The overall purpose: The overall purpose of the Euroclear Sweden/Euroclear Finland compensation policy is to align the interests of our employees with the long-term interests of Euroclear Sweden/Euroclear Finland stakeholders.
Euroclear Sweden/Euroclear Finland being part of Euroclear Group we adopt a Euroclear group approach as far as possible but follow local specificities as well as national legislative and regulatory requirements. Non-cash benefits are provided to employees appropriate to the country they work in and are market relevant.
Our compensation framework is designed to attract and retain employees, in a market infrastructure business where specific business knowledge is not widely available in the general market.
The incentive program is designed to be transparent, fair, equitable and available to all employees.
The incentive program is in line with Euroclear Sweden/Euroclear Finland’s strategy, objectives, values and long term interests.
The lines of business of Euroclear Sweden/Euroclear Finland carry with them operational risk. Euroclear Sweden/Euroclear Finland does not take credit, market or liquidity risk, except credit risk for the placement of their capital.
The eligible amount of variable compensation for each entity is determined centrally by the Euroclear group according to financially conservative principles; taking into consideration global economic outlook, future expected performance etc.
Compensation for non-executive members of the board of directors
Compensation for the non-executive Directors comprises of an annual gross fee. This fee is pro-rated to the number of Board meetings attended and reflects any additional formal responsibilities held.
Non-executive Directors are not part of any incentive program (short or long-term) and are not entitled to other type of compensation such as stock options or employment benefits (other than reimbursement of expenses). Their compensation is not linked to the performance of Euroclear Sweden/Euroclear Finland.
The compensation of the non-executive Directors is overseen and decided by the Shareholder’s meeting.
Compensation for emplyees
Compensation for employees is comprised of annual salary, based on monthly fixed pay, and, as appropriate, discretionary variable compensation which is awarded annually.
Euroclear Sweden/Euroclear Finland does not offer employees a guaranteed bonus.
The overall variable compensation pool available to Euroclear Sweden/Euroclear Finland is set annually by the Euroclear Sweden/Euroclear Finland Boards, after consulting ESA/NV Board, related to the business performance in the Euroclear group and in Euroclear Sweden/Euroclear Finland.
The assessment of business performance is made taking into account of the results of a Balanced Score Card approved by the Euroclear Sweden/Euroclear Finland Board to which a qualitative assessment is added.
The Balanced Score Card objectives include financial, business, operational, risk and other possible objectives.
Variable compensation includes a general profit sharing and an individual bonus part.
The general profit sharing is determined taking into account the performance of the company against the Balance Score Card.
The individual bonus for the employees is based on the annual performance evaluation. Evaluation takes multiple criteria into consideration including e.g. achievement of specific objectives, productivity, teamwork, behavior, people management, communication, risk management and compliance with policies. In the evaluations employees are rated across 5 categories: role model, A++, A+, A and improvement required.
Variable compensation is calculated in cash.
Compensation to individual employees shall not counteract the company’s long term interest. Employees of Euroclear Sweden and Euroclear Finland whose actions can have a material impact on the risk exposure of Euroclear Finland/ Euroclear Sweden are subject to deferral rules for 60%of the amount of payable variable compensation that exceeds 100.000 SEK.* If there are different legal or regulatory requirements on deferral of payments for Euroclear Sweden and Euroclear Finland, the stricter rules shall apply to both companies, as applicable at the moment of payment.
Deferred payments shall be applied for the following roles:
•CEO of Euroclear Sweden and Euroclear Finland,
•Deputy CEO of Euroclear Sweden and Euroclear Finland,
•Members of ExCom of Euroclear Sweden and Euroclear Finland
•Head of Euroclear Sweden’s and Euroclear Finland’s Risk Management,
•Head of Euroclear Sweden’s and Euroclear Finland’s Legal
•Head of Euroclear Sweden’s and Euroclear Finland’s Internal Audit
•Head of Euroclear Sweden’s and Euroclear Finland’s Compliance,
•Head of Euroclear Sweden’s and Euroclear Finland’s Finance,
•Head of Operations of Euroclear Sweden Head of Operations of Euroclear Finland
Above mentioned deferred payments may be cancelled in part or in whole if at a later date it is demonstrated that the employee, department or Euroclear Sweden/ Euroclear Finland did not fulfill the performance criteria. Euroclear Sweden/ Euroclear Finland can refrain from paying deferred variable compensation if its position is significantly weakened.
Person being on long-term assignment in the Nordics from ESA and having a role for which deferred payments shall be applied, is deemed to fall within the scope of the Euroclear Corporate compensation policy instead of the Euroclear Sweden/ Euroclear Finland compensation policy. Notwithstanding the aforementioned, the Board of the Euroclear Sweden/ Euroclear Finland may decide to cancel or refrain from paying deferral compensation to such person if Euroclear Sweden’s or Euroclear Finland’s capital falls below regulatory capital requirements or if at a later stage it is demonstrated that Euroclear Finland / Sweden performance criteria that were set for local bonuses turned out not to have been fulfilled.
Governance and oversight
Euroclear Sweden/ Euroclear Finland Board have established a Nominations, Remuneration and Governance Committee to advise it on compensation matters that fall within the Board’s responsibility. The Committee is composed of two non-executive Board members. The Board retains all decision-making power and decides on the compensation policy.
Euroclear Sweden/Euroclear Finland Board decides on the level and attribution of the overall variable compensation pool.
The Nominations, Remuneration and Governance Committee reviews, and advises the Board as appropriate on, any recommendations for changes to compensation policy to ensure conformity with the Euroclear Group principles and to assess whether they meet the objectives of Euroclear Sweden/Euroclear Finland and are appropriate for the current environment.
Internal Audit of Euroclear Sweden/Euroclear Finland will independently conduct an annual review of the policy to confirm compliance with prevailing legislation and that the company’s compensation complies with the policy. The review shall take place no later than in conjunction with the adoption of the annual accounts.
The above mentioned audit can be executed also by external auditors.
*The regulations currently in force in Sweden stipulate that at least 60 per cent of the payment of the variable compensation should be deferred at least three years. Euroclear Sweden has separately agreed with the Swedish FSA that the deferral rule can be applied above the threshold of 100.000 SEK bonus. In Finland variable compensation EUR 50.000 and above shall be deferred for three years. Thus, Swedish rule should be applied to both companies.