Remuneration philosophy

Swedbank applies a total remuneration approach which aims to counteract excessive risk-taking and incentivise employees to deliver sustainable performance that is consistent with Swedbank’s strategic goals, the interest of the shareholders and customers as well as healthy and effective risk management. Remuneration is individually based and shall encourage employee performance in line with Swedbank’s goals, strategy and vision as well as individual behaviours that is consistent with Swedbank’s values (Open, Simple and Caring).

Swedbank offers competitive but not market leading remuneration that is derived from business and local market needs and set independently of gender, transgender identity or expression (i.e. gender neutral), ethnicity, religion or other belief, disability, sexual orientation or age. Remuneration in Swedbank aims to attract and retain a diverse workforce with the ability, experience and skills to deliver on Swedbank’s strategy in an inclusive and equal work environment.

Remuneration components

The majority of employees at Swedbank have both fixed and variable remuneration components, which including pension and other benefits represents their total remuneration. Total remuneration is market based and designed to achieve a sound balance between fixed and variable remuneration.

Fixed remuneration

Fixed remuneration constitutes the primary component of remuneration in Swedbank. It reflects the nature and responsibility of the position held, individual employee performance and market conditions. Pension benefits are generally granted in accordance with collective bargaining agreements, rules and practice in the country where each employee is permanently resident.

Variable remuneration

Variable remuneration is a component of remuneration which aims to incentivise specific behaviours and desired results, create an alignment between the rewards and risk exposure to those of the shareholders and provide motivation and performance driven culture in Swedbank. Variable remuneration serves as an important incentive to realise the business strategy of Swedbank, and to stimulate employees to make efforts to strengthen the long-term value of Swedbank.

Variable remuneration is based on relevant, predetermined and measurable criteria, set with the purpose of increasing Swedbank’s long-term value. Variable remuneration is primarily based on a common risk-adjusted profit measure. Both current and future risks is taken into consideration as well as actual costs for capital and liquidity. A multiple-year perspective is applied to ensure long term sustainability of profits considering underlying business cycles and risks at the time of pay-out.

As Swedbank strives for a value driven corporate culture, the individual performance criteria will include desired results as well as a behavioural part to ensure that individual behaviours are consistent with Swedbank’s values (Open, Simple and Caring).

Risk management and sustainability

Sound risk-taking is incorporated in Swedbank’s business strategy. There should be an alignment between the rewards and risk exposure of shareholders and employees. Remuneration should counteract excessive risk-taking and incentivise employees to deliver sustainable performance that is consistent with strategic goals as well as healthy and effective risk management.

Swedbank integrate ethical, social, environment risk and economic considerations in all its business decisions, operations and business development. Within Swedbank’s Performance Development-process, individual performance criteria are set to contribute and support Swedbank’s overall strategic direction, in which sustainability is an important part.

Further, sustainability risks are integrated in Swedbank’s remuneration practices by including qualitative individual performance criteria as basis for allotment of variable remuneration for all employees, e.g. as adherence with Swedbank’s values, as well as applying deferral periods and the delivery of variable remuneration in instruments for the majority of the employees. Lack of compliance with external or internal regulations or deficiencies in risk management capabilities are such circumstances that will be considered as inconsistency with Swedbank’s values.

Sustainability in Swedbank

Governance

Swedbank’s remuneration policy states the foundations and principles for establishing remunerations within Swedbank. Swedbank’s Board of Directors’ decision to introduce the remuneration policy is preceded by and based on an analysis of what risks are associated with Swedbank’s remuneration system and policy. The CEO together with the Group Executive Committee recommend remuneration proposals for submission to the Board’s Remuneration Committee. The Remuneration Committee prepares matters concerning remuneration prior to discussion and decisions by the Board of Directors. The Remuneration Committee also prepares matters concerning remuneration to be decided by the Annual General Meeting.

Further, all remuneration to the CEO and other top executives must be paid in accordance with Swedbank’s guidelines on remuneration to top executives as decided by the Annual General Meeting.

Management and corporate governance in Swedbank