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Remuneration to executive officers

The 2020 Annual General Meeting decided on the following guidelines for remuneration and other terms of employment for executive officers of Handelsbanken.

Guidelines

These guidelines shall be applied to remuneration to the Group Chief Executive, members of executive management, the Deputy Chief Executives, and the Heads of Group Risk Control and Group Compliance (below referred to as “executive officers”). 

The guidelines shall be applied to new agreements, and shall not affect remuneration previously decided for executive officers. The guidelines are not applicable to remuneration that is decided upon by the annual general meeting.

Handelsbanken’s goal is to have higher profitability than the average of peer banks in its home markets. This goal is mainly to be achieved by the Bank having more satisfied customers and lower costs than its competitors.  

Handelsbanken’s business strategy is presented in the Annual Report.

To contribute to the Bank’s goal, remuneration must reflect a long-term view of employment at the Bank, and also be in keeping with the Bank’s generally low risk tolerance.

Principles for remuneration to employees of Handelsbanken

Handelsbanken’s principles for remuneration to employees are long-established. In the policy for remuneration in the Handelsbanken Group, the Board has established that the Bank’s remuneration system must be consistent with the Bank’s business objectives and business culture, which are based on sound, sustainable operations. 

In addition, the remuneration policy states that fixed remuneration is fit-for-purpose for sound, sustainable operations, and is therefore applied as a basic principle. Variable remuneration is applied with great caution. Remuneration for work performed is set individually for each employee, and is paid in the form of a fixed cash salary, pension allocation and customary salary benefits (which can take the form of a car allowance, housing associated with the position, disability insurance, household assistance services, etc.). Salaries are based on factors known in advance, such as those set out in the remuneration policy. 

Taking into account the above approach, an employee’s total remuneration must be on market terms, enabling Handelsbanken to attract, retain and develop skilled employees, and ensuring good management succession. 

Remuneration to executive officers

In the preparation of the Board’s proposals for these guidelines, Handelsbanken’s remuneration policy and the above principles for remuneration to employees have been taken into account; this contributes to the Bank’s business strategy, long-term interests and sustainability.

  • The aggregated total remuneration shall be on market terms

  • Remuneration is paid in the form of a fixed cash salary, pension provision and customary benefits

  • The executive officers in question are included in the Oktogonen profit-sharing system on the same terms as all employees of the Bank

  • The retirement age is normally 65. Pension benefits are defined contribution, may correspond to a maximum of 35 per cent of the annual fixed cash salary, and may be payable in addition to pension plans under collective agreements. Other benefits may per year in total correspond to a maximum of 35 per cent of the annual fixed cash salary

  • The period of notice on the part of an executive officer is six months, and on the part of Handelsbanken a maximum of twelve months. If the Bank terminates the employment contract later than five years after the person becomes one of the Bank’s executive officers, the period of notice is a maximum of twenty-four months. No other termination benefits are paid. Other time periods may apply due to collective agreements or labour legislation

Concerning employment conditions that are subject to non-Swedish regulations: with regard to pension benefits and other benefits, the relevant adjustments may be made to comply with such mandatory regulations or fixed local practice. In doing this, the overall aims of these guidelines shall be fulfilled as far as possible.

Decision process 

The Board has set up a remuneration committee. The committee’s tasks include preparing the Board’s proposals concerning guidelines for remuneration to executive officers. When the need for material changes arises – and at least every four years – the Board shall draw up a proposal for new guidelines and present it for a resolution at the annual general meeting. The guidelines shall apply until new guidelines have been adopted by the annual general meeting. The remuneration committee must also monitor and evaluate the application of the guidelines for remuneration for executive officers, as well as the prevailing structures and levels of remuneration at the Bank. All members of the remuneration committee are independent of the Bank and its management. The Group Chief Executive also attends the committee’s meetings, although not when the committee is discussing and deciding upon remuneration-related matters that concern the Group Chief Executive herself.

Deviation from the guidelines

The Board may decide, temporarily, to deviate partly or wholly from the guidelines, if there are particular reasons for this in an individual case, and a deviation is necessary to satisfy the Bank’s long-term interests and sustainability, or to ensure the Bank’s financial viability. As stated above, preparing the Board’s decisions in matters of remuneration is part of the remuneration committee’s tasks, and this includes decisions regarding deviations from the guidelines.

Evaluation of the application of guidelines

The remuneration committee's evaluation of the application of the guidelines for compensation to executive officers that were adopted in 2019.

In accordance with the Swedish Code of Corporate Governance, the Board's remuneration committee must evaluate the guidelines for compensation to executive officers that were adopted by the AGM in 2019, as well as the prevailing structures and levels of compensation in the Bank.

The remuneration committee noted that the external auditors have submitted a report to the 2020 AGM, stating that the Board and the Group Chief Executive have complied with the guidelines for compensation to executive officers that were adopted by the AGM in 2019.

The executive officers of Svenska Handelsbanken have only fixed salaries and no variable compensation. The compensation levels and compensation structure have made it possible to recruit and retain executive officers to the extent required, at a cost to the Bank that is regarded as reasonable. Thus the assessment of the remuneration committee is that the compensation levels and compensation structure are appropriate.

Incentive programmes

There are no existing equity-related or equity price-related incentive programmes for executive officers or for any other members of the Executive Management. 

The executive officers of the Bank, except Board members who are not employees of the Bank, and other members of the Executive Management are included in the Oktogonen profit-sharing system on the same terms as all employees of the Bank.

Auditors' statements

The company's auditors have submitted a written statement showing that the principles applicable since the Annual General Meeting 2019 have been complied with.