43 Management stock-ownership plan

A long-term and value-oriented compensation model is in place for Group Executive Management, the Executive Board and selected key managers. Details can be found in the Compensation Report.

Regardless of the actual cash flow, management stock-ownership plans are recognised in the financial year to which they economically belong. For deferred share and cash plans, the expense for the entire vesting period is estimated, updated and recognised pro rata temporis over this period in personnel expenses.

The total amount of variable compensation is determined within a range known as the “value share” and is based primarily on the net profit of VP Bank Group. The Board of Directors makes a facts-based assessment of the total amount of variable compensation and can adapt the amount. In times of adverse operating conditions, the overall amount of variable compensation is reduced accordingly and can even amount to zero. This takes into consideration the multi-annual, risk-adjusted profitability of VP Bank Group (cf. graph below), the sustainable level of profitability, capital costs and therefore takes account of current and future risks.

Calculation of risk-adjusted profit

The sum of provisions for variable compensation must be affordable on aggregate. Never should VP Bank Group or any individual Group subsidiary fall into financial difficulties as a result. The impact on the Group’s equity situation is taken into consideration in this process.

In accordance with the model approved by the Board of Directors on 11 December 2025, the compensation payable to Group Executive Management consists of the following components:

1. A fixed base salary; this is contractually agreed between the Board of Directors and individual members. In addition to the base salary, VP Bank pays proportionate contributions to the management insurance scheme and the pension fund.
2. A Restricted Share Plan (RSP); this is a long-term, variable management participation in the form of registered shares A of VP Bank Ltd. and serves as a long-term commitment in the form of shares. The RSP is paid out over the five-year plan period, one-fifth per year in the form of VP Bank registered shares A. After transfer, these remain blocked for a further year. Until the transfer of ownership, the Board of Directors reserves the right to reduce or suspend the allocated entitlements in the event of defined events and in extraordinary situations. The RSP accounts for 50 per cent of the total variable performance-related compensation.
3. A Cash Deferral Plan (CDP); this is a long-term management equity-participation programme in the form of cash distributions. The payout is distributed pro rata over five years. Until the relevant time of transfer of payout, the Board of Directors reserves the right to reduce or suspend the allocated vested cash benefits in the case of defined occurrences and in extraordinary situations. The share of the cash deferral makes up 10 per cent of total variable performance-related compensation.
4. An immediate cash compensation (STI); the share of this amounts to 40 per cent of total variable performance-related compensation.

The Board of Directors determines the planning parameters of the variable profit-sharing (RSP) and their amount annually. The target share of total compensation varies in accordance with function and market customs.

In order to comply with regulatory requirements, a Restricted Share Plan (RSP) may also be used in individual justified cases to implement special retention measures, to compensate for loss of benefits at previous employers or for any severance payments.

In the following table (management stock-ownership plan), in harmony with the compensation principles described above, all share plans operated at VP Bank are shown, and not just the share plans that affect management.

Instruments of variable compensation

Management stock-ownership plan (LTI)