Remuneration process and performance evaluation of the members of the governance structure At the company level, sustainability is integrated into the business strategy, and the evaluation of the performance of the highest level of management (Administrators) is carried out using internal indicators referring to the established development directions, sustainability being one of the strategic development directions. However, there is no distinct performance bonus system for this specific top management structure dedicated to the organization's impact on the economy, the environment, and people. Other management structures have sustainability objectives included in the annual performance review, depending on the projects and operations they manage. The Sustainability Manager is evaluated based on performance indicators (the degree of project fulfillment, the implementation of strategic directions and leadership are evaluated). We continue to implement the MBO (Management Business Objectives) process for establishing remuneration for all our management structures, which considers indicators of variation within the labor market and the performance of the people evaluated. The salary increase is proposed by the direct managers and is approved by the management based on a transparent and independent process. Both the annual evaluations and these salaries increases courts consider the objectives set for the fulfillment of sustainability projects, if any. More information about fixed and variable remuneration, bonuses and benefits can be found in the chapter Employees and society, the same policy being applied regardless of the position. Total annual compensation rate Due to the organizational structure based on the pillars, the compensation rate is presented on each pillar separately because each pillar cumulates specific conditions of activity, which are very different between the three pillars and cannot be compared from an operational point of view. In 2023, the highest-paid store employee had a compensation level 2.74 times higher than the annual median for all store employees, except for the highest-paid individual. At the same time, in the logistics centers, the highest paid employee received compensation 5.64 times higher than the median annual compensation in the same category, except for the highest paid individual, and in the case of the head office, 4.36 times higher. The data was compiled considering the compensation for the person with the highest position in each category, except for the position of Logistics Director belonging to the head office. All employees with a seniority in the company of more than 12 months, who did not have maternity leave or parental leave in the reporting year, and whose work fraction was 8 hours (full-time) were considered. The ratio of the total annual compensation for the highest-paid person in the organization to the total median annual compensation for all employees (except the highest-paid individual) The ratio of the total annual compensation for the highest-paid person in the organization to the total median annual compensation for all employees (except the highest-paid individual) 2022 2023 PROGRESS 2023 vs. 2022 1:12.71 1:13.40 +5 % The total annual compensation for the highest-paid position in the organization increased by 18.36% in 2023, compared to 2022. The previous increase was 7.06% in 2022, compared to 2021. The median total annual compensation of all employees except the highest-paid person increased by 10.01% in 2023, compared to the previous year, while in 2022 the median compensation increased by 10.24% compared to 2021. The ratio of the increase in total annual compensation for the highest paid person to the increase in the median total annual compensation of all employees except the highest paid person was 1:1.83 in 2023, and in 2022 it was 1:0.68 in 2022. SUSTAINABILITY REPORT PENNY ROMANIA 2023 62/256 MESSAGE FROM THE GENERAL DIRECTORS SUSTAINABILITY STRATEGY AND GOVERNANCE ABOUT US AND OUR VALUE CHAIN ABOUT THE REPORT THE FUTURE IS MADE TODAY SUSTAINABILITY MILESTONES CONTENTS
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