Nordea’s Remuneration Policy

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The Board of Directors decides on the Group Board Directive on Remuneration (Nordea's Remuneration Policy), based on an analysis of the possible risks involved, and ensures that it is applied and followed-up as proposed by the Board Remuneration Committee

Information about the number of meetings held by the Board of Directors and its committees.  

Nordea's Remuneration Policy is applicable to the whole group and is also approved by the Board of Directors of each legal entity respectively.

Purpose Components Risk and remuneration Audit Purpose

Nordea's Remuneration Policy shall

  • Support Nordea’s ability to recruit, develop and retain highly motivated, competent and performance-oriented employees and hence support the Group strategy;
  • Ensure that employees are offered a competitive and market aligned total reward offering;
  • Support sustainable results and the long-term interests of the shareholders; and
  • Ensure that remuneration in Nordea is aligned with efficient risk management, Nordea Purpose and Values and applicable regulations

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.

When assessing performance against the pre-determined set of well-defined goals and target, Nordea applies an aligned structure with clear expectations for people leaders. Individual performance is assessed on not only ‘what’ is delivered but also ‘how’ it is delivered. A key aspect is performance against specific risk and compliance targets as well as general compliance and risk conduct, which must be appropriately considered when determining variable remuneration awards.

Updated: February 2019
Source: Annual Report 2018

Components

Nordea remuneration components - purpose and eligibility

Nordea's remuneration structure comprises fixed remuneration and variable remuneration:

Fixed remuneration

Fixed Base Salary which should remunerate for role and position and is impacted by: job complexity, responsibility, performance and local market conditions.

Allowance is a predetermined fixed remuneration component. Fixed base salary is, however, the cornerstone for all fixed remuneration. Allowances are not linked to performance or otherwise incentivising risk taking.

Pension and Insurance aims at ensuring employees an appropriate standard of living after retirement as well as personal insurance during employment. Pension and insurance provisions are in accordance with local laws, regulations and market practice either collectively agreed schemes or company determined schemes, or a combination thereof. Nordea aims to have defined contribution pension schemes.

Benefits in Nordea are awarded as a part of the total reward being either individually agreed or based on local laws, market practice, collective bargaining agreements and company determined practice.

Variable remuneration

The following variable remuneration programmes are offered to selected Nordea employees, and you can read more about them on under Variable remuneration programmes.

GEM Executive Incentive Programme (GEM EIP)is offered to recruit, motivate and retain the CEO and executive officers in GEM.

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.

Executive Incentive Programme (EIP)is offered to recruit, motivate and retain selected people leaders and key employees outside of GEM, and aims to reward strong performance and efforts. 

Variable Salary Part (VSP)is offered to selected people leaders and specialists to reward strong performance.

Bonus schemesis 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.

Recognition Schemes is offered to employees to recognize extraordinary individual or team performance. Identified Staff and employees eligible for other variable remuneration components (excluding Profit Sharing Plan and Recommendation Programme) are not eligible for Recognition Scheme awards.

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.

Long Term Incentive Programme (LTIP) Nordea offered Long-Term Incentive Programmes (LTIP) years 2007-2012.

Updated: February 2019
Source: Annual Report 2018

Risk and remuneration

The link between performance, risk and variable remuneration

Nordea’s remuneration components are assessed annually to ensure business relevance, that all risks are addressed appropriately as well as compliance to applicable international and local regulations. 

Risks are addressed through the regular reviews of both remuneration structures as well as individual remuneration components, participants and potential size of potential awards, and by disclosing relevant information. 

Also, Nordea has processes to align business and individual goal and target-setting across Nordea with the overall strategy, and predefined risk adjusted criteria.

The main performance goals in variable pay for Nordea Group were hence both absolute and relative financial goals and targets as well as absolute and relative customer satisfaction goals and targets. 

When assessing performance against the pre-determined set of well-defined goals and target, Nordea applies an aligned structure with clear expectations for people leaders. Individual performance is assessed on not only ‘what’ is delivered but also ‘how’ it is delivered. A key aspect is performance against specific risk and compliance targets as well as general compliance and risk conduct, which must be appropriately considered when determining variable remuneration awards. 

The following principles are examples of what is further applied to ensure sound risk management: 

  • There is an appropriate balance between fixed and variable remuneration
  • Relevant Control functions are involved in and give input to the design of variable remuneration plans and associated processes. 
  • No employee in Nordea can earn variable remuneration exceeding 200% of annual fixed remuneration. The maximum ratio between the fixed and the variable remuneration for employees who are identified as having an impact on Nordea’s risk profile under CRD IV (Identified Staff) was 100% in 2018. 
  • The risks set out in Nordea’s Risk Appetite Statement are linked to forfeiture conditions to ensure that breaches of risk limits influence variable remuneration awards.
  • Payments related to early termination of employment should reflect performance achieved over time and should be designed to not reward failure or misconduct. 
  • Nordea ensures that a substantial part of variable remuneration, as a minimum for Identified Staff, is deferred and afterwards retained over an appropriate period. This means that 40%–60% of variable remuneration awards are deferred for three to five years with vesting and subsequent disbursement over the deferral period on a pro-rata basis. At least 50% of vested awards are also subject to 6–12 months’ retention.
  • Deferred amounts relating to the 2018 performance year are subject to indexation against the development of Nordea’s share price during both the deferral and retention period ensuring that awards are made in the form of instruments linked to the Nordea share price. Dividends are excluded from the indexation due to regulatory requirements.
  • General provisions for malus and claw-back in Nordea are set out in Nordea’s Board Directive on Remuneration. The Consequence Management Committee (“CMC”), constituted of the heads of Control Functions, provides governance and oversight of risk performance related adjustments of selected staff in scope in the first line of defence.
  • Employees must not use personal hedging strategies to undermine or eliminate the effects of deferred variable remuneration being partly or fully removed.

Updated: February 2019
Source: Annual Report 2018

Audit

Audit of the Remuneration Policy

At least annually, the Board Remuneration Committee follows up on the application of the Nordea Remuneration Policy and supplementary instructions through an independent review by Group Internal Audit.

Updated: February 2019
Source: Annual Report 2018