Corporate Governance at Commerzbank - A solid governance structure as basis for economic success
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Corporate Governance at Commerzbank A solid governance structure as basis for economic success Commerzbank AG | Group Investor Relations | Frankfurt | June 2019
Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Group Structure Governance Board Directors CSR
Corporate Governance at Commerzbank – a solid governance structure
as basis for economic success
Solid governance framework in line with German Corporate Governance Code
› Diverse Supervisory Board in terms of gender, nationality and age structure
› All shareholder representatives on the Supervisory Board are independent in compliance with
German legislation and the German Corporate Governance Code (DCGK)
› Solid governance structure is underlined by above average ESG ratings (e.g. ISS Scores)
The Members of Commerzbank’s Supervisory Board are highly experienced
› The board comprises experienced professionals from diverse business backgrounds
› Highly proficient in terms of digitalisation and technology – newly introduced committee supporting
the transformation of the bank under the strategy Commerzbank 4.0
› Composition of committees in line with DCGK, e.g. financial experts serving on audit committee
Governance structure enables sufficient monitoring of the Board of Managing
Directors by the Supervisory Board
› Best practice remuneration policy for the Board of Managing Directors ensures long-termism and
avoids inappropriate risk bearing for short-term unsustainable economic success
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 1
Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Agenda
1 Commerzbank Group Structure Page 3
2 Corporate Governance Page 8
3 Supervisory Board Page 12
4 Board of Managing Directors Page 18
5 Sustainability and Corporate Social Responsibility Page 28
6 Appendix Page 34
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 2
Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Commerzbank Group Structure
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 3
Commerzbank Corporate Supervisory Board of Managing Sustainability and
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With more than 13m customers in Germany and more than 5m in
Central and Eastern Europe, Commerzbank is a leading bank in PSBC1)
Commerzbank Group Structure Current shareholder structure
100% 82.3% 69.3% >5%
15%
Federal Republic
of Germany
~1,000 domestic branches and ~400 foreign branches (mBank),
20 foreign operating corporate banking branches and 31
representative offices in just under 50 countries3)
1) PSBC = Private and Small Business Customers
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 2) As well as five Swiss agencies in Basel, Bern, Lausanne, Lucerne and St. Gallen 4
3) As of 31st December 2018Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Commerzbank 4.0 – a strategic program based on three corner-stones
to deal with challenges and succeed in future
Focussed business model
We will focus on businesses in two operating segments: PSBC
and CC (Corporate Clients), discontinuing non-core activities
Digital enterprise
We will transform the Bank into a digital enterprise and digitalise
80% of all relevant processes
Enhancing efficiency
We will simplify the Bank, increasing efficiency by reducing costs
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 5Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Overall, our transformation is making good progress and key execution
indicators are in line with plan
Target 2020 Q1 2019 In line with plan?
Net new customers
2.0 1.2
(m cumulated) (since 10/2016)
PSBC Assets under Control
(GER) >400 402
(€bn; end of period)
Growth
Net new customers
>10.0 9.7
(k cumulated) (since 01/2016)
CC
Loan Volume
Corporates (€bn)
>85 84
Digital-
isation Group
Digitalisation ratio 80% 62%
( )
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 6Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Our shared corporate culture is embodied as ComWerte in five values
Integrity › Our activities are guided by integrity – compliance with laws and duties as well as credibility
in our approach have been firmly anchored in Commerzbank since it was established in 1870
› Integrity means we conduct ourselves in a legally and ethically impeccable manner, in keeping
with statutory and internal regulations and our own value system
Customer › Customer orientation is the ability to design our company, processes and products so that
orientation they meet the needs of our customers
› It is our objective to rapidly solve to any issues as soon as they arise
Performance › We are measured by our performance – consequently, all employees deliver the best possible
performance in their functions in order not only to meet, but to exceed customer expectations
› In our activities, we aim to be among the market leaders – Commerzbank has long been
considered as the backbone of the German Mittelstand
Courage › Courage shows the determination to remain open to new ideas and to accept responsibility for
one’s own actions
› Although the banking sector is witnessing a shift away from physical banks, Commerzbank
continues to deliberately invest in its network of branches
Team › Commerzbank knows that its strength is rooted in team spirit at every level – the bank could not
generate any of its products without the involvement of many helping hands
spirit
› Although the customer often only sees the final result, a successful outcome depends on the
interaction of all of these team players
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 7Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Corporate Governance
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 8Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Commerzbank’s approach to achieve a solid Corporate Governance
The bank’s Corporate Governance approach Constituents of the bank’s Governance Frameworks
› The bank’s approach to a solid Corporate
Governance is anchored in a responsible and
transparent management aiming for a
sustainable value creation.
› Consideration is given to diversity in the
composition of the Board of Managing
Directors and in the election of Supervisory
Board members to reduce the risk of prejudice.
› Transparent reporting comprises the
corporate governance report, non-financial
report and remuneration report.
› The non-financial report covers the following six
topics: environmental protection1), treatment of
employees, social responsibility, respect for
human rights, combating bribery and corruption
and the treatment of customers.
1) Further information on Sustainability and Corporate Social
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 Responsibility including information on environmental 9
protection confer pp. 31-33Commerzbank Corporate Supervisory Board of Managing Sustainability and
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The German Corporate Governance Code as basis for Commerzbank’s
Governance Framework
› The German Corporate Governance Code1) comprises essential
statutory regulations for the management and supervision of German
listed companies with the objective to enhance the transparency and
comprehensibility of the German Corporate Governance system.
› The Code includes nationally and internationally acknowledged
standards to achieve good and responsible Corporate Governance.
› It aims to promote confidence in management and supervision by all
stakeholders.
› The Code highlights the obligation of Management and Supervisory
Boards to ensure the continuance of the firm and its sustainable value
creation in line with the principles of the social market economy.
› The principles of the Code not only require compliance with the law,
but also ethically sound and responsible behaviour.
Responsible Corporate Governance is a key part of Commerzbank's self-image. We are
unquestionably committed to the principles of good Corporate Governance. The bank provides an
annual declaration of compliance, explaining whether we have complied with the Code.
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 1) Deutscher Corporate Governance Kodex (DCGK) 10Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Collaboration between the Supervisory Board and the Board of
Managing Directors in the German “Two-tier Board System”
A structure of the Board of Directors of a company Executive Control Ownership
used in certain European countries, such as Germany, Level Level Level
that comprises two tiers:
Two-tier Two-tier Management Supervisory
› a Supervisory Board, on which representatives of Shareholders
Board employees and shareholders are represented; System Board Board
System › a Management Board (Board of Managing
One-tier
Directors or Executive Board) that is concerned Board (Chair & CEO) Shareholders
System
with the day-to-day running of the business.
Supervisory Board Board of Managing Directors
› The Supervisory Board supervises › The Board of Managing Directors
and advises the Board of Managing is responsible for independently
Directors on managing the bank. managing the enterprise.
› The Supervisory Board supervises › It is obliged to act in the bank’s
the Board of Managing Directors in best interest and undertakes to
particular with respect to compliance increase the enterprise value of
with all respective applicable the bank sustainably.
banking supervisory regulations. › The Board of Managing Directors
› Furthermore, the Supervisory Board is responsible for the development
is responsible for the remuneration and execution of the bank’s
system of the Board of Managing strategy under the supervision of
Directors. the Supervisory Board.
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 11Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Supervisory Board
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 12Commerzbank Corporate Supervisory Board of Managing Sustainability and
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General information on the composition of the Supervisory Board
The Supervisory Board of Commerzbank consists of a total of 20 members of which ten
members are elected by the bank’s employees in accordance with the German law on co-
determination – the remaining ten representatives are elected by Commerzbank’s shareholders.1)
Composition of the Supervisory Board2)
10%
Average age of members of
the Supervisory Board:
Back-
40% Diversity 40% Nationality 40%
ground 60 years
60% 60% 40% Average period of being a
board member:
10%
4 years
Men Women Germany Banking Industrials / Corporates
Other (EU / Non-EU) Financial Services Trade Unions
Independence of the Supervisory Board
According to the German Corporate Governance Code, all representatives elected by the bank’s shareholders
have no personal or business relationship with the bank, its corporate bodies, a controlling shareholder or a
company affiliated with the controlling shareholder that could lead to a significant, not temporary conflict of interest.
1) In case of stalemate situations, the Chairman of the
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 Supervisory Board has a double voting right 13
2) Overview includes only representatives of shareholdersCommerzbank Corporate Supervisory Board of Managing Sustainability and
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Composition of the Supervisory Board
Dr. Stefan Schmittmann
Dr. Markus Kerber Chairman of the Board Anja Mikus Dr. Victoria Ossadnik
C C C C
Dr. Rainer Hillebrand Robin J. Stalker
Dr. Tobias Guldimann Nicholas Teller
C C
Sabine U. Dietrich Dr. Gertrude Tumpel-Gugerell
C C
Representatives of shareholders
Representatives of employees
Heike Anscheit Stefan Wittmann
Alexander Boursanoff Alexandra Krieger
Gunnar de Buhr Kerstin Jerchel
Stefan Burghardt Christian Höhn
Uwe Tschäge Monika Fink
Deputy Chairman
Audit Committee Committee for Digitalisation and Technology Compensation Control Committee Mediation Committee Nomination Committee Presiding Committee
Risk Committee Social Welfare Committee C indicates the Chairperson of the respective Committee
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 14Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Remuneration system of the Supervisory Board
Basic remuneration Additional remuneration
Basic remuneration Additional remuneration
(in €) (in €)
Chairman of the Board 240,000 Chairman Audit / Risk Committee 60,000
Deputy Chairman of the Board 160,000 Member Audit / Risk Committee 30,000
Member of the Board 80,000 Chairman of all other Committees 40,000
Members of all other Committees 20,000
The additional remuneration for committee appointments is not linked or dependent on the long- or short-term
performance of Commerzbank.
Additional remuneration is paid for a maximum of three committee appointments, taking the figures for the three
highest paid positions.
In addition, each member receives an attendance fee of €1,500 for each meeting or conference call of the Supervisory
Board or one of its committees.
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 15Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Committees of the Supervisory Board – Committee for Digitalisation
and Technology
To ensure that it can perform its duties efficiently, the Supervisory Board has formed eight
committees from its members.
To actively monitor the digital transformation of the bank in accordance with its strategy
“Commerzbank 4.0”, the Board has set up the Committee for Digitalisation and Technology.
The Committee for Digitalisation and Technology shall consist of at least five Supervisory Board
members.
As part of the Bank’s transformation into a digital technology company, the Committee for Digitalisation
and Technology shall accompany the changes of the business model, the development of digital
products and processes and the associated changes to the organizational structure.
The Committee for Digitalisation and Technology receives regular reports from the Board of Managing
Directors on relevant technological developments and the implementation of technical innovations as
well as their effects.
The Committee for Digitalisation and Technology supports the Supervisory Board in advising and
monitoring the Bank’s digitalisation progress and the associated IT and investment budget.
The Committee for Digitalisation and Technology receives regular
reports on cyber risks and the associated information security of the Bank.
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 16Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Composition of the Committee for Digitalisation and Technology1)
Sabine U. Dr. Victoria Dr. Stefan Anja Dr. Rainer
Dietrich Ossadnik Schmitt- Mikus Hillebrand
Chairperson mann
Career bp Europa SE › E.ON Energie › Commerzbank AG › Arabesque GmbH › Otto Group
Deutschland GmbH › Bayrische Hypo- & › Union Investment
highlights
› Microsoft Dtl. GmbH Vereinsbank AG › Allianz Pimco AM
› Former Member of the › Current CEO of E.ON › Former CRO2) of › CEO/CIO3) of German › Current Deputy Chair-
Executive Board of Managing Energie Deutschland Commerzbank Nuclear Waste man of the Board of
Directors of bp Europa › Former Vice President › Former Member of the Disposal Fund (Public Managing Directors of
experience › Former Director Risk Data & AI Microsoft Management Board of Endowment) the Otto Group
and Compliance at bp Corporation HypoVereinsbank
› Various executive and › Global VP roles in › Various non-executive › Former CIO3) of › International project
International non-executive positions Microsoft Corporation mandates on super- Arabesque Asset management
at bp in UK, India, and Oracle Corp. visory boards and Management London experience
business Vietnam and Belgium similar bodies for
experience European banking and
business enterprises
› Establishing bp’s 1st › Deep IT, AI and data › Specific knowledge of › Experiences in asset › Digitalisation and
web presence in DACH knowledge with 18 yrs banking organisations, management, financial transformation of Otto
Digitalisation / › Transformation of bp global management structures, processes planning and balance Group from mail-order
banking / finance Group Env. Liabilities experience at CSC, and risk management sheet reporting to a digital business
knowledge into Life Cycle Mgmt. Oracle and Microsoft
› Former Global VP
Remediation Mgmt.
› Studies of Engineering › PhD in physics at › Doctorate in economics › Master of business › Doctorate in economics
Sciences (Chartered Munich University and studies of eco- administration at and social sciences at
Education Engineer) at Technical nomics at University of Göttingen University University of German
University Berlin St. Gallen Federal Armed Forces
1) Overview includes only representatives of shareholders
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 2) CRO = Chief Risk Officer 17
3) CIO = Chief Investment OfficerCommerzbank Corporate Supervisory Board of Managing Sustainability and
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Board of Managing Directors
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 18Commerzbank Corporate Supervisory Board of Managing Sustainability and
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General information on the composition of the Board of
Managing Directors
The Board of Managing Directors consists of a total of six regular members and the CEO.
Composition of the Board of Managing Directors
14% Average age of members of the
29% Board of Managing Directors:
Back-
Diversity
ground 53 years
Average period of being a
71% board member:
86%
5 years
Men Women Banking
Others (Consulting, Automotive)
Female quota on the Board of Managing Directors
Commerzbank’s target Commerzbank’s actual
quota: quota:
at least 1 woman 1 woman
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 19Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Composition of the Board of Managing Directors (1/2)
Martin Dr. Marcus Stephan Jörg
Zielke Chromik Engels Hessenmüller
CEO CRO CFO COO
05.11.20101) 01.01.2016 01.04.2012 15.01.2019
Audit Credit Risk Management Finance Banking Operations
Communications Intensive Care Investor Relations Delivery Center
Market Risk Management Tax Information Technology
Risk Controlling & Capital Mgmt. Treasury Markets Operations
Responsibilities
Asset & Capital Recovery mBank Organisation & Security
Big Data & Advanced Analytics Digital Transformation & Strategy
› Executive Board Member › Divisional Board Member › Stephan Engels was directly › Divisional Board Member
Private Customers Chief Credit Risk Officer appointed as CFO when he Development & Strategy
Previous › Divisional Board Member › Divisional Board Member joined the Executive Board › CFO mBank S.A.
Commerzbank Group Finance Chief Market Risk Officer › Head of Investment Banking
positions › Group Manager Retail Banking Finance
› Group Manager Corporate
Banking
› Eurohypo AG › Deutsche Postbank AG › Daimler AG › mBank S.A.
› Deutsche Hyp AG › McKinsey & Company › DaimlerChrysler Services AG › Dresdner Bank AG
Former employers › Deutsche Bank 24 › Munich University › DaimlerChrysler Bank AG
› Deutsche Bank AG › debis AG & debis AirFinance
› Dresdner Bank AG › Daimler Benz AG
1) Martin Zielke was appointed as CEO on 1st May 2016;
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 between November 2010 and May 2016, he was regular 20
Board Member responsible for Private CustomersCommerzbank Corporate Supervisory Board of Managing Sustainability and
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Composition of the Board of Managing Directors (2/2)
Michael Dr. Bettina Michael
Mandel Orlopp Reuther
Board Member Board Member Board Member
23.05.2016 01.11.20171) 01.10.2006
Private Customers Compliance Mittelstandsbank
Small Business Customers Human Resources Corporate Finance
comdirect bank Legal Corporates International
Commerz Real Credit Portfolio Management
Responsibilities
FICC2)
Research
CC Development & Digitalisation
Trade Finance & Cash Mgmt.
› Divisional Board Member › General Representative › Executive Board Member
Private Customers responsible for Compliance, Corporates & Markets
Previous › CEO comdirect bank AG Human Resources and Legal › Executive Board Member
Commerzbank › Group Manager Private and › Divisional Board Member responsible for Treasury and
positions Business Customers Development & Strategy Non-Core Assets
› Head of Business Develop-
ment Private Customers
› McKinsey & Company › McKinsey & Company › Deutsche Bank AG
› Dresdner Bank AG
Former employers › Bremer Bank (Dresdner
Bank AG)
1) Dr. Bettina Orlopp was appointed as General
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 Representative to the Executive Board in May 2016 21
2) FICC = Fixed Income, Currencies & CommoditiesCommerzbank Corporate Supervisory Board of Managing Sustainability and
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Overview of the compensation governance structure at Commerzbank
•Information
Supervisory Board
•Preparation of decisions
•Support in monitoring (SB)
Remuneration Control Committee (RCC) Risk Committee (RC)
Tasks
-Assessing the remuneration systems (including for employees in Tasks
the control units) on the basis of or with reference to the risk,
capital, and liquidity situation of the institution -Pursuant to Section 25d(12) KWG, examination of whether
Cooperation incentives provided by the remuneration systems take into
-Ensuring that remuneration systems are aligned with the business,
risk, and remuneration strategy of the Group consideration risk, capital and liquidity, as well as the likelihood
and timing of earnings
-Supporting the Supervisory Board in the monitoring of processes
designed to determine Risk Takers & Group Risk Takers as well as
in creating resolution suggestions pursuant to Sect. 25a(5)(6) KWG
-Preparation of the resolutions of the SB regarding the variable
compensation of the members of the Board of Managing Directors
•Information
•Support
Appointment Board of Managing
(after Supervisory Directors •Information
Board hearing) •Support
Remuneration Officer (RO) Remuneration Committee (RemCo)
Tasks Tasks
-Ongoing monitoring of appropriateness -Ensuring appropriate involvement of the control units in
-Supporting the Supervisory Board and its Remuneration Control structuring and monitoring the remuneration systems as well as in
Committee with regard to all remuneration systems Cooperation regard to the process to determine Risk Takers as well as Group
-Supporting the Remuneration Control Committee on overarching Risk Takers pursuant to Section 3(3) InstitutsVergV
issues -Ensuring the total amount of variable remuneration is determined
-Preparing the remuneration control report under appropriate involvement of the control units in a manner that
-Other issues is in line with their scope of responsibility
Regulatory requirements pursuant to KWG/InstitutsVergV Requirements from InstitutsVergV, formal implementation at institution’s discretion
Source: Commerzbank Remuneration Report 2017, p. 5
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 22Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Key adjustments of Commerzbank’s remuneration system
› The Supervisory Board has decided to adjust Commerzbank’s remuneration system for the Board of
Managing Directors based on the German Remuneration Ordinance for Institutions (IVV1)) after the
Board of Directors has adjusted the non-pay-scale model for all non-pay-scale employees.
› Amendments came into force on the 1st January 2019.
› The adjusted remuneration system includes a claw back clause for variable remuneration.
› Commerzbank has already partly converted some variable components into fixed compensation for its non-
pay-scale employees. Therefore, it is logical to partly convert variable compensation of the Members of
the Board of Managing Directors. Thereby, the conversion includes a markdown. This adjustment shall
increase the bank’s recruiting ability by offering a more competitive remuneration system.
› The basic logic of Commerzbank’s remuneration system remains the same. Members of the Board of
Managing Directors still participate on the success of the Group, on their particular segment and
their individual target achievements.
› Compared to European banks, DAX and MDAX companies, Commerzbank’s remuneration system is fair
and adequate.
1) IVV = Institutsvergütungsverordnung (German
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 23
Remuneration Ordinance for Institutions)Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Effective remuneration structure of Commerzbank’s Board of Managing
Directors
Former remuneration system1) Adjusted remuneration system1)
24%
34%
43%
~€13.4mn ~€12.7mn
60%
16%
23%
Basic salary Short-term incentives Long-term incentives Basic salary Short-term incentives Long-term incentives
Highlights
› Commerzbank applies an appropriate and market-orientated remuneration system
– Compensation sets incentives for short-term and long-term performance
– Commerzbank does not pay excessive compensation to the Members of the Board of Managing Directors
– After the adjustment of the remuneration system, total compensation – if target amount is achieved – declines further
› In 2018, fringe benefits and service costs for pension entitlements amounted to €0.9mn and €3.4mn, respectively
1) Assumptions: 100% target achievement; constant share
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 price; 7 Members of the Board of Managing Directors; 24
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Commerzbank’s adjusted remuneration system includes a claw back
clause and thus increases long-term participation of Board Members
FY FY+1 FY+2 FY+6 FY+7 FY+8
Share price
Share price
fixing in
fixing in March
January
30% Determine
Long-term 12-month waiting
share-based Cash paid
share-based period
compensation Retention period1)
including a
retrospective performance evaluation
30% Determine before long-term incentives are paid
Long-term
cash-based Cash paid
cash-based
compensation
20% Determine
Short-term 12-month waiting
share-based Cash paid
share-based period
compensation
20%
Short-term
Cash paid
cash-based
Claw back period
Commerzbank’s remuneration system is stretching the variable compensation – 50% share-based
› 20% of variable compensation is payable in cash, an additional 20% is payable after a 12-month waiting period, again in
cash but share-based.
› The remaining 60% arises after the end of a five-year retention period and after the retrospective performance
evaluation. Thereof, half is paid in cash and half after a 12-month waiting period, also in cash but share-based.
1) The retention period is extended by two and one year(s) for
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 new Members of the Board of Managing Directors in the 25
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The target achievements of Board Members are set between 0% and
200% – the variable remuneration is limited to 150% of target amount
Corporate Level (70% weight)
Corporate Level
› Weighted average of target achievement based on a group-based target- Target achievement
n-2 n-1 n
performance comparison determined by the Economic Value Added (EVA) or 0% … … …
100% … … …
another ratio that may be chosen for the group. 200% … … …
Department Level (segment and/or shared functions; 30% weight)
Segment Level
› Target achievement by the department (segment and/or shared functions) for the Target achievement
n-2 n-1 n
members of the Board of Managing Directors in question is responsible on 0% … … …
100% … … …
quantitative and/or qualitative targets. 200% … … …
Individual Level (Multiple of 0.7-1.3)
› Target achievements are measured over a three-year period, with achievement of the Target/Criteria Individual Level
company targets for the financial year in question being given a weighting of 3/6, the x1 … … …
previous year 2/6 and the year before that 1/6. The results of the three-year achievement x2 … … …
… … … …
of the company targets are then multiplied by a factor of between 0.7 and 1.3, which is Sum 0% 200%
dependent on the achievement of the Board member’s individual targets. 0.7 corresponds Multiple 0.7 1.0 1.3
to individual target achievement of 0% (minimum), 1.0 to individual target achievement of
100% and 1.3 to individual target achievement of 200% (maximum).
The remuneration system provides a uniform remuneration component which is linked to overall group,
department and individual targets.
Source: Commerzbank Annual Report 2018, pp. 29-31
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Remuneration system of the Board of Managing Directors
In November 2018, the Supervisory Board decided on adjustments of the remuneration system due to
the amendment of the German Remuneration Ordinance for Institutions (IVV1)).
Appropriate design of the remuneration system according to the German IVV
Strategy Risk, capital and liquidity Target setting
The compensation system supports The compensation system of the Board The annual setting of group-wide and
the implementation and execution of of Managing Directors is in line with the individual targets for variable compen-
the bank’s strategy and is aligned with bank’s risk, capital and liquidity sation components is based on the
the overall group risk strategy structure bank’s overall group strategy
The adjusted remuneration system provides part conversion of variable to fixed compensation – the
total compensation potential decreases for all Board Members.
Adjusted remuneration system of the Board of Managing Directors
in € fixed compensation variable comp. target amount Ratio variable / fix
Regular old 750,000 1,000,000 1,750,000 1.33
Board Members adjusted 990,000 660,000 1,650,000 0.67
old 1,312,500 1,628,640 2,941,140 1.24
CEO
adjusted 1,674,247 1,116,165 2,790,412 0.67
1) IVV = Institutsvergütungsverordnung (German
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 27
Remuneration Ordinance for Institutions)Commerzbank Corporate Supervisory Board of Managing Sustainability and
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Sustainability and Corporate Social Responsibility
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Sustainability ratings substantiate our vision to become Germany’s
most sustainable commercial bank
Commerzbank’s Sustainability Ratings
Outper- › “The company is considered an outperformer on ESG issues compared to its industry
former peers. This stems from its leading position on environmental issues, outperformance
on social issues and its average performance on governance issues.”
75/100 Points
Prime/C › “Commerzbank has established a group-wide code of conduct covering all important
issues, such as corruption, antitrust violations, insider dealings and conflicts of
Sector Avg.: D+ interest in varying degrees of detail.”
A › “We assess the company is well prepared policy-wise, to mitigate the negative impact
of […] its long-expected restructuring.”
B
› CDP’s rating scoring system is based on a pyramid like model in which companies
have to fully satisfy each increasingly tougher grading pillar before they can advance
to the next level. Levels go from Disclosure (D-/D) to Leadership (A-/A).
Low › ISS QualityScores are offering an indication on the extent of non-financial disclosure
relating to ESG – scale from 1 to 10, whereby 1 indicates the lowest ESG risk
Risk1) › Commerzbank’s ISS QualityScores:1) Environment = 1 / Social = 2 / Governance = 4
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 1) ISS QualityScores as of 1 June 2019 29Commerzbank Corporate Supervisory Board of Managing Sustainability and
Appendix
Group Structure Governance Board Directors CSR
We are a leading German provider of Renewable Energy Project Finance
funding – inaugural Green Bond issued in October 2018
Renewable Energy Project Finance Portfolio Portfolio Breakdown1)
(Exposure at Default, €bn end of period)
69%
1%
+20% 18%
4.0 4.1 4.2 4.2 4.2 invested in Germany
3.5 3.8
12% €4.2bn
69% 31%
invested globally
2013 2014 2015 2016 2017 2018 Q1 2019 Wind Onshore Wind Offshore Solar Others
Commerzbank Green Bond Framework Commerzbank’s Inaugural Green Bond
› On 16th October 2018, Commerzbank issued its inaugural
Use of Proceeds
Green 5-yrs €500m Non-Preferred Senior Bond.
Project Evaluation › Robust green bond framework in accordance with the Green
Bond Principles 2018 – SPO2) provided by Sustainalytics.
Management of Proceeds › €503m eligible wind and solar assets from vintages 2016-
2018 assigned to the Green Bond.
Reporting
› With a total installed capacity of 461.8 MW, the loans
underpinning the Green Bond help to avoid estimated CO2
External Review emissions of ~755,242 tons p.a. contributing to five SDGs.3)
1) Based on Energy Portfolio as of Q1 2019
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 2) SPO = Second Party Opinion 30
3) SDG = Sustainable Development GoalsCommerzbank Corporate Supervisory Board of Managing Sustainability and
Appendix
Group Structure Governance Board Directors CSR
Positions and policies on environmental and social issues (1/2)
In 2011, Commerzbank stopped
issuing any new exchange-traded The assessment takes into
investment products based on account the mining methods used
food staples such as wheat, corn, by the company, the
soya, rice and potatoes. implementation of ecological
restoration measures, and
compliance with human rights and
Agricultural
occupational health and safety
standards.
The guideline of Commerz-
bank AG governing coal-
related transactions covers
Coal power
In the case of customer
the process chain, from coal Mining
relationships and transactions
extraction to coal-fired
relating to oil and gas,
electricity generation at
Commerzbank performs
power plants. Commerzbank
assessments of how oil and gas
does not finance new coal- Oil & gas fields are explored, how High
fired power plants or new
Conversation Value Areas are
coal mines. Transactions
protected, and how compliance
related to modernisation
with human rights and
measures are reviewed on a
occupational health and safety
case-by-case basis and may
standards is ensured.
be rejected.
We incorporate the early identification and appropriate handling of environmental and social
risks based on sustainable and ethical decision-making criteria into our overall risk strategy
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 31Commerzbank Corporate Supervisory Board of Managing Sustainability and
Appendix
Group Structure Governance Board Directors CSR
Positions and policies on environmental and social issues (2/2)
Commerzbank does not finance Concerning customer relationships
the supply of weapons or and transactions related to power
armaments to conflict zones or generation, compliance with
areas of tension, nor does it human rights, the protection of
finance controversial weapons. Power
generation High Conversation Value Areas
The recipient must be a clearly and the implementation of
identifiable governmental body. Arms trade environmental impact
assessments are subject to
particular scrutiny.
Human
rights
Commerzbank is committed to
Land and Indigenous respecting human rights as
forestry peoples
defined by internationally accepted
human rights standards. Within its
sphere of influence, Commerzbank
makes a differentiated contribution
In addition to environmental and
to the protection and promotion of
social conditions regarding Commerzbank’s commitment to human rights.
cultivation and exploitation, fundamental human rights includes
Commerzbank also examines special protection of indigenous
compliance with sustainable peoples, who are often subjected
standards for palm oil production. to compulsory measures such as
involuntary resettlement and
displacement.
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 32Commerzbank Corporate Supervisory Board of Managing Sustainability and
Appendix
Group Structure Governance Board Directors CSR
Environmental and social risk management process
Operational Unit
Request
(Product, transaction, business relationship)
Linked to sensitive topic area? Business can be pursued
No
Yes
Product, transaction or business
Linked to exclusion criteria?
Yes relationship has to be rejected
Reputational Risk Mgmt.
No
Review of sector-
Review of cross-
specific
sector requirements
requirements
Evaluation
May lead to a rejection of product,
Differentiated assessment
transaction or business relationship
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 33Appendix Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 34
Commerzbank Corporate Supervisory Board of Managing Sustainability and
Appendix
Group Structure Governance Board Directors CSR
Committees of the Supervisory Board – General information (1/2)
Committee Description of activities
› Supporting the Supervisory Board in the monitoring of:
Audit › the accounting process
Committee › the effectiveness of the compliance and risk management
› the performance of the audits
Committee for
› Supporting the Supervisory Board in advising and monitoring the bank’s
Digitalisation &
digitalisation progress and the associated IT and investment budget
Technology
› Supporting the Supervisory Board in the appropriate structuring of the
Compensation
compensation systems of the Board of Managing Directors
Control
› Monitoring the appropriate structure of the compensation systems of the employees
Committee
› Shall cooperate with the Risk Committee
Mediation › The functions and composition of the Mediation Committee are established by
Committee Section 27, paragraph 3 of the German Co-determination Act
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 35Commerzbank Corporate Supervisory Board of Managing Sustainability and
Appendix
Group Structure Governance Board Directors CSR
Committees of the Supervisory Board – General information (2/2)
Committee Description of activities
› Recommending appropriate shareholder representative candidates to the
Nomination Supervisory Board for it to propose at the General Meeting
Committee › Supporting the Supervisory Board in the elaboration of an objective to promote the
representation of the under-represented gender
› Responsible for concluding and altering employment contracts with the members of
Presiding the Board of Managing Directors
Committee › Responsible for terminating the employment contracts of the members of the Board
of Managing Directors
› Monitoring of the bank’s risk situation and management, devoting particular
Risk
attention to the overall risk strategy, the sub-risk strategies and credit, market,
Committee
liquidity, operational, reputational and compliance risks
Social Welfare › Responsible for all personnel and social issues which are of general relevance for
Committee employees
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 36For more information, please contact Commerzbank’s IR team
Christoph Wortig (Head of Investor Relations)
Mail: ir@commerzbank.com
P: +49 69 136 52668
www.ir.commerzbank.com
M: christoph.wortig@commerzbank.com
Ansgar Herkert (Head of IR Communications)
P: +49 69 136 44083
M: ansgar.herkert@commerzbank.com
Institutional Investors and Financial Analysts
Michael H. Klein Jutta Madjlessi
P: +49 69 136 24522 P: +49 69 136 28696
M: michael.klein@commerzbank.com M: jutta.madjlessi@commerzbank.com
Corporate Governance / ESG
Dirk Bartsch (Head of Strategic IR &
Rating Agency Relations) Matthias Obst
P: +49 69 136 22799 P: +49 69 136 26430
M: dirk.bartsch@commerzbank.com M: matthias.obst@commerzbank.com
Financial calendar
07 Aug 07 Nov
2019
Q2 2019 results Q3 2019 results
Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 37Disclaimer This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include, inter alia, statements about Commerzbank’s beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates, projections and targets as they are currently available to the management of Commerzbank. Forward-looking statements therefore speak only as of the date they are made, and Commerzbank undertakes no obligation to update any of them in light of new information or future events. By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, among others, the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which Commerzbank derives a substantial portion of its revenues and in which it hold a substantial portion of its assets, the development of asset prices and market volatility, potential defaults of borrowers or trading counterparties, the implementation of its strategic initiatives and the reliability of its risk management policies. In addition, this presentation contains financial and other information which has been derived from publicly available information disclosed by persons other than Commerzbank (“external data”). In particular, external data has been derived from industry and customer-related data and other calculations taken or derived from industry reports published by third parties, market research reports and commercial publications. Commercial publications generally state that the information they contain has originated from sources assumed to be reliable, but that the accuracy and completeness of such information is not guaranteed and that the calculations contained therein are based on a series of assumptions. The external data has not been independently verified by Commerzbank. Therefore, Commerzbank cannot assume any responsibility for the accuracy of the external data taken or derived from public sources. Copies of this document are available upon request or can be downloaded from https://www.commerzbank.de/en/hauptnavigation/aktionaere/governance_/corporate_governace_1.html Commerzbank AG | Group Investor Relations | Frankfurt | June 2019 38
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