Recognise with fairness and competitiveness

The pay strategy in the different Companies, embodied in compensation and recognition policies, is guided by three fundamental principles:

• creating a positive impact on our people, ensuring a balanced and dignified standard of living for employees and their families;
• ensuring fairness and equity as a foundation, guaranteeing competitive pay packages adjusted to different contents and functional levels;
• recognising the effort and commitment of our teams, the achievement of results and the exceeding of targets, singling out and reinforcing exemplary performance and behaviours.

Guaranteed income

A fundamental principle that guides our policies is the guarantee that, in the different Companies, our employees receive a competitive salary. For this reason, our strategy is to set entry-level salaries above the national minimum wages.

Poland introduced a new system for increasing the national minimum wage, with two increases taking place in the year (in January and July), resulting in a historic 20% increase in the national minimum wage in 2023 compared to the previous year. Despite the impact this measure had on Biedronka and Hebe, the Companies invested to maintain the competitiveness of guaranteed minimum income. Biedronka ensured an entry-level salary up to 22% higher than the Polish minimum wage.

In Portugal, and in line with the biggest increase on record of the national minimum wage, all the Companies secured an increase in their entry-level minimum salary of up to 18%. Many employees thus received an increase in income above inflation recorded during the year.

In Colombia, where the national minimum wage increased 48% between 2018 and 2023, Ara offers an entry-level salary higher than the national minimum wage, with the efforts made by the Company guaranteeing its employees a minimum monthly income 53% higher than the Colombian minimum wage in 2023.

*In Portugal, the minimum monthly income includes the entry base salary and meal subsidy. In Poland it includes the entry base salary and presence subsidy, and in Colombia it includes the entry base salary, meal subsidy and transport subsidy. The values presented are for full-time working hours in the three countries under analysis.

In addition, we follow policies and processes to reward our people fairly and equitably in all our Companies. The majority of our employees have their salary reviewed after their first year of service as a way of rewarding their commitment and distinguishing experience and autonomy. We have also defined salary levels adjusted to the different functional contents and levels of responsibility in the different operations and business support areas. All these variables led to a considerable increase in average salaries in 2023, particularly at Biedronka (where the average salary increased 16%) and Recheio (increased 11%).

Also taking into account merit-based salary increases, 99% of active employees during the year saw their salary increased, resulting on an average raise of 18%.

Recognition

In 2023 we invested around 312 million euros in recognising our employees, 8% more than in 2022, strengthening the growing trend in the use of these mechanisms in the Group’s pay strategy.

Biedronka has incentive mechanisms in place that recognise the individual or team performance of all store and logistics employees, in addition to various extraordinary awards paid during the year. Pingo Doce launched its quarterly store management bonus in 2023 to reward the performance of store management teams in increasing sales and reducing losses. Recheio recognises the employees in its different business areas by offering at least one monthly performance bonus, including the monthly store bonus, sales incentives, productivity bonus and the bonus related to store openings.

In 2023, between annual performance bonuses, non-absence awards and incentive schemes, we invested around 277 million euros (16% more than in 2022) distributed as follows:

• more than 120 million euros in performance bonuses paid to managers and extraordinary awards paid to operational teams (around 85,300 employees);
• more than 156 million euros allocated to sales performance bonuses, non-absence awards, and other bonuses and awards.

As a way of recognising their loyalty and commitment, every year we award a special bonus to employees who reach a certain level of seniority. In 2023, we invested around seven million euros in this special bonus, paid to nearly 5,900 employees.

Cognizant of its strategic nature, we have improved our approach to recognition, increasingly valuing how objectives are achieved and not just the fact that they have been achieved. We have been testing innovative mechanisms that meet these needs, for instance at Ara and Hussel, where we implemented gamification recognition systems, focused on improving processes and recognising behaviours and results.

At Christmas, an important season for families, and amidst a challenging economic climate, with a significant increase in the cost of living, over 109,000 employees in operations roles in Poland and Portugal received an exceptional recognition award totalling 24.4 million euros. Biedronka also ensured the payment of an extraordinary bonus to store management teams, corresponding to an additional investment of around 4.1 million euros.

Benefits

Fringe benefits are another key component of the Group’s compensation policy, as they enhance our value proposition for employees and are tailored to their needs.

Depending on their level of responsibility, employees receive a benefits package that can include life insurance, health insurance, travel accident insurance, and a pension plan. These benefits are complemented by a package of work tools designed to make it easier for employees to carry out their duties, in addition to the wide range of family and wellbeing support measures we have available for employees.

We also offer a flexible social benefits plan, Bolsa Flex, under which an amount is allocated to each employee to select, from amongst the available options, the ones that best suit their needs and personal preferences. In 2023, more than 4,500 employees were covered by Bolsa Flex. At Hebe, a sum from the Social Fund (a legally required mechanism in Poland) can be allocated to more than 4 thousand available options, giving employees complete flexibility over how to use their money.