Value Enhancing Executive Long Term Incentive Plan Approved by the Supervisory Board – Investor Relations

Yesterday maib Supervisory Board voted to approve the Long Term Incentive Plan (“the Plan”), under which stock options are to be granted to top and middle management of the Bank as part of their compensation package. The plan is structured based on phantom options, allowing for maximum flexibility in terms of the design of the program, while securing the intended economics of the plan. Thereby, while the awards are linked to the value of maib’s shares, they do not grant their holders ownership of the Bank or any entitlement to dividends thus avoiding the dilution of existing shareholders. Maib’s Plan is a based on a best practice approach to executive compensation, meant to align incentives of management and shareholders, while putting the prudent, long-term development of the Bank front and center.

Strategic view

The Plan is designed to emphasize long-term, sustainable value creation, by aligning the interests of qualifying employees and shareholders, while fully respecting the existing regulatory guidelines. The awards under the Plan are linked to the growth of the Bank’s equity valuation rather than short-term measures such as annual profitability. This is done to avoid excessive risk taking associated with variable profit-linked compensation and instill a sense of measured and responsible approach to business in the long-term. Additionally, the Plan will act as a powerful instrument of employee retention and motivation, with enrolment in the plan potentially open to new participants in the future.

Maib’s strategic goals are to establish an operating model on par with best-in-class international peers, and also to potentially list its shares on a major international stock exchange, which would require attracting and retaining talent on international scale. The Plan should enable the Bank to achieve those goals at a reasonable cost.

Plan details

The Plan strictly adheres to the National Bank of Moldova regulatory requirements for management compensation among other factors where relevant, for total variable portion of the compensation not to exceed the fixed compensation, as well as share based payment to be capped at 50% of the variable compensation. In addition, the total amount of the share linked instruments to be earned by the participants throughout the program will not exceed the 5% of the outstanding shares of the Bank, as per the limit set by maib’s AGM. The plan includes just under 100 employees representing all business lines at levels at and above mid-level executive. Each option has malus and clawback clauses. In aiming to be fully compliant with existing regulatory framework, maib sought the advice of Schoenherr, on legal aspects, and BDO, on financial advisory aspects.
 

Vasile Tofan, maib Supervisory Board member and Chair of Nomination and Remuneration Committee, said:

“Maib has put in place an innovative executive compensation package, which promotes balanced approach to motivation and risk management. It is tied to long-term value of the business rather than short-term profitability, while avoiding excessive costs and shareholder dilution.”

Vytautas Plunksnis, maib Chairman, said:

“The Long Term Incentive Plan, that the Supervisory Board approved today, follows best-in-class international practices, and will be a decisive factor in attracting and retaining talent necessary to attain ambitious targets set out in maib’s updated strategy.”

About maib

Maib is the largest bank in Moldova, accounting for 31.1% of country’s banking assets and 34.2% in loans as of 30 September 2021. The bank provides 25.3%of all mortgage loans extended to Moldovans, serves over 35% of Moldova’s population and is among the largest employers in the country. The bank is well capitalized with Tier 1 Capital ratio of 19.9% as of 30 September 2021. Maib is widely recognized for its customer service and product innovation. Since 2018, maib’s largest shareholder is HEIM Partners Limited, a consortium of investors composed of European Bank for Reconstruction and Development, Invalda INVL, a leading asset management group in the Baltics, and Horizon Capital, an Emerging Europe focused private equity fund manager.

Upcoming investor event

April 2022 – maib Investor Day (date to be confirmed)