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Nordea’s Remuneration Policy

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The Board of Directors decides on the Group Board Directive on Remuneration (Nordea's internal 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 and People Committee. 

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

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

Aim of Nordea’s Remuneration Policy

Nordea’s Remuneration Policy (internally referred to as the Group Board Directive on Remuneration) will:

  • 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 shareholders by including goals directly linked to the per-formance of Nordea and by awarding parts of variable remuneration in shares or other instruments; and
  • Ensure that remuneration at Nordea is aligned with efficient risk management, the 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 having remuneration that is consistent with and promotes sound and effective risk management, and that does not encourage excessive risk-taking or counteract Nordea’s long-term interests.

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

Updated: March 2021
Source: Annual Report 2020

Nordea’s remuneration structures

Nordea’s remuneration structure comprises fixed remuneration and variable remuneration. 

Fixed remuneration components

Fixed base salary should remunerate for role and position and is affected by job complexity, responsibility, performance and local market conditions. 

Allowance is a predetermined fixed remuneration component tied to the employee’s role and position. Fixed base salary is, however, the cornerstone of all fixed remuneration. Allowances are not linked to performance and do not incentivise risk taking. 

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

Benefits at Nordea are awarded as part of the total reward offering that is either individually agreed or based on local laws, market practice, collective bargaining agreements and company-determined practice.

 Variable remuneration components

Nordea has the following variable remuneration plans, which you can read about in more detail here.

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

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

Bonus schemes were offered only to selected groups of employees in specific business areas or units as approved by the Board of Directors, e.g. in Large Corporates & Institutions, Nordea Asset Management, in Nordea Funds and within Group Treasury. The aim is to ensure strong performance and maintain cost flexibility for Nordea.

Recognition Scheme was offered to employees to recognise extraordinary performance. The individual performance is assessed based on a predetermined set of goals. Material Risk Takers and employees eligible for other formal annual variable remuneration plans, excluding the Profit Sharing Plan, are not eligible for Recognition Scheme awards. 

Profit Sharing Plan (PSP) is offered group-wide to all Nordea employees but not to employees who are eligible for any of Nordea’s other formal annual variable remuneration plans. For eligible employees, the Profit Sharing Plan is offered irre-spective of position and salary and aims to collectively reward employees based on achievement in relation to pre-determined financial goals as well as goals relating to customer satisfaction. 

Long-Term Incentive Programme 2020-2022 (LTIP) In 2020, the Board of Directors decided to launch LTIP 2020-2022 for GLT. The main purpose of the LTIP 2020-2022 is to further align the GLT’s interests with those of shareholders. 

Updated: March 2021
Source: Annual Report 2020

Risk and remuneration

The link between performance, risk and variable remuneration in Nordea’s remuneration components is assessed annually to ensure business relevance, to ensure that all risks are addressed appropriately, and to ensure compliance with applicable international and local regulations. 

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

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

Financial and non-financial goals are based on the busi-ness’s expectations and forecast and stretched targets are approved by the Board of Directors to ensure alignment with shareholders and business priorities. Hence, the main performance goals in variable remuneration for the Nordea Group in 2020 were financial goals and targets as well as customer satisfaction and employee engagement goals and targets. 

When assessing performance against the pre-determined set of well-defined goals and targets, Nordea applies an aligned structure with clear expectations for our people. Individual performance is assessed on not only ‘what’ is delivered but also ‘how’ it is delivered. A key aspect is performance in relation to 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 further examples of how sound risk management is supported: 

  • Applying a group variable remuneration funding mechanism which considers prudential and appropriate risk-adjustments when setting a group pool for each performance year;
  • Ensuring that the Board of Directors approves the total outcome of variable remuneration before award, which allows for adjustments in outcome if deemed appropriate by the Board of Directors e.g. considering risk limits;
  • There is an appropriate balance between fixed and variable remuneration;
  • Relevant control functions provide input on the setting of a group variable remuneration pool, performance goals and the outcome of such, to ensure that the impact on staff behaviour and the risks of the business undertaken are fully addressed;
  • The effect on long-term results is considered when determining goals and targets for variable remuneration;
  • No employee at Nordea can earn variable remuneration exceeding 200% of their annual fixed remuneration. The maximum ratio between the fixed and the variable remuneration for Material Risk Takers was 200% in 2020 in accordance with the 2019 AGM’s decision. In practice, however, a ratio between the fixed and the variable remuneration above 100% of their annual fixed remuneration only applies to a very limited number of employees due to the outcome from Nordea’s variable remuneration plans being capped at certain levels;
  • 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; and
  • Employees engaged in control functions are compensated independently of the performance of the business unit(s) they control and predominantly through fixed remuneration.

Updated: March 2021
Source: Annual Report 2020

Audit of Nordea’s Remuneration Policy

The BRPC follows up on the application of the Remuneration Policy and supplementary instructions within Nordea through an independent review by Group Internal Audit. This audit is conducted at least annually. 

Updated: March 2021
Source: Annual Report 2020