Dated May Nasdaq Clearing AB. Remuneration Policy. Date of issue: May Policy Owner: Approved by: Next review date:

Transcription

1 Dated May 2016 Nasdaq Clearing AB Remuneration Policy Date of issue: Issuing Department: Policy Owner: Approved by: Next review date: May 2016 Office of General Counsel Chief Compliance Officer Board of Nasdaq Clearing AB May 2017

2 Table of Contents 1. Creation date 3 2. Scope of Application 3 3. Objective 3 4. Core elements of Global Policy 4 5. Positions that may affect the company s risk exposure 5 6. Fixed and variable pay 6 7. Governance and control 7 8. Disclosure of information on remuneration 7 2

3 1. Creation date August Scope of Application This Remuneration Policy (hereinafter referred to as ( Policy ) 1 supplements the Nasdaq Inc. global remuneration policy/compensation Package (hereinafter referred to as Global Policy ) and constitutes a general policy applicable for associates within Nasdaq Clearing AB (hereinafter referred to individually by company name or together as Nasdaq Clearing, or as Company ). In addition to the Global Policy (see Section 4 below) this Policy is applicable to all associates within Nasdaq Clearing. However, this Policy sets forth some further restrictions in the remuneration with regard to associates belonging to such a personnel category in Nasdaq Clearing who may, as part of his/her assignment, perform material influence on Company s risk exposure (hereinafter referred to as Risk Takers ). The applicability of the remuneration principles with respect to the aforementioned personnel category is described in Section 5 below. Further, the Company shall ensure that consultants, or other persons working or performing actions to the Company, and this person being employed by a third party or being an independent entrepreneur, are subject to the scope of application of this Policy to such extent as appropriate. 3. Objective The objective with this Remuneration Policy is to have a competitive and fair approach for all associates within Nasdaq Clearing, allowing the recruitment and retention of qualified and experienced personnel. Further, the purpose of this Policy is to promote effective risk management and to encourage risk-taking being in line with the Company s long-term interests. The Global Policy describes our philosophy and the three major remuneration components annual base salary, annual performance-based cash incentive awards and long-term stockbased compensation (i.e., equity awards). 1 This Policy is set up to meet the Swedish regulations issued by the Financial Supervisory Authority, Finansinspektionen s Regulations and General Guidelines (FFFS 2011:1 and FFFS 2007:5) and Guidelines (FFFS 2015:14, earlier 2011:2) (hereinafter referred to as Swedish Regulations ) as well as Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR) 3

4 4. Core elements of Global Policy 4.1. General Philosophy The remuneration principles laid down in this Policy are based on the core philosophy of the Global Policy applicable for the Nasdaq group. To uphold independency in the compensation decisions, the Management Compensation Committee, designated by the Board of Directors of The Nasdaq Group Inc, issues the Global Policy and sets the core philosophy for associates compensation levels. The core philosophy of Nasdaq group s Global Policy is based on reward for performance, aligning compensation with corporate goals and objectives, rewarding outstanding service and maintaining compliance with each country s laws, regulations and market practices. Further, each associate s variable remuneration is, according to the Global Policy, evaluated by the overall parent company or subsidiary objectives and business unit/department objectives as well as individual objectives. The Management Compensation Committee has endeavored to create a performance-based compensation program that meets the needs of our global company and recognizes the important responsibilities to our stockholders. Accordingly, the compensation mix focuses on short-term (cash based compensation) and long-term (equity based compensation) financial performance of our company. Nasdaq group strives to offer associates a competitive balance between the fixed and variable components in order to attract motivated persons and retain skilled individual associates. Consequently, the variable remuneration is capped according to Nasdaq s Global Policy. For all associates the variable remuneration, both short-term and long-term, is expressed as a percentage of base salary. Such cap promotes in Nasdaq s opinion the balance between the variable and fixed remuneration and appropriate risk taking Long-term perspective According to the Global Policy, the total compensation mix to individual associates aims to encourage taking appropriate risks in order to improve Nasdaq Group Inc. s long-term performance and build a long term shareholder value. The compensation program is subject to a comprehensive risk assessment process that is intended to identify any areas of the compensation structure that may intentionally encourage inappropriate risk taking. Such risk assessment aims to prevent that Nasdaq Group s total remuneration for a given period of time does not expose its ability to achieve a positive result over the life time of a business cycle. Accordingly, the actual costs for maintaining adequate capital and liquidity that are inherent to the business operations are taken into account in such performance measurement. In order to discourage excessive risk taking within Nasdaq Group Inc, some positions/functions within the Nasdaq Group Inc. are not according to the Global Policy permitted to have any revenue related goal in their cash based variable compensation scheme 4

5 nor as a performance measure for the long-term incentive program (equity based). 2 Such exclusion of the revenue related goal with respect of associates within control functions (e.g. risk, compliance and internal audit) contributes to independency of business areas and goals that they are reviewing. 3 Such positions include e.g. the regulatory, market surveillance, finance and audit functions. In addition, where necessary, due to material errors, omissions, fraud, or misconduct of an associate, Nasdaq has the authority to seek reimbursement for any compensation deferred to any such associate. Moreover, Nasdaq s remuneration principles according to the Global Policy do not allow any guaranteed variable remuneration Grandfather principle At Nasdaq all decisions that are in any way linked to compensation and performance evaluations are governed by a principle called the Grandfather principle. The Grandfather principle means that any decision being made by the immediate manager is always reviewed and approved by the manager s manager. Such decisions include setting and evaluating individual goals, all changes in compensation, and all variable remuneration payouts. Further, EMIR requires Nasdaq Clearing s Board to appoint a Remuneration Committee to design and further develop the remuneration policy, oversee its implementation by senior management and review its practical operation on a regular basis. The Instructions for the Nasdaq Clearing Remuneration Committee state that the Committee will: Propose, review and recommend a remuneration policy for employees within Nasdaq Clearing to be adopted by the Board of Directors. The remuneration policy shall comply with the prudent risk management stipulated by the EMIR regulation 648/2012. Define scope of individuals who shall be deemed as Risk Takers and propose to the Board of Directors a list of those that should be classed Risk Takers. Review remuneration of Risk Takers to ensure that Remuneration Policy is being adhered to. Nasdaq believes that this level of governance actively counterstrikes excessive risk taking. 5. Positions that may affect the company s risk exposure According to the Swedish Regulations, a company s remuneration policy shall define Risk Takers. These Regulations define a Risk Taker as An employee belonging to a category of staff whose professional activities can have a material impact on the firm's risk level. EMIR 2 The list of the individual associates belonging to such category, are maintained by the Human Resources department of Nasdaq. 3 Associates within control functions as set forth in FFFS 2011:1 Chapter 3 Section 9 shall have their goals determined independent of the business that they control. 5

6 requires that Risk Takers are remunerated in a manner that is independent of the business performance of the CCP. Operational, reputational and clearing risks as well as legal risks are deemed as typical risk categories in Nasdaq Clearing s business operations. Consequently, the Risk Takers in Nasdaq Clearing typically consist of the Chief Executive Officer, as well as senior managerial level positions reporting directly to the Board of Directors as well as positions within compliance, regulatory and risk management as well as clearing risk management. The Remuneration Committee shall define the scope of individual associates who shall be deemed as Risk Takers and report this to the Board of Directors. The Human Resources department in Nasdaq, shall accordingly maintain and update the list of Risk Takers. 6. Fixed and variable pay The annual fixed salary shall be competitive and based on the individuals responsibilities and performance. The total variable remuneration according to Nasdaq group s Global Policy consists of the combination of the annual actual paid cash and granted long-term incentive equity award. The granted long-term incentive equity award will automatically be forfeited in connection with an associate s resignation. The Equity Incentive Plan consists of three vehicles that reward long-term success and growth: (1) Performance Share Units ( PSU three year); (2) Performance Share Units (PSU one year); and (3) Restricted Stock Units ( RSU ). Those with greater responsibility for long-term company performance will have incentives more heavily weighted toward PSUs with either three year Cliff Vesting (PSU 3 year)or 1/3 vesting per year(psu one Year), while those with less direct impact on company results will have incentives more heavily weighted toward RSUs. Such awards are capable of being clawed-back in the event of poor financial performance of personal conduct. All Nasdaq employees are eligible to participate in the Global Compensation Program. The annual fixed salary sets a roof for the employee s total variable remuneration, as the variable remuneration is set as a percentage of the annual fixed salary, in the range between 4-250% of annual fixed salary. The level of the variable remuneration is differentiated based on employees position within the company, where majority have a range of 5-50% variable remuneration of annual fixed salary. The total variable remuneration consists of the Corporate Incentive Plan (CIP) and an equity program. 6

7 6.1. Nasdaq Clearing AB Risk Takers within Nasdaq Clearing AB shall have their total variable remuneration deferred with a substantial proportion and for a minimum period of three years. Both the fixed salary and the total variable remuneration should, on an annual basis or when significant changes occur, be reviewed and kept in line with the Regulations and the Policy. The deferred payment for an individual associate mentioned above may be cancelled in part or in whole by Nasdaq, if at a later stage, in connection to the end of the deferral period, it is demonstrated Nasdaq Clearing AB did not fulfill the performance criteria designated for it. Such cancellation shall be applied only if the Company s financial stability is significantly weakened, whereby the Company no longer is considered to be able to continue conducting business. Risk Takers are remunerated in a manner that is independent of the business performance of the CCP. The level of remuneration will be adequate in terms of responsibility as well as in comparison to the level of remuneration in the business areas. 7. Governance and control This Policy and the defining of the scope of Risk Takers are subject to approval of the Board of Directors of Nasdaq Clearing. Further, the Board of Directors shall be responsible for application and follow up of the Policy. Swedish Regulations and EMIR stipulate that an independent control function shall on an annual basis monitor that the remuneration applied by the Company is in compliance with this Policy. The control function shall be independent of the business units they are monitoring, have appropriate authorizations and resources and receive remuneration independent of the business areas they are reviewing. Based on the above, the Company shall engage its internal auditors to carry out the control of the Policy referred to above. When needed, the control function shall immediately report the results of its review to the Board of Directors at least annually and no later than in conjunction with the adoption of the annual accounts. 8. Disclosure of information on remuneration An account of the Company s remuneration shall be disclosed in conjunction with the adoption of the annual report in accordance with the applicable Swedish Regulations. The Company shall present its account in the annual report, in an appendix to the annual report or on its website. If the account is not included in or appended to the annual report, the Company shall disclose in its annual report where the information is published. The information should be published in such a manner that the economic conditions for individual associates are not revealed. 7

8 The account shall be available for at least one year after its publication. Information about performed risk analysis shall be disclosed on Nasdaq website or in the respective annual reports. 8