UniCredit Group

Launching a new ESOP during the financial crisis

Piet BriersInternational Benefits Manager, UniCredit Group

Edwin AlexanianEuropean Operations Manager, Global Shares

Maoiliosa O’CulachainCo-Founder and Director, Global Shares

Employees: ~174,000 (FTE)

Branches: ~ 10,200

Banking operations in 22 countries

International network spanning ~ 50 countries

Global player in asset management: ~ € 167bn in managed assets

Market leader in Central and Eastern Europe leveraging on the region’s structural strengths

UNICREDIT GROUP AT A GLANCE

STRATEGIC GEOGRAPHICAL POSITIONING IN ONE OF EUROPE’S WEALTHIEST AREAS…

No. 1

No. 3

No. 2

~ 17%

~ 4%

~ 16%

Germany

Austria

Italy

Ranking Market share

... BUT ALSO IN THE CEE REGIONCHARACTERIZED BY STILL REMARKABLE STRUCTURAL STRENGTHS DESPITE SOME CYCLICAL WEAKNESSES

STRENGTHS

WEAKNESSES

Long-term real convergence prospects are strong

Strong EU anchor with a strong bank regulatory environment

Very strong commitment of non-resident banks to CEE region

Imbalances to significantly improve in 2009/10

Economic slowdown

Relatively high external financing requirements

Relatively high FX leverage ratios in some countries

cyclical structural

cyclical structural

COMPENSATION POLICY FRAMEWORK

Share ownership as a valuable tool for enabling the engagement,

affiliation and alignment of interests between shareholders, management

and employees

Employee Share Ownership Plan rewards the continued support and

commitment of our people throughout the organisation

As appropriate in light of local legal and fiscal requirements, to offer

employees the opportunity to invest in the future achievements of the Group

through share-based Plans whereby employees can purchase UniCredit

shares at favorable conditions

ELECTION ENROLMENT HOLDINGINVITATION

Jan 2010 – Jan 2013

27 October 2008

Oct – Dec 2008Jan 2009 – Dec 2009

ESOP 2008: MAIN FEATURES

Plan participants can buy UniCredit shares at favorable conditions, receiving 1 free share (Discount share) for every 20 shares purchased at market price (Investment shares)

Moreover, Plan participants will receive 1 additional free restricted share (Matching share) for every 5 shares bought at discount (considering Investment & Discount shares)

After 3 years, Plan participants will have access to the Free shares (Discount + Matching). The entitlement to the Matching shares (but not the Discount shares) is subject to the employment status of the Participant in the UniCredit Group during the 3-year lock-up period

ESOP 2008: MAIN FEATURES

The overall potential benefit for participants

in terms of free shares (Discount & Matching)

is ca. 26% of their investment.

INTERNAL BROKER & BANKING NETWORK

MARKET TURMOIL

COMMUNICATION

DATA PRIVACY

ONLINE PORTAL

NEXT STEPS

CHALLENGES FOR ESOP IMPLEMENTATION

INTERNAL BROKER & BANKING NETWORK

FinecoBank – the UniCredit broker based in Italy – supports the

purchasing of the shares

Leveraging on the involvement of the local UniCredit banking network

to support the shares management & direct debit of participants’

contributions

Participants are required to have a current account and a linked

securities account operated by a local bank which is part of the

UniCredit Group

The Current Account shall be the one where the Participant receives

his/her salary

WE DON’T NEED AN EXTERNAL BROKER

INTERNAL BROKER & BANKING NETWORK

Need for “banking order” to be submitted by participants to their local bank

Banking order via online plan portal

Portal to be customised for verifications and controls by local banks in light of MiFID* rules

Application process can continue only after the verifications by local banks are positively confirmed

Requirement for current account (where salary is credited) and securities account with a bank of the Group

Reduce cost & maximize effectiveness

Competitive fees from FinecoBank for share purchasing & management

Costs remain within the Group

No need to open new accounts leveraging on local banking network

No extra operational & tax costs for participants while maximizing local expertise to support direct debit &shares management

Direct debit to avoid the need to develop specific payroll-deduction procedures

* MiFID = Markets in Financial Instruments Directive (EU Directive 2004/39/EC)

MARKET TURMOIL

Unprecedented market conditions

Share price volatility exceeding expected benefit under the Plan

Impossible to predict when market confidence would return

Why commit today to purchase shares in the future?

What will the future look like?

Confidence in Business Model and future of the Group

Reward the continued support and commitment of employees

Create sense of belonging to the Group

Favorable conditions offered by UniCredit Group

First truly “Global” plan across the Group

Keeping promise to the employees

COMMUNICATION

LET’S SHARE comes from UniCredit’s branding concept LET’S START, representing a call to action, participation, sharing in the success of the Company and at the same time, given the double meaning of “share”, to the employees’ participation in ESOP

Communication process set at Group level

Holding (Global Compensation & Benefits) provided master documents & templates

Countries adapted to local requirements and managed delivery

Market turmoil mandated last minute changes to communication strategy

No “hard selling” due to the risky nature of the investment offer

DATA PRIVACY

Individual consent on data protection is required to participate in the Plan

Before accessing the “offer”, employees need to sign off the agreement

Electronic consent in general but written signature required in some countries

Local HR to send non-personal data to Global Shares before the individual

consent sign-off (User ID, password, Country and HR System code)

Personal data transferred to Global Shares only after individual consent

Holding provided standard consent agreement to be adapted and translated by

local HR

Consult with EWC (European Works Council) and local Unions / Works

Councils to ensure any further local requirements for data protection

ONLINE PORTAL

DATA PRIVACY

Using the 4 pieces of non-personal data, the portal is accessible by all eligible

employees (User ID, Password, Country and HR System code)

From this data the Portal:

Displays in the employee’s relevant language (can be changed by

employee at any time – 5 languages)

Identifies and presents country/ language specific documentation/

communication to employee

Determines whether collection of full employee demographic details are to

be requested manually or automatically once the employee agrees to the

Data Privacy Terms and Conditions

ONLINE PORTAL

DATA PRIVACY

Before the employee can proceed to enroll to the Plan he/she must agree to the

Data Privacy Terms and Conditions

In certain countries the Data Privacy consent must also be printed off by

the employee and sent to their local HR

ONLINE PORTAL

DATA PRIVACY

Participant PortalParticipant PortalUniCredit HR UniCredit HR system / serversystem / server

Employee logs into Portal and agrees to Data Privacy Terms and Conditions

Portal sends automatic electronic message to relevant UniCredit HR system /

server with employee’s USER ID and Original PASSWORD

UniCredit HR system / server validates details

When validation is confirmed, UniCredit HR system/ server returns the

employee’s full demographic data which is automatically uploaded to the Portal

database and the participant can proceed with their enrolment. The process

takes a matter of seconds

ONLINE PORTAL

APPLCATION FORM

ONLINE PORTAL

APPLCATION FORM

Once the Portal has all the relevant data for the employee, the participant can

proceed with their enrolment

The employee must complete the application form supplying their Securities

account number

Using the data supplied by the UniCredit HRs the Portal will;

Determine the currency (using pre-determined exchange rates)

The threshold limits for each employee based on their maximum eligible

annual contribution amount as supplied by the HRs

Allow the employee to select their contribution modality (12 Equal Monthly

payments or 1,2 or 3 one-off payments)

ONLINE PORTAL

BANKING TESTS

Due to the nature of the Plan, once the participant has submitted their

application they must undergo various Banking tests before they can proceed

to ‘Confirm their Order’

The tests are carried out by the relevant Bank

Global Shares sends (on a daily basis) the details of all employees who have

enrolled via FTP

Fineco splits the data by the relevant Banks and send on to them so the tests

can be performed

Fineco (on a daily basis) return the results to Global Shares via FTP

ONLINE PORTAL

BANKING TESTS

Participant PortalParticipant Portal FinecoFineco

UniCredit local UniCredit local BanksBanks

ONLINE PORTAL

BANKING TESTS

When the results are applied to the Portal, the employee will receive an

automatic email inviting them back to continue with the process

The participant will then be presented with their results and will either be

able to proceed and ‘Confirm their Order’ or be required to fix any issues

and re-apply

Possible results which will require the employee to re-apply:

Bank Account error (to be fixed through local HR)

Securities account error (to be corrected by employee on re-

application)

MFID error (to be settled with Bank)

The Portal specifies the actions required by the employee for each error

ONLINE PORTAL

BANKING TESTS

Once the participant has achieved good results they can proceed to ‘Confirm

their Order’ and will be presented with their Order Summary and Fineco will

commence the purchasing of their Shares as per their application details

NEXT STEPS

Suggested Portal improvements for next roll out:

Improved validation on email addresses as supplied by participant

Mass email communication system for Portal

More support in relation to entry of securities account by participants

Visual guidance for participants in relation to the stage they are at in the

entire process

Improved automated file transfers between all parties

Questions and AnswersQuestions and Answers