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.
Nordea's Remuneration Policy will
- support Nordea’s ability to recruit, develop and retain
highly motivated, competent and performance-oriented
employees and hence fulfilling the the People strategy;
- Ensure that employees are offered a competitive and market aligned total reward offering;
- Support sustainable results and the long-term interests of shareholders; and
- Ensure that remuneration in Nordea is aligned with efficient and effective risk management, Nordea purpose and values and applicable regulations.
Nordea offers competitive remuneration packages.
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.
Remuneration should be aligned with the business strategy. Performance is assessed not only on "what" is achieved but equally important "how" it is achieved. There should be an equal balance between "what" and "how" when goals are assessed. Adherence to Nordea's purpose and values, business principles and Group Internal Rules are key considerations taken into account for determining variable remuneration awards.
Updated: June 2018
Source: Annual Report 2017
Nordea remuneration components - purpose and eligibility
Fixed Salary remunerates employees for full satisfactory performance. The individual salary is based on three cornerstones: Job complexity and responsibility, performance and local market conditions.
Pension and Insurance schemes aim at ensuring an appropriate standard of living after retirement and personal insurance during employment. Pension and insurance provisions are according to local laws, regulations and market practice and take the form either of collective agreements, company-determined schemes or a combination thereof. Nordea aims to have defined contribution pension schemes. Nordea does not use discretionary pension benefits.
Benefits at Nordea are granted as a means to stimulate performance and well-being. Benefits are either linked to the employment contract or local conditions.
Profit Sharing aims to stimulate value creation for customers and shareholders and is offered to all employees. The performance criteria for the 2017 programme are Return on Capital at Risk, Return on Equity relative to peers, Customer Satisfaction Index both absolute and relative to Nordic peers.
Variable Salary Part (VSP) is offered to selected managers and specialists to reward strong performance. Individual performance is assessed based on a predetermined set of well-defined financial and non-financial success criteria, including Nordea Group criteria.
Bonus scheme is offered only to selected groups of employees in specific businesses areas or units. The aim is to ensure strong performance and to maintain cost flexibility for Nordea. Assessment of individual performance shall be based on a predetermined set of well-defined financial and non-financial success criteria, including Nordea Group criteria.
Executive Incentive Programme (EIP) may be offered to recruit, motivate and retain selected managers and key employees, and aims to reward strong performance and efforts. EIP contains predefined financial and non-financial performance criteria at Group, Business Area/Group Function/Division and unit/individual level.
GEM Executive Incentive Programme (GEM EIP) is offered to the CEO and Group Executive Management (GEM) and is based on predefined financial and non-financial performance criteria at Group, business area/group function and individual level.
Long Term Incentive Programme (LTIP) Nordea offered Long-Term Incentive Programmes (LTIP) years 2007-2012.
Updated: April 2018
Source: Annual Report 2017
Nordea’s remuneration components are evaluated annually to ensure compliance with both international and local remuneration regulations and guidelines. In addition to the evaluation of Nordea’s remuneration components, the risk analysis addressing issues arising with respect to Nordea’s Remuneration Policy was updated in March 2017. Key factors addressed include risks related to the governance and structure of the remuneration schemes, target-setting and measurement of results, as well as fraud and reputation. The main focus of the analysis is the variable components that potentially lead to total compensation that could be considered high.
Nordea mitigates these risks by regularly reviewing the structure of the remuneration components, including the participants and potential payout amounts, and by disclosing relevant information to the public. Furthermore, Nordea has established clear processes for target-setting, aligned with the Group’s strategy, and predefined growth and development initiatives. The measurement of results is aligned with Nordea’s overall performance measurement, and payout decisions are subject to separate processes and the Grandparent principle (approval by the manager’s manager). Nordea also mitigates relevant risks by means of its internal control framework, which is based on the control environment and includes the following elements: values and management culture, goal orientation and follow up, a clear and transparent organisational structure, separation of duties, the four-eye principle, quality and efficiency of internal communication and an independent evaluation process.
The following principles are examples of what is further applied to ensure sound risk management:
- No employee in Nordea has a variable remuneration that exceeds 200% of the relevant person’s fixed remuneration. The maximum ratio between the fixed and the variable remuneration for Identified Staff is currently 100%.
- Guaranteed variable remuneration can be offered only in exceptional cases and then only in the context of hiring new staff, limited to the first year of employment and where Nordea has a sound and strong capital base.
- Remuneration packages related to compensation for contracts in previous employments must be aligned with Nordea’s Remuneration Policy.
- Payments related to the early termination of a contract should reflect performance achieved over time and should be designed in a way that does not reward failure or misconduct.
- Employees engaged in control functions are compensated independent of the performance of the business unit(s) they control.
Performance-related remuneration (excluding Profit Sharing) for employees in the risk analysis defined as Identified Staff is partially deferred in accordance with international guidelines and national regulations. This means that 40%-60% of the variable remuneration is deferred for three to five years with pro rata disbursement during the deferral period. The first disbursement of deferred variable remuneration can take place one year into the deferral period at the earliest. 50% of the variable remuneration, 80% of EIP and GEM EIP, is indexed with Nordea’s Total Shareholder Return. Find more details about Amounts deferred and the deferrals (pdf, 159 KB).
Payment of variable remuneration to Identified Staff (excluding Profit Sharing), or to all employees if required according to national regulations, is conditional upon that such payment is justified based on Nordea’s, the relevant business unit’s and the individuals results. An adjustment, partly or down to zero, can occur if the person in question e.g. has violated internal or external regulations, participated in or been responsible for an action that has caused Nordea significant losses, or in the event of a significant downturn in Nordea’s or the relevant business unit’s financial results.
Employees are required to undertake to not use personal hedging strategies to undermine or eliminate the effects of deferred variable remuneration being partly or fully removed.
Updated: April 2017
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