Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information Consideration of employment conditions elsewhere in the Group Remuneration packages for all Group employees comprise both fixed and variable elements. In accordance with prevailing commercial practice, the Remuneration Committee does not formally consult with employees in preparing the Remuneration Policy but in determining an Executive Director’s remuneration, the Remuneration Committee considers: (i)pay and employment conditions of senior management (including Executive Management); (ii)pay and employment conditions across the Group as a whole; (iii) whether employees across the Group are personally satisfied with the way they are remunerated; and (iv) feedback received from Human Resources Executive Management and other employees in the executive remuneration structure. Our employees’ remuneration packages are comprised of cash salary, bonus opportunity and benefits. For Executive Management, the remuneration package is heavily weighted towards deferred shares in the form of nil-cost options which align remuneration of Executive Management with shareholder interest. All employees receive a competitive benefit package in line with Georgian market practice and all Georgian employees are entitled to participate in the national pension scheme on the same terms as applicable to Executive Directors. Other factors taken into consideration are competition in the market place, individual performance and competencies. Usually, exceptional personal performance is recognised through variable pay. The Company also operates an Employee Equity Compensation Plan on a discretionary basis. For a FTSE 250 company of our size and depth, our Executive Directors and senior management must have the skills, experience, work ethic and attitude required to successfully execute our strategy, meet our objectives and create value for shareholders over the long term. In order to recruit and retain this talent, we must benchmark the value of remuneration against other FTSE companies of similar size and sector listed in the UK. The remuneration of employees in the Group, other than Executive Director(s) and senior management, is benchmarked against the Georgian Labour Market as this is the most relevant comparator. The Remuneration Committee is regularly informed by Human Resources of remuneration developments across the Group. The compensation structure of the Executive Management is set by the Remuneration Committee and is modelled on the Policy but the Remuneration Committee is not bound by it when setting the Executive Management’s remuneration. The Remuneration Committee generally awards members of the Executive Management discretionary deferred shares as a bonus to ensure maximum alignment with shareholders and to help set the tone from the top. Equity Compensation Trusts and dilution limits The Bank of Georgia Group operates two employee benefit trusts (EBT), one for senior executives, and the other for employees below the executive level (the “ESOPs”), which hold ordinary shares on trust for the benefit of employees and former employees of the Group, and their dependents, and which is used in conjunction with the Group’s employee share schemes. The Bank of Georgia Group has committed that new shares issued in satisfaction of share compensation from the time of the Company’s listing on the premium segment of the LSE will not exceed 10% of Bank of Georgia Group’s ordinary share capital over any ten-year period. Business expenses Executive Directors are reimbursed for reasonable business expenses incurred in the course of carrying out duties under their service contract, on provision of valid receipts. Annual Report 2018Bank of Georgia Group PLC 137