The Board of Directors of Carnegie has adopted a remuneration policy that covers all employees of the Group. The policy is based on a risk analysis performed annually by the Group risk management function under the direction of the CRO. The policy is revised annually.
Fixed remuneration is the base of the remuneration model. Base salary depends on several parameters, such as the employee’s competence, responsibility and long-term performance.
Variable remuneration for the Group and each unit
Total allocations for variable remuneration for the Group as a whole are based mainly on risk-adjusted earnings. The allocation of variable remuneration to the business areas and units is based on the extent to which operational targets have been achieved, market conditions and industry standards and risk-taking and risk management.
The proposal for provision and allocation to the business areas and units is prepared by the Board of Directors’ Remuneration Committee. Particular consideration is given to any risks that maybe associated with the proposal. The Committee also analyses the impact on Carnegie’s present and future financial position. This assessment is based on the forecasts used in the ICLAAP. Special attention is paid to ensuring that capital targets set by the Board will not be missed. Finally, the Committee assesses whether there is any risk of conflicts of interest and, if so, how the conflicts will be managed The recommendation from the Remuneration Committee forms the basis of the Board’s final decision on variable remuneration.
Individual performance assessment
Carnegie applies a corporate-wide annual process to evaluate individual employee performance. The assessment is made against predefined objectives and covers both financial and non-financial criteria. Any allocation of variable remuneration and possible increases in fixed salary are determined in relation to attainment of individual objectives, unit performance and Group performance.
In compliance with external regulations, Carnegie has identified “Defined identified staff ”, who are employees who exert significant influence over the company’s risks that could lead to significant impairment of earnings or financial position. Defined identified staff include executive management, employees in leading strategic positions, employees responsible for control functions and risktakers, as defined by external regulations. For this group, 40-60% of variable remuneration is deferred for three to five years. The deferred portion may be withheld if criteria established in conjunction with the decision to allocate variable remuneration are not met. In addition, variable remuneration to this group may not exceed fixed remuneration.
Employees in control functions
The criteria for variable remuneration to employees who are responsible for control functions are designed to ensure their integrity and independence, which includes ensuring that remuneration is independent of the units subject to control.
Monitoring and control
Internal Audit performs an annual, independent review to ensure that the Group’s remuneration complies with the remuneration policy and regulatory requirements and reports its findings to the Board not later than in conjunction with approval of the annualaccounts.
Employees of the Carnegie Group owned around 30 percent of equity in the parent company as of 31 December 2018. Employee ownership is an important aspect of generating commitment to the entire company’s development and ensuring that employees have the same incentives as other owners to create long-term value.There are no ongoing incentive programmes in which employees are remunerated in shares or options.