and deciding the • Executive Directors to build and maintain a shareholding discretionary deferred shares for, senior management, equivalent to 200% of cash plus deferred share salary, including the executive team, for 2018; and with a requirement that a departing Executive Director determining the remuneration of the new Executive • maintains the required shareholding for two years post- Director, Archil Gachechiladze. employment. Indeed, given the pay structure, an Executive Director who has been with the Company more than Looking forward a couple of years will naturally hold a higher amount The Remuneration Committee has devoted a considerable in unvested shares at any given time. amount of time to considering the executive remuneration Malus and clawback provisions: framework, and subject to shareholder approval, it is our Malus and clawback provisions have been extended intention that the new Policy will operate for the next three consistent with UK best practice, with specific triggers years as the CEO and Executive Management Team continue set out on page 136. These provisions are in addition to focus on delivering long-term value to you, our shareholders. to the unusual structure of remuneration whereby part We hope that the new Policy will meet with your support of the salary is paid in deferred share salary and no at the upcoming 2019 Annual General Meeting. bonuses are paid in cash. Both unvested salary shares and discretionary shares lapse if the service contract Alasdair Breach is terminated under certain circumstances. Chairman of the Remuneration Committee 27 March 2019 What is in this report? This Remuneration Report is split into two sections: • The new Directors’ Remuneration Policy which will be voted on at the 2019 AGM. Subject to approval by shareholders, the new Policy will apply from the 2019 AGM. • The Annual Report on Remuneration (set out on pages 129 to 148) which includes the Annual Statement by the Chairman of the Remuneration Committee, describes the implementation of Bank of Georgia Group PLC’s Directors’ Remuneration Policy and discloses the amounts earned relating to the year ended 31 December 2018. The Annual Report on Remuneration will be subject to an advisory vote at the 2019 AGM. The Remuneration Report complies with the provisions of the Companies Act 2006 and Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. The Remuneration Report has been prepared in line with the recommendations of the new UK Corporate Governance Code 2018 and the requirements of the UKLA Listing Rules. 130 Annual Report 2018Bank of Georgia Group PLC