Report on remuneration policy for Nasdaq Stockholm AB

Transcription

1 Report on remuneration policy for Nasdaq Stockholm AB in compliance with the Swedish Financial Supervisory Authority s general guidelines on remuneration policies, FFFS 2016:21 (2015:14 until October 2016)

2 Remuneration policy Introduction Nasdaq Inc. applies global, Group-wide remuneration principles. In addition, Nasdaq Stockholm has produced a remuneration policy in compliance with the Swedish Financial Supervisory Authority s general guidelines on remuneration policies in exchanges and clearing organizations (FFFS 2016:21) (2015:14 until October 2016) ( Swedish Regulations ), that supplement the Group-wide remuneration principles. The company carries out an annual risk analysis of its remuneration principles that examines all of the risks to which the company is, or may be, exposed, including risks associated with the company s remuneration policy and the remuneration system. The remuneration policy and risk analysis are published on Nasdaq Stockholm AB s website The aim of Nasdaq s remuneration principles is to offer market-based remuneration that promotes a situation whereby qualified expertise can be recruited to and retained within Nasdaq, as well as promoting effective risk management within the Group. Nasdaq deems it of substantial importance to reward its employees for work well done when the company and employees have performed in line with set goals. Remuneration principles 1. Remuneration principles for Nasdaq Group The Nasdaq Inc. Group s remuneration principles are based on a performance-based principle according to the Nasdaq Group s financial targets, development and operational targets and continuous regulatory compliance. The variable remuneration for each employee is determined based on the above-mentioned general targets that apply to the entire Nasdaq Group, as well as the individual s performance. However, no guaranteed variable remuneration is permitted in the Nasdaq Group. Furthermore, Nasdaq endeavors to offer a competitive balance between variable and fixed remuneration that is also intended to encourage healthy risk-taking. As a result, variable remuneration has a ceiling. In Nasdaq s opinion, such a ceiling promotes a balance between employees fixed and variable remuneration. The global Group-wide remuneration principles also include the option for Nasdaq to decide on withdrawing variable remuneration under certain circumstances. 2. Remuneration principles for Nasdaq Stockholm AB The remuneration policy applies to Nasdaq Stockholm AB and has been approved by the Board of Directors. The policy also states that a control function is to independently examine every year whether the company s remuneration is consistent with the remuneration policy Nasdaq Stockholm AB s control function comprises the company s Compliance function, which, in order to avoid a potential conflict of interests, has in turn tasked accounting firm EY to independently perform this audit. The remuneration policy applies to all employees at Nasdaq Sweden. Furthermore, in accordance with the Swedish Regulations for an employee who can influence the company s risk level, a minimum of 60% of variable remuneration is to be deferred by at least three years. Operative risks, reputation risks, clearing risks and legal risks are typical risk categories for Nasdaq Stockholm AB. Employees who can influence Nasdaq Stockholm AB s risk level are thus typically senior executives who report to the Board of Nasdaq Stockholm AB and executives in the regulatory compliance, risk and clearing functions. The Board of Nasdaq Stockholm AB defines this risk-taking group in more detail and the HR department administers updated lists of risktaking personnel. Efforts to ensure long-term value creation and an adequate balance between variable and fixed remuneration are fundamental to both the remuneration policy for Nasdaq Stockholm AB and the Group-wide remuneration principles. The Nasdaq Group s total earnings, together with the individual performance of the employee, thus 2(5)

3 form the basis of the amount of remuneration and the allotment and composition of the variable remuneration. Remuneration for certain employees is determined by the Nasdaq Group s sales targets, in addition to earnings-based targets and the employee s individual performance targets. This group of employees belong to the senior executives category. However, remuneration for employees who are affiliated to Nasdaq Stockholm AB s control functions, such as compliance, risk and internal audit, are governed only by the Nasdaq Group s earnings trend and individual performance targets. Considering the operations, nature and scope of Nasdaq Stockholm AB, the Board has decided to defer 35-70% of remuneration to identified risk-takers for three years. If Nasdaq Stockholm AB engaged an individual in the Nasdaq Group (who is not employed in Nasdaq Stockholm AB) to perform significant functions, including risk-takers, Nasdaq Stockholm AB can decide to also apply the remuneration policy to these individuals. Accordingly, Nasdaq Stockholm AB is to publish information about such remuneration in accordance with the Swedish Regulations.. Remuneration structure for Nasdaq Sweden 2016 The companies remuneration of employees consists of fixed and variable remuneration, as well as pension and other benefits. Variable remuneration is divided into short-term and long-term incentive programs. The short-term incentive program encompasses all employees and is a cash-based remuneration linked to various targets in the Nasdaq Group s business. The long-term incentive program comprises share-based remuneration of Restricted Stock Units (RSU) and Performance Share Units (PSU), described below. Variable remuneration in Nasdaq Sweden (1-2) 1. Cash-based remuneration The Board of Nasdaq Inc. decided on cash-based variable remuneration for all employees in the Group for the calendar years Nasdaq bases this cash-based remuneration on both the Nasdaq Group s total earnings, the earnings of individual business units and the employee s results. The cash-based remuneration for the individual employee comprises the outcome of the abovementioned earnings targets. The condition for allotment of cash-based remuneration is that the employee is actively employed in the Nasdaq Group on the date of payment. 2. Share-based remuneration In December 2008, the Nasdaq Board of Directors decided to implement a long-term incentive program (LTIP) for all permanent employees. This program consists of share-based instruments linked to the Nasdaq share, which is listed on the Nasdaq Stock Market in the US. The LTIP is a performance-based program including a requirement of continued employment. The ratio used for measuring performance is Nasdaq s operating income in the year concerned. The principles of share-based remuneration and its components are presented in more detail below. 3(5)

4 The amount of an employee s share-based remuneration depends on the company s earnings, the business area s earnings, the team s targets and the employee s position in the company. The LTIP s share-based remuneration comprises three different instruments: - Performance Share Units (PSUs) with 1-Year performance, one-third transferred to employees per year. The number of shares transferred is linked to Nasdaq s corporate operating income with a payment interval of 0-150%, meaning that the number of shares transferred can be lower or higher. - Performance Share Units (PSUs) with 3-Year performance, 100% transferred after three years. The number of shares transferred is linked to the Total Shareholder Return (TSR) and to S&P 500 earnings. The number of shares transferred can be lower or higher. - Restricted Stock Units (RSUs) that vest over time (non-performance-based), 25% transferred after two years, 25% after three years and 50% after four years. The number of shares allotted is always the same as the number transferred. The employees, depending on the position held, have been allotted a number of RSUs, a combination of RSUs and PSUs, or alternatively a combination of one-year PSUs and three-year PSUs. RSUs and PSUs will be allotted on March 31, 2017 since Nasdaq s 2016 operating income achieved the established targets. Pension and other benefits (1-2) 1. Pensions Nasdaq Sweden offers its employees a market-rate, premium-based occupational pension Nasdaq pension plan. The retirement age is Other benefits In addition to the above occupational pension, Nasdaq Sweden has taken out health insurance, group life insurance (TGL), medical expenses insurance and occupational injury insurance (TFA) for its employees. Employees are also able to supplement their cover via Nasdaq s voluntary group insurance. 4(5)

5 Publication of information regarding remuneration Total amount expensed for remuneration for 2016 in SEK 000s Risk-takers & senior Other Total executives 1) Amount No. Amount No. Amount No. Total remuneration excl. variable remuneration Variable remuneration Total ) Risk-takers and senior executives are reported collectively in order not to reveal the financial circumstances of individual people, in accordance with Chapter 5 of 2016:21. 2) The figure above includes variable remuneration for one risk-taker that was paid and expensed in another Nasdaq company. Percentage distribution of variable remuneration: Cash-based remuneration 61% Share-based remuneration 39% Remuneration earned and remuneration paid Amount Earned in 2016 (total remuneration) Paid in 2016, earned in 2016 (total remuneration excl. variable remuneration) Paid in 2016, earned Accumulated deferred remuneration Amount Refers to earned but not paid variable cash and share-based remuneration Total amount expensed and paid for severance pay * 2016 No. of employees Highest individual amount Paid amount Expensed not paid * There is no guaranteed variable remuneration 5(5)