Variable remuneration programmes

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Nordea offers a competitive and market aligned total reward offering. Nordea has a total remuneration approach to compensation that recognises the importance of well-balanced but differentiated remuneration structures based on business and local market needs, as well as the importance of remuneration being consistent with and promoting sound and effective risk management not encouraging excessive risk-taking or counteracting Nordea’s long-term interests.

The following incentive systems are a part of Nordea's variable remuneration.

Profit sharing Recognition VSP Bonus schemes EIP LTV GEM EIP LTIP 2007-2012 Profit sharing

Profit Sharing Plan

Profit Sharing Plan (PSP) is offered group-wide to all Nordea employees but not to Identified Staff and employees who are eligible for any of Nordea’s other formal variable remuneration plans.

For eligible employees, the Profit Sharing Plan is offered irrespective of position and salary, and aims to reward employees based on achievement against pre-determined financial goals as well as goals relating to customer satisfaction.

In 2018, a total of EUR 56.9m was provided under Nordea’s Profit Sharing Plan. Each employee can receive a maximum of EUR 3,200. If all stretched performance goals were met, the cost of the Profit Sharing Plan for eligible participants would have amounted to a maximum of approx. EUR 76.9m.

Updated: February 2019
Source: Annual Report 2018

Recognition

Recognition schemes

Recognition Schemes is offered to employees to recognize extraordinary individual or team performance. Individual or team performance is assessed based on a predetermined set of goals. Identified Staff and employees eligible for other variable remuneration components (excluding Profit Sharing Plan and Recommendation Programme) are not eligible for Recognition Scheme awards.

Awards from recognition schemes are provided within a cap of a value not exceeding 1 months' salary or a defined maximum nominal value.

Nordea adheres to the Grandparent principle when determining any awards from Recognition Schemes to any employees.

Updated: February 2019
Source: Annual Report 2018

VSP

Variable Salary Part (VSP)

Variable Salary Part (VSP) is offered to selected people leaders and specialists to reward strong performance. Assessment of individual performance is based on a pre-determined set of well-defined financial as well as non-financial goals, including Nordea Group goals, BA/GF/Division goals and Team/Personal goals. VSP maximum opportunity should normally not exceed a maximum outcome of 25% of annual fixed salary, except for few selected managers and specialists within specific areas. Awards from VSP shall not exceed annual fixed salary.

Awards from VSP are paid in cash. For Identified Staff, VSP awards are partly subject to share price indexation, deferral and subsequent retention as well as forfeiture clauses.

Nordea adheres to the Grandparent principle when enrolling employees to any VSP scheme and approving the outcome. 

Updated: February 2019 
Source: Annual Report 2018

Bonus schemes

Bonus schemes

Bonus schemes is offered only to select groups of employees employed in specific business areas or units as approved by the Board of Directors, e.g. in Nordea Wholesale Banking, Nordea Asset Management and within Group Treasury and ALM. The aim is to ensure strong performance and to maintain cost flexibility for Nordea. Bonus schemes are pool based which is linked to a set of well-defined financial as well as non-financial goals, including Nordea Group goals. Divisional financial performance is measured as risk-adjusted profits, explicitly incorporating capital and funding costs, and is adjusted for multi-period revenue effects and minimum required profit. In the event of weak or negative overall results for the Nordea Group, bonus pools can be adjusted downwards at the discretion of the Board of Directors. As such, individual awards are determined based on detailed performance assessments covering a range of financial and non-financial goals.

Individual bonuses must be provided within both caps on the percentage of risk-adjusted profit that can be paid out, as well as individual caps for variable pay. Also, an approval process is in place to provide specific governance relating to significant individual awards from bonus schemes. 

2018 Bonus awards from bonus schemes are paid in cash. For Identified Staff, awards are partly subject to share price indexation, deferral and subsequent retention as well as forfeiture clauses.

The Board of Directors decides on new or revised bonus schemes and the size of bonus pools on proposal from BRC. GEM is responsible for the implementation of the agreed bonus schemes

Updated: February 2019 
Source: Annual Report 2018

EIP

Executive Incentive Programme (EIP)

Executive Incentive Programme (EIP) is offered to recruit, motivate and retain select-ed people leaders and key employees outside of GEM, and aims to reward strong performance and efforts. Assessment of individual performance is based on a pre-determined set of well-defined financial as well as non-financial goals, including Nordea Group goals, BA/GF/Division goals, Team/Personal goals and where relevant employing entity goals.

The effect on the long-term result is to be considered when determining the goals and any EIP awards shall not exceed annual fixed salary.

2018 EIP awards are paid in cash and are partly subject to share price indexation, deferral and subsequent retention as well as forfeiture clauses. Awards for most participants in EIP are subjected to three-year deferral.

Updated: February 2019 
Source: Annual Report 2018

LTV

Leaders of Transformation Variable (LTV)

Leaders of Transformation Variable Programme (LTV) is offered to a selected and limited group of top management members to reward strong performance and working towards common goals. LTV is based on assessment of Group, BA/GF and Team/Personal performance. The programme is pool-based with predetermined financial and non-financial goals and targets at Group level as well as a collective set of performance targets for the programme participants. The individual award from the pool is determined by a performance assessment of defined goals and targets at BA/GF/Division and individual level.

Individual awards from the LTV shall not exceed annual fixed salary. All awards from 2018 LTV are paid in cash and are partly subject to share price indexation, deferral and subsequent retention as well as forfeiture clauses.

Updated: February 2019
Source: Annual Report 2018

GEM EIP

GEM Executive Incentive Programme (GEM EIP)

GEM EIP is offered to recruit, motivate and retain the CEO and executive officers in GEM and aims to reward strong performance and efforts. Assessment of individual performance is based on a predetermined set of well-defined financial as well as non-financial goals, including Nordea Group goals, BA/GF goals (where relevant) and Team/Personal goals.

GEM EIP has a one-year performance period and the outcome shall not exceed the fixed salary.

The effect on the long-term result is considered when the targets are determined. The outcome from GEM EIP is based on the Board of Directors’ assessment of performance against the predetermined targets.

The outcome from GEM EIP 2018 will be paid out over a five-year period in cash, and be subject to forfeiture clauses, Total Shareholder Return indexation (dividend factor to be excluded during the deferral period) and retention, taking account of domestic rules and practices where relevant.

40% of awards from GEM EIP 2018 is paid in 2019 and 30% is deferred for pay-out in 2022 and 30% is deferred for pay-out in 2024. When amounts are paid, 50% will be subject to retention for 12 months.

Updated: February 2019
Source: Annual Report 2018

LTIP 2007-2012

Long-Term Incentive Programmes (LTIP) 

Nordea offered LTIP in the years from 2007-2012.

More information on Nordea LTIPs is presented in the table in note G7 in Nordea’s Annual report and in Annual reports of previous years.

Updated: February 2019