Directors’ Remuneration Report continued Salary in the form of cash and long-term deferred shares Purpose and link to strategy Operation Opportunity • To closely align the Executive • The level of base salary for an Executive Director is fixed in his or • The level of cash salary and Directors’ and shareholders’ her service agreements. The level of salary is reviewed by the number of deferred salary interests. Remuneration Committee when a service agreement is up for shares are set in the Executive • To promote long-term value renewal or if there is a significant change in circumstances and the Directors’ service agreements, creation and share price Executive Director and Remuneration Committee agree to and will be no more than the growth. consequent changes in their agreements, for example the Remuneration Committee • To reflect the role and implementation of a new Remuneration Policy. considers reasonable based required duties, skills, • Salary is comprised principally of long-term deferred shares on his or her duties, skills and experience and individual (“deferred share salary”), plus a cash salary. experience. In the event that contribution to the Group. • Deferred share salary is awarded in the form of nil-cost options another Executive Director is • To encourage commitment annually in respect of the work year, and is usually expected to be appointed, the value of his or her to the Group and to recruit awarded towards the beginning of the work year. It is noted that total salary and his or her bonus and retain high-calibre none of the deferred share salary vests during the work year or opportunity (i.e. the talent. the year after; and also it is subject to pro rata lapse in the event discretionary deferred shares) an incomplete year is worked. is not expected to exceed that • Deferred share salary in respectof a work year will vest over five of the CEO at the time. years from the start of the year in which the salary is earned as • The Remuneration Committee follows: 25% will vest on each of the second, third, fourth and fifth has the discretion to change the anniversary of the start of the work year. split of total salary between the • Upon vesting the Executive Director also receives cash payments cash salary and the deferred equal to the dividends paid on the underlying shares between the share salary. date the award was made and the vesting date. • Lapse provisions (natural malus) are built into the deferred share Cash salary salary as set out in the notes to this Policy table. Extended malus • The total amount payable to and clawback provisions do not apply to the deferred share salary the current CEO and Executive as the awards attach to salary already earned. Instead the Director, Mr Gachechiladze, Remuneration Committee considers the discretionary deferred is US$ 370,000 per annum. salary as a sufficiently large pool from which to apply the extended malus and clawback provisions Deferred share salary if necessary in the circumstances to do so. • The total number of deferred share salary shares for Mr Gachechiladze is fixed at 75,000 per annum. 132 Annual Report 2018Bank of Georgia Group PLC