Bonus schemes are only offered to selected groups of employees employed in specific businesses areas or units approved by the Board of Directors. Nordea pays bonuses linked to performance where both divisional bonus pools and individual allocations are explicitly based on defined performance measures. Divisional financial performance is measured as risk-adjusted profits, explicitly incorporating capital and funding costs, and adjust for multi-period revenue effects as well as minimum required profit. In the event of weak or negative overall Nordea Group result, bonus pools can be adjusted downwards at the discretion of the Board of Directors. As such, individual compensation is determined based on detailed performance evaluations covering a range of financial and non-financial factors.
Inappropriate individual bonuses are prevented through both caps on the percentage of risk-adjusted profit that can be paid out as well as individual caps. Nordea has introduced deferral programmes for the staff in the risk analysis defined as Identified Staff.
Care is taken to ensure that control and compliance staff employed in divisions having bonus schemes remains competitively rewarded.
The Board of Directors decides on new or revised bonus schemes and outcome of divisional bonus pools on proposal by Board Remuneration Committee. GEM has responsibility for the implementation of the agreed bonus schemes. Nordea also applies a stringent process to ensure that compensation for individuals does not encourage excessive risk taking behaviour. To supplement the division level assessment, there is an approval process for significant bonuses to individuals, with the CEO’s approval required for bonuses exceeding a predetermined level.Source: Annual Report 2012