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Variable remuneration programmes

Nordea meeting room with people

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 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.

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

Profit Sharing Plan

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 variable remuneration plans.

For eligible employees, the PSP is offered irrespective of position and salary and aims to collectively reward employees based on achievement in relation to predetermined financial goals as well as goals relating to customer satisfaction. The PSP is capped financially, and the outcome is not linked to the value of Nordea’s share price.

In 2020, a total of EUR 32.4m was provided under Nordea’s Profit Sharing Plan (EUR 13.1 in 2019, EUR 56.9m in 2018). Each employee can receive a maximum of EUR 3,200. 

Updated: March 2021
Source: Annual Report 2020

Recognition scheme

Recognition Schemes is 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 variable remuneration plans, excluding Profit Sharing Plan, are not eligible for Recognition Scheme awards.

All individual remuneration decisions are subject to separate processes and approved in line with the grandparent principle (four-eyes approval by the manager’s manager).

Updated: March 2021
Source: Annual Report 2020 

Variable Salary Part (VSP)

Variable Salary Part (VSP) is offered to selected people leaders and specialists to reward strong performance. The assessment of individual performance is based on a predetermined set of well-defined financial as well as non-financial goals. The VSP maximum outcome for 2020 should normally not exceed a maximum outcome of 25% of the annual fixed salary, except for few selected managers and specialists within specific areas of Nordea. Awards from VSP will not exceed annual fixed salary.

Awards from VSP are paid in cash. For Material Risk Takers, VSP awards are partly delivered in instruments with subsequent retention. Parts of the awards for Material Risk Takers from VSP are subject to at least three-year pro-rata deferral period with forfeiture conditions applying during the deferral period. 

Updated: March 2021  
Source: Annual Report 2020

Bonus schemes

Bonus schemes is offered only to select 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 to maintain cost flexibility for Nordea. Individual awards are determined based on detailed performance assessments covering a range of financial and non-financial goals. Individual awards are determined based on detailed performance assessments covering a range of financial and non-financial goals. 

2020 Bonus awards from bonus schemes are paid in cash. For Material Risk Takers, awards are partly delivered in instruments with subsequent retention. Parts of the awards for Material Risk Takers in a bonus scheme are subject to a three-to-five year pro-rata deferral period with forfeiture conditions applying during the deferral period.

Updated: March 2021  
Source: Annual Report 2020

Executive Incentive Programme (EIP)

Executive Incentive Programme (EIP) is offered to recruit, motivate and retain selected people leaders and key employees outside of GLT and aims to reward strong performance and efforts. The assessment of individual performance is based on a predetermined set of well-defined financial as well as non-financial goals. Individual EIP awards will not exceed annual fixed salary.

Awards from 2020 EIP are normally, and always for Material Risk Takers, allocated partly in cash and partly in instruments with subsequent retention. Parts of the awards for participants in EIP are subject to a three-to-five year pro-rata deferral period with forfeiture conditions applying during the deferral period.

Updated: March 2021  
Source: Annual Report 2020

Executive Incentive Programme (EIP 2020) for GLT

EIP 2020 for GLT was offered to recruit, motivate and retain the CEO and executive officers in GLT and aimed to reward strong performance and efforts. EIP 2020 for GLT has a one-year performance period and includes predetermined performance goals and targets at group, business area/group function and individual level. The effect on the long-term result is considered when determining the targets. 

The outcome from EIP 2020 has been based on the Board of Directors’ assessment of performance against predetermined targets. The outcome from EIP 2020 will be paid over a five-year period in cash and in Nordea shares, and will be subject to forfeiture clauses. No dividends are paid during the deferral period. Nordea shares will be subject to 12 months' retention. The maximum outcome of EIP 2020 for GLT members participating in LTIP 2020-2022 was reduced form 100% of the annual fixed base salary to 75% as part of a rebalancing of the GLT's remuneration structure. EIP 2020 is capped at maximum 75% of fixed base salary.

The CEO and the members of the GLT have been offered participation in programmes similar to EIP 2020 since 2013.

40% of the EIP 2020 outcome will be paid out in 2021, the remaining 60% will be paid-out annually pro-rata over five-years with 12% delivered each year. 50% of the EIP 2020 outcome is delivers in Nordea shares (excluding dividends) at each delivery event, which are subject to retention for 12 months when the deferral period ends. The outcome from EIP 2020 has been expensed in full in 2020. 

For further information please refer to Nordea's Annual Report for 2020.

Updated: March 2021
Source: Annual Report 2020

Long-Term Incentive Programmes (LTIP) 

Nordea offered LTIP in the years from 2007-2012. The LTIP 2012 programme was fully expensed in May 2015. All shares in LTIP 2012 are fully vested and consequently not conditional. There are no outstanding shares for current GLT members as of 31 December 2020. 

More information on Nordea LTIPs is presented in Annual reports of previous years.

Updated: March 2021

Long-Term Incentive Plan (LTIP) 2020-2022

In 2020, the Board of Directors decided to launch a LTIP 2020-2022 to Nordea's Group Leadership Team (GLT) in accordance with the remuneration policy for governing bodies adopted by an advisory vote at Nordea's 2020 AGM. The main purpose of the LTIP 2020-2022 is to further align the GLT's interests with those of shareholders. 

The LTIP 2020-2022 has a three-year performance period from 1 January 2020 to 31 December 2022 and deferral and retention periods, according to regulations.

The total maximum number of shares that can be granted under the LTIP 2020-2022 was nominally allocated to the participants in 2020 as conditional share awards. In 2023, based on Nordea's performance against pre-established performance criterial the maximum number of shares or a proportion of the shares will be awarded to the participants. The first portion of the shares of the potential award will be delivered in 2023. The rest of the shares are deferred and delivered annually in five equal portions during 2024-2028. Each share delivery is subject to a 12-month retention period.   

For further information on LTIP 2020-2022, see p.65 of Nordea's Annual Report 2020.

Updated: March 2021
Source: Annual Report 2020