Nordea Funds has adopted the remuneration policy of Nordea Group with fund management company regulation specific adjustments. Nordea Funds has a total remuneration approach to compensation that recognizes 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 or the interests of the funds managed by Nordea Funds.
In Nordea Funds, ESG is a part of our remuneration models to cater for commitment and engagement in sustainability among our employees. ESG is integrated in our remuneration polices in the design and long termism of the remuneration structure, but also in relation to how we govern remuneration policies and decisions internally in a sustainable way.
Nordea Funds' Remuneration Policy shall
- Support Nordea Funds’ 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 Funds is aligned with efficient risk management, Nordea Funds’ Purpose and Values and applicable regulations
All employees on variable pay scheme are measured against both qualitative as well as quantitative targets suitable for their position and tasks. All employees have performance goals linked to risk and compliance performance which require adherence to high standards to our internal policies. Goal setting and/or performance assessments support the efforts to integrate the risk that environmental, social or governance events or conditions could cause, if they occur, an actual or a potential material negative impact on the value of the investment.
Nordea Funds’ remuneration components - purpose and eligibility
Nordea Funds' remuneration structure comprises fixed remuneration and variable 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.
The following variable remuneration programmes are offered to selected Nordea employees, and you can read more about them on under Variable remuneration programmes.
Bonus schemes is offered only to select groups of employees employed in specific business areas or units as approved by the Board of Directors. 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.
The link between performance, risk and variable remuneration
- Nordea Funds’ 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 Funds has processes to align business and individual goal and target-setting across Nordea Funds with the overall strategy, and predefined risk adjusted criteria.
- When assessing performance against the pre-determined set of well-defined goals and target, Nordea Funds 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.
- 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) is 200% as approved by the Nordea Bank Plc’s shareholders at the Annual General Meeting in 2019. The maximum ratio shall apply for the performance year 2019 and onwards.
- Payments related to early termination of employment should reflect performance achieved over time and should be designed to not reward failure or misconduct.
- Nordea Funds 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. The Board of Nordea Funds has decided that on basis of proportionality deferral is applied only to persons whose variable remuneration exceeds 50.000 EUR. At least 50% of vested awards are also subject to 6–12 months’ retention.
- Deferred amounts relating to performance are subject to indexation against the development of funds’ performance during both the deferral and retention period. General provisions for malus and claw-back in Nordea are set out in Nordea Funds’ Board Instruction 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 defense.
- Employees must not use personal hedging strategies to undermine or eliminate the effects of deferred variable remuneration being partly or fully removed.
Audit of the Remuneration Policy
At least annually, the Board Remuneration Committee follows up on the application of the Nordea Funds’ Remuneration Instruction and supplementary instructions through an independent review by Group Internal Audit.
The Nordea Funds’ Remuneration Committee evaluates the remuneration policy and practices. The committee is responsible for the preparation of recommendations to the Board of Directors relating to the remuneration policy that may have an impact on the risks and the risk management of Nordea Funds and the funds managed by Nordea Funds. We believe that this solid governance structure is an important piece in building and maintaining a sustainable remuneration policy.
The Chairman of the Board of Directors of Nordea Funds Jukka Perttula and the board members Reima Rytsölä and Søren Thorius Mølhave Andresen have been appointed as members of the Nordea Funds’ Remuneration Committee.