The Board of Directors’ proposals to Nordea’s Annual General Meeting on 25 March 2010

17-02-10 15:00 | Press release

The Annual General Meeting (AGM) of Nordea Bank AB (publ) (Nordea) will be held on Thursday 25 March 2010 at 13.00 at Aula Magna, Stockholm University, in Stockholm. The board of directors proposes an amendment to the articles of association regarding the way general meetings are convened, authorisation for acquisition and conveyance of own shares, guidelines for remuneration to the executive officers and a Long Term Incentive Programme

The Board's proposals to the AGM

Amendment to the articles of association

The board of directors proposes that article 10 of the articles of association be amended so that notice to attend the general meeting must be given by advertisement in the Swedish Official Gazette and on the company's web site. That the notice has been given must be advertised in Dagens Nyheter. The resolution to amend the articles of association is conditional on that an amendment regarding the way general meetings are convened in the Swedish Companies Act has entered into force and that the amendment means that the proposed wording of article 10 is consistent with the Swedish Companies Act.

Acquisition and conveyance of own shares

In order to facilitate an adjustment of the company's capital structure to prevailing capital requirements and to facilitate the use of own shares as payment for or financing of acquisition of companies or businesses, the board of directors proposes that the AGM authorises the board to repurchase own ordinary shares on a regulated market where the company's ordinary shares are quoted, or according to an acquisition offer to all of the company's owners of ordinary shares. Nordea's holdings of own shares may not at any time exceed ten per cent of the total number of shares in the company. Acquisition of shares on a regulated market may only take place within the registered price interval at any time, meaning the interval between the highest buying price and the lowest selling price. Acquisition of ordinary shares according to an acquisition offer to all shareholders may take place at a premium of up to 30 per cent.

The board of directors proposes that the AGM authorises the board of directors to convey own ordinary shares to be used as payment for or financing of acquisitions of companies or businesses. Conveyance is to be carried out by other means than on a regulated market. Conveyance shall take place at an assessed market value and may take place with deviations from the shareholders' preferential right. Payment for conveyed ordinary shares may be made in cash, by contribution in kind, or through sett-off of claims against the company.

Acquisition of own shares within securities operations

The board of directors proposes that Nordea may continuously acquire own ordinary shares in order to facilitate its securities operations. The holdings of such shares may not exceed one per cent of all shares in the company.

Guidelines for remuneration to the executive officers

A proposal in respect of guidelines for remuneration to the executive officers (the CEO and the members of Group Executive Management) is to be presented to the AGM by the board of directors. It is proposed thatNordea shall maintain remuneration levels and other employment conditions needed to recruit and retain executive officers with competence and capacity to deliver according to Nordea's short and long term targets. Remuneration of executive officers will be decided by the board of directors in accordance with Nordea's internal policies and procedures, which are based on the Swedish Financial Supervisory Authority's (SFSA) regulations and general guidelines on remuneration policy as well as international sound compensation practices. In this context, the principles established by the Financial Stability Board (FSB) and the European Commission are of particular importance.

Salaries and other remuneration in line with market levels is the overriding principle for compensation to the executive officers. Compensation to the executive officers shall be consistent with and promote sound and effective risk management and not encourage excessive risk-taking or counteract Nordea's long term interests.

Fixed salary is paid for fully satisfactory performance. In addition variable salary part can be offered to reward performance meeting agreed predetermined targets on Group, business unit and individual level. The effect on the long term result is to be considered when determining the targets. The variable salary part shall as a general rule not exceed 35 per cent of a fixed salary. In accordance with international principles guaranteed variable salary part is to be exceptional and may only occur in the context of hiring a new executive officer and then be limited to the first year. A major part of the variable salary part shall be deferred with a minimum deferment period and with claw back clauses according to the SFSA's regulations and general guidelines on remuneration policy taking account of domestic rules and practices where relevant.

A Long Term Incentive Programme is proposed. The programme, which is share- and performance-based, has performance measuring over three years, a cap and requires an initial investment by the participants. According to the programme the remuneration is proposed to be given in the form of matching and performance shares free of charge. If the Long Term Incentive Programme is not approved the variable salary part may be increased and shall as a general rule not exceed 50 per cent of fixed salary. Non-monetary benefits are given as a means to facilitate executive officers' performance and are determined by what is considered fair in relation to general market practice. Retirement benefits shall be offered in accordance with market practice in the country where the officers are permanent residents. Notice and severance pay in total shall not exceed 24 months' of fixed salary.

Proposal from the Swedish state: Nordea shall maintain remuneration levels and other conditions required to recruit and retain executive officers with competence and capacity to deliver according to Nordea's short and long term targets. The executive officers will not be able to receive a short term variable salary, neither will they be able to participate in the long term incentive programme. With this exception, the proposal of the state is in accordance with that from the board.

Long Term Incentive Programme to retain and recruit the best talent


The board proposes a long term incentive programme 2010 (Long Term Incentive Programme) ("LTIP 2010") which, like the programmes introduced in the years 2007, 2008 and 2009 ("LTIP 2007", "LTIP 2008" and "LTIP 2009") aims at strengthening Nordea's ability to retain and attract the best

talents for key leadership positions. Further, the aim is that the managers and key employees whose efforts have direct impact on Nordea's result, profitability and long term value growth, shall be stimulated to increased efforts by aligning their interests and perspectives with those of the shareholders.

LTIP 2010 is based on similar principles as the previous programmes and also comprising up to 400 managers and other key employees in the Nordea Group, who are deemed to be of considerable significance for the group's future development.

The programme is a combined matching and performance share programme and a requirement for participating is that the participant holds and locks-in Nordea shares. Allotment, with a capped maximum outcome, depends, inter alia, on the achievement of Nordea's financial goals. Compared with previous programmes this programme will not comprise of rights to purchase Nordea shares during an exercise period following a vesting period. Instead, the participants will be entitled to allotment of Nordea shares free of charge, after a longer vesting period; three years. The performance conditions are based on similar principles as the ones in LTIP 2007, LTIP 2008 and LTIP 2009.

For each Nordea share held and locked-in the participant will be entitled to allotment, free of charge, of:

· one ordinary Nordea share. This share is a Matching Share, which will be allotted if the participant remains employed by Nordea during the three year vesting period.

· a maximum of three ordinary Nordea shares. These shares are Performance Shares, which means that in addition to the three year employment criterion, Nordea has to fulfil certain financial targets, see appendix below.

In order to implement the previous programmes in a cost-effective and flexible way the AGM 2007, 2008 and 2009, decided to hedge those programmes through an issue of redeemable and convertible C-shares. The board considers that the applied alternative is the most cost-effective and flexible method of delivery of shares and for covering certain costs, principally social security costs, for which reason the board proposes to the AGM that the financial risk for LTIP 2010 will also be hedged by way of a directed cash issue of 5,125,000redeemable and convertible C-shares. This form of hedge is seen as preferable to an equity swap. The new shares shall - with deviation from the shareholders' preferential right - be subscribed for by a third party. The subscription price shall correspond to the share's quota value. The share capital, after the new issue of shares, will be increased by 5,125,000 euro. The new C-shares do not entitle to any dividend.

Furthermore, the board of directors proposes authorisation to repurchase the issued C-shares through a directed acquisition offer in respect of all C-shares. C-shares, after conversion to ordinary shares, shall be conveyed to participants in LTIP 2010. It shall also be possible to convey a portion of the shares on a regulated market in order to cover certain costs, mainly social security costs. Moreover, it is proposed that Nordea is entitled, before the AGM 2011, to transfer a maximum of 520,000 ordinary shares of the total holding of 3,120,000 ordinary shares, to cover certain costs, mainly social security costs for LTIP 2007 as well as transfer a maximum of 480,000 ordinary shares of the total holding of 2,880,000 ordinary shares to cover certain costs, mainly social security costs for LTIP 2008 and to transfer a maximum of 1,450,000 ordinary shares of the total holding of 7,250,000 ordinary shares, to cover certain costs, mainly social security costs for LTIP 2009.

The costs are expected to have a marginal effect on Nordea's key ratios. The programme is estimated to cost about 21 million euro during the three-year vesting period, which corresponds to about 1.00 per cent of Nordea's staff costs

The proposed incentive programme has been developed in close consultation with major shareholders. Nordea's board of directors intends to renew the long term incentive programme annually.

Notice to attend the Annual General Meeting

The notice will be published around 23 February. The notice contains instructions as to how registration is to be made, proposal for the agenda of the meeting and the main content in the proposals to the AGM. Notice to attend the meeting will be available on the company's web site www.nordea.com

For further information:

Jan Larsson, Head of Group Identity and Communications, +46 8 614 79 16

Rodney Alfvén, Head of Investor Relations, +46 8 614 78 52

The information in this press release is such that Nordea shall announce publicly according to Act (1991:980) regarding trading with financial instruments and/or Act (2007:528) regarding the securities market.

Appendix:

Conditions for performance shares in the LTIP 2010

In addition to the three-year employment criterion, the entitlement to receive allotment of performance shares depends on certain financial performance conditions:

· Performance shares I: If the compound annual growth rate ("CAGR") in risk adjusted profit per share ("RAPPS") from the financial year 2009 (base year for the calculation) to and including year 2012 ("Three years CAGR in RAPPS") amounts to 2 per cent the participant is entitled to receive allotment of the number of performance shares I corresponding to 15 per cent of the maximum number of performance shares I that may be allotted (minimum hurdle). If Three years CAGR in RAPPS amounts to or exceeds 9 per cent, the participant is entitled to receive allotment of the maximum number of performance shares I that may be allotted (stretched target). If Three years CAGR in RAPPS exceeds the minimum hurdle but is less than the stretched target, the participant is entitled to receive allotment corresponding to 15 per cent of the maximum number of performance shares I that may be allotted plus a proportionate number of performance shares I based on a linear interpolation between the minimum hurdle and the stretched target.

· Performance shares II: If Nordea's total shareholder return 2010-2012 ("TSR 2010-2012") places Nordea in the eleventh position or lower compared to the other banks in the peer group, currently including five Nordic and fourteen other European banks, Allied Irish Bank, Banco Bilbao Vizcaya Argenaria (BBVA), Bank of Ireland, Barclays, BNP Paribas, Commerzbank, Danske Bank, DnB NOR, Erste Bank, Banco Santander, Intesa Sanpaolo, KBC, Lloyds TSB, Royal Bank of Scotland, SEB, Société Générale, Svenska Handelsbanken, Swedbank and UniCredit, defined by the board, the participant will not be entitled to allotment. If Nordea's TSR 2010-2012 places Nordea in position 6-10 the participant is entitled to the following allotment of performance shares II: position six - allotment corresponding to 75 per cent of the maximum number that may be allotted, position seven - allotment corresponding to 60 per cent of the maximum number that may be allotted, position eight - allotment corresponding to 45 per cent of the maximum number that may be allotted, position nine - allotment corresponding to 30 per cent of the maximum number that may be allotted and, position ten - allotment corresponding to 15 per cent of the maximum number that may be allotted. If Nordea's TSR 2010-2012 places Nordea in the first to fifth position the participant is entitled to receive allotment corresponding to the maximum number of performance shares II that may be allotted (stretched target).