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Remuneration policy 2018

AS SEB banka information on the remuneration policy and its implementation

In accordance with CFMC Regulations No. 126 of 2 July 2014 “Regulations on Basic Principles of Remuneration Policy” Clouse 20, AS SEB banka (The Bank) and the consolidation group of the Bank shall disclose the information about the remuneration policy and practice, taking into account EU regulation No.575, as well as principles of confidentiality and private person data protection.

The Bank has its approved remuneration policy, which is aligned with the Remuneration policy of the Bank's shareholder Skandinaviska Enskilda Banken AB (publ).

The SEB Group’s vision is to deliver world-class service to our customers. Implementation of this vision is important for the Bank to attract, retain, and develop talented employees and to reward them. The goal of the Policy is to establish the main principles of pay for work, seeking to reward for a sustainable, long-term value-added creation that meets interests of shareholders and investors. The Policy shall promote sound and effective risk management as well as desired performance, conduct and behavior. Further, the Policy shall prevent the risk that the remuneration models drive excessive risk-taking or conflicts of interest detriment to the best interest of the Bank’s clients. As well as, SEB Group aims that the remuneration to its employees is competitive in the markets and segments where SEB Group operates in order to motivate high performing employees.

  • Information concerning the decision-making process used for determining the Remuneration policy, including information on the Remuneration committee (composition and mandate)

The Bank is guided by the Remuneration policy that was approved by the Bank's Supervisory council on 20 February 2018. The Bank as we as consolidation group companies have implemented the Remuneration policy requirements. When developing said remuneration policy, no services of external advisers were resorted to.

The Bank's Human Resources Department together with the Compliance and Risk Department, annually reviews the Remuneration policy and submits proposals on the policy changes. The remuneration policy is approved by the Bank's Supervisory council, upon approval of the Bank’s Remuneration committee. The Management board of the Bank is responsible for the implementation of the Remuneration policy.

REMUNERATION AND HUMAN RESOURCES COMMITTEE (31 December 2018)

The Remuneration and Human Resources Committee (Remuneration committee) provides assistance to the Supervisory council regarding remuneration, leadership, business continuity and other issues related to the staff as well as proposes candidates to the vacant Bank’s bodies and recommends to discuss them in the respective Bank’s bodies. Remuneration committee also performs other functions provided for by the remuneration committee regulations and relevant legal acts.

Candidates to members of the Remuneration committee are approved by the Supervisory council of the Bank. Persons related to the Bank or its subsidiary companies by labor relations as well as members of the Bank's management board may not be elected chairman or members of the remuneration committee.

None of the members of the remuneration committee has shares in the Bank.

Nevienam no Atalgojuma komitejas locekļiem nepieder SEB bankas akcijas.

KNUT JONAS MARTIN JOHANSSON
Skandinaviska Enskilda Banken AB (publ) Head of Business Support Division

RIHO UNT
Skandinaviska Enskilda Banken AB (publ) Head of Baltic Division

JUHA KATAJOKI
AS SEB banka member of Supervisory council

  • Information on the relation between the remuneration and performance results

The Bank continuously follows up and secures that the variable remuneration models do not put the employees in conflict of interest with its customers, promote appropriate code of conduct behavior and do not incentivize excessive risk taking. The Bank’s control functions shall support this follow up. The Remuneration Committee shall in consultation with the Risk and Capital Committee examine whether incentives provided by the remuneration systems appropriately take into consideration risk, capital, liquidity and the likelihood and timing of earnings.

Business performance results shall be established by combining the individual performance and balanced risk taking. Remuneration shall be established for encouraging both immediate results, as well as long term results, and for encouraging long-term strategic decisions to ensure a sustained business performance. Total remuneration paid for a specified period shall be established taking into consideration several year results and shall not jeopardize the ability for SEB to achieve a positive result of the Bank on the aggregated level during a business cycle.

Transparent and individual goals as well as individual evaluation, is used as a foundation for setting employee remuneration. Individual performance shall be evaluated based on the financial and non-financial indicators within the SEB Group’s target areas derived from the applicable business plan and the ambition to deliver world-class service to our customers. Individual behavior shall be evaluated based on the SEB Group’s core values as a starting point.

  • The most important design characteristics of the remuneration system, including information on the criteria used for performance measurement and adjustment, deferral policy and vesting criteria

The Bank employees’ remuneration consist of the following three elements:

  • base salary;
  • variable remuneration – individual programme, which is participated by a targeted group of employees and includes variable salary, which may consist of salary in shares or in any other financial instruments paid out after a certain set period of time;
  • additional benefits.

Base salary – it is the base pay established in an employee’s labor contract.

Variable remuneration – it is a variable portion of remuneration, which may be paid to employees as an extra to the remuneration by position – in bonuses, rights to the Skandinaviska Enskilda Banken AB shares, equity-linked financial instruments, other financial or non-cash instruments, and the amount of which depends on an individual employee’s input to the performance of his/her subdivision or of SEB Group.

Additional benefit it includes additional health insurance, pension saving contribution, additional annual vacation, additional paid vacation to students and other possible benefits.

All Employee Programme is a collective profit allocation programme meant for all SEB Group employees. The payout within collective profit sharing might not be considered as the variable pay. By determining the individual outcome, the individual performance as well as fulfilment of unit targets (financial and non-financial) does not affect the individual payout amount. The payout level is set every year based on SEB Group’s absolute and relative performance in terms of financial targets and customer excellence. The decision on the level of payout is taken by SEB Group Executive Committee after evaluating results of the accrual year. The payout level is capped and for Bank’s employees the amount is calculated as per cent of the annual base pay. The half of the individual outcome might be deferred for 3 years and adjusted for the TSR of Skandinaviska Enskilda Banken AB share. Meaning that the value of deferral depends on fluctuations of Skandinaviska Enskilda Banken AB share price and SEB Group’s performance in long term, which means that the payout amount may be decreased or increased after deferral period.

The remuneration policy establishes that principles for the determination and payment of variable remuneration to risk-takers must be in line with SEB Group’s long-term continued activities interests, business strategy, objectives, values, and would encourage reliable and effective risk management, and employees would not be encouraged to take risk that is excessive and unacceptable to the SEB Group.

Variable remuneration to the Bank’s employees whose professional activities and/or decisions taken may have a significant impact on the risks assumed by the Bank is established according to the impact of their decisions on risk. An employee is considered to be able to take decisions that have a significant impact on the risk assumed by the Bank (i.e. a’ Identified staff’), if the employee meets at least one of the following criteria:

  • employees with leading strategic positions;
  • heads of key business subdivisions with the authority to take decisions that may have a material impact on the Bank’s activity results;
  • employees with risk control functions;
  • employees with the right to conclude transactions or assume obligations and/or take decisions and able to have a significant impact on the risk assumed by the bank;
  • Highest positions with in Bank’s Credit committees chairmen of the Bank’s New Product/Service Approval Committees and members of the Committees;
  • employees whose remuneration is equal or exceeds the remuneration of the Bank’s employees in leading strategic positions.

Variable remuneration for Identified staff is calculated based on the appraisal of a relevant employee’s performance over no less than three to five years, and the actual variable remuneration is paid in portions – over a period that matches the Bank’s operation cycle and operational risk. No less than 50 per cent of the remuneration to such employees must consist of shares or any other financial instruments.

The deferred variable remuneration portion is allocated proportionately over the entire deferral period, and its payment is started no earlier than after one year since the end of a relevant employee’s performance appraisal and shall be effected no more than once a year.

In case of financial instruments that constitute a portion of the variable remuneration, a no less than 12 months’ deferral period is applied. Such period is reckoned since the time of granting the rights to the financial instruments. This provision applies both to the deferred variable remuneration portion and to the variable remuneration portion that is not subject to deferral.

  • The ratios between fixed and variable remuneration

Variable pay shall not exceed 50 per cent of annual base salary. Remuneration Human Resources Committee may decide on a different variable compensation and official proportions but variable pay shall not exceed 100 per cent of annual base salary.

Guaranteed remuneration is not paid in SEB Group.

  • Information on the performance criteria on which the entitlement to shares, options or variable components of remuneration is based

The Bank has right to suspend payment of variable pay, a portion or total variable pay if performance of a specific person, business unit or the Bank generates loss, including not limited to remuneration in cash and in other financial instruments.

Variable pay, as well as the deferred portion, shall be disbursed and approved if the Bank’s financial standing is sustainable and shall be related to the performance results of the Bank, business unit or employee. Variable pay in accordance with acts of law of the Republic of Latvia shall be decreased and shall not be paid if the Bank’s activity results do not meet the ratios established in the Bank’s business strategy, generates loss, the employee acted in bad faith or his activities resulted in losses for the Bank.

All pay outs are subject to risk adjustment which might reduce the final pay-out of the deferred amount. SEB Group’s implementation of the current regulations on risk adjustment of variable compensation stipulates that the deferred amount may be disbursed taking into account the following terms:

  • sustainability of the Bank's and/or the SEB Group’s financial standing;
  • implemented annual objectives of an employee, also, adherence to the requirements of the internal legal acts.

Prior to the disbursement of each deferred portion of the variable remuneration and in each case related to its disbursement the above-indicated terms are assessed.

  • General quantitative information on remuneration 2018

Comments and definitions on tables below:

  • All amounts are presented excluding employer’s social tax costs
  • Number of employees are defined as of December 31, 2018

Employee salary report 2018

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