Remuneration About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements Rabobank's Vision on Remuneration As part of Rabobank's vision on Remuneration we focus on cooperative objectives and on Rabobank's core values. Our background as a cooperative means we allow employees to make an actual difference both in the local communities in which they work and internationally by contributing to our goal of providing a solution to the global food issue. Rabobank has a conscientious, socially responsible and sustainable remuneration strategy within the limits of legislation and regulations. The financial part of the reward is targeted at market median. Rabobankaimsto bean attractive employer. We want to hireand retain talent, we focus on empowering our employees, and we cherish diversity. This is done not only by offering fair remuneration packages, but also by providing a valuable set of secondary conditions, such as an attractive working environment, a good pension structure and focus on the development of employees. Our (global) performance management system GROW! as well as the Dutch Development Budgetforthe Collective Labor Agreement (CLA) population and executives, contribute to employees' professional and personal development. Remuneration Policies Rabobank's remuneration policy is captured in several documents. For most Rabobankemployees,the CLA is applicable. A separate remuneration policy applies to the Managing Board and other executives. DLL and Rabo Real Estate Group have each adopted remuneration policies of their own that fit the framework. Remuneration policies for Wholesale, Rural Retail (WRR), DLL and Rabo Real Estate Group entities located outside the Netherlands are partly based on local legislation and regulations, as well as on market conditions, but they are always based on the same Vision on Remuneration. The principles and guidelines of the Vision on Remuneration are detailed in the Group Remuneration Policy.The Group Remuneration Policy is annually updated and complies with (external) regulations, with Rabobank Group's business strategy, as well as with its customer focus, core values and desired risk profile. The policy takes into account the fact that Rabobank is an important bank with an international scope and complex activities. It supports solid and effective risk-management processes designed to protect Rabobank's long-term results and its robust capital position. This is accomplished, for example, through the application of the cycle of risk alignment, through raising employees' awareness of risks and through discouraging undesirable risks (e.g. irresponsible sales practices). The policy further encourages employees to aim for lasting results in line with the long-term interests of Rabobank Group, its clients and other stakeholders. General Outlines of the Policy In general, fixed pay is based on job evaluation and leads to a function scale for each position. Each function scale is accompanied by a salary scale, which allows for a remuneration ratio between levels. This is done within the Netherlands as well as within entities outside the Netherlands that have local benchmarks. The salary scales are set around the median of the market for comparable work, so that it complies with Rabobank's conscientious vision on remuneration. Within Rabobank Group, only a specified body is eligible for variable pay. This body is situated within Treasury, the domain Wholesale, Rural Retail and within Rabobank's subsidiaries. Variable pay is never guaranteed and does not reward for failure or misconduct. The link between performance and pay is determined in performance management documents, in which employee's contribution to Rabobank and to their personal growth are assessed. Rabobank's performance objectives consist of well-balanced financial and non-financial criteria. At least half of the performance objectives must be non-financial. The performance objectives do not contain any incentives that might encourage behavior that is careless or otherwise not in the clients' best interest. Also, the objectives take into account whether the core val ues of Rabobank are observed, such as, for instance, the empowerment of employees. Rabobank complies with Dutch and European legislation, maximizing variable pay to an average of 20% of fixed pay for employees working in the Netherlands, and a maximum of 100% for employees working outside the Netherlands. In 2018, Rabobank did not use the possibility provided in Dutch law to award variable pay up to 200% in countries outside the EEA. In 2018, the variable remuneration for Rabobank Group worldwide was EUR 198.5 million (2017: EUR 216.9 million), approximately 5% of the total amount reserved for remuneration. For all variable payments, several risk-mitigating measures are in place, such as ex-ante and ex-post testing and the ability to apply malus or clawback. For those employees eligible for variable pay, a risk target should be part of their individual GROWlNotes. The group of employees that might possibly have had a material impact on the risk profile of the bank was designated as Identified Staff. This selection is generally done annually, while in 2018 the Annual Report 2018 - Corporate Governance 102

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Annual Reports Rabobank | 2018 | | pagina 104