SWEDEN Law and Practice Contributed by: Richard Engblom, Per Josephson, Anna Cumzelius and Amin Bell, Harvest Advokatbyrå
erned by the SFSA’s regulations (FFFS 2011:1) regarding remuneration structures in credit insti - tutions, investment firms and fund management companies licensed to conduct discretionary portfolio management. The regulation stipulates that the board of the bank shall establish a documented remuneration policy that is in line with and promotes sound and effective risk management and counteracts excessive risk-taking behaviour. The remunera - tion policy shall encompass all employees. The board of directors shall decide on: • remuneration to senior management; • remuneration to employees who are primarily responsible for any of the firm’s control func - tions; and • measures to enable a review of how the firm’s remuneration policy is being applied. The decision of the board of directors shall, where applicable, comply with decisions made by the Annual General Meeting with regard to the company’s remuneration. The total variable remuneration shall not limit the ability of the company to maintain, or strengthen as needed, a sufficient capital base. The control function shall annually review the company’s remuneration structure for compliance with the remuneration policy. Remuneration Structure Where a company’s remuneration contains vari - able components, it shall ensure that the fixed and variable components are appropriately bal - anced. The fixed components shall represent a sufficiently large portion of the employee’s total remuneration that the variable components can be set at zero.
The performance assessment used to calculate variable remuneration components shall primar - ily be based on risk-adjusted profit measures. Both current and future risks shall be consid - ered. Actual costs of the capital and the liquidity required for the business activities shall also be taken into account. Specially Regulated Staff Senior management and employees in the fol - lowing categories of staff are identified as spe - cially regulated staff: • employees in strategic management posi - tions; • employees responsible for control functions; • risk takers; and • employees whose total remuneration is equal to or exceeds the total remuneration of any of the members of senior management. A risk taker is an employee belonging to a cat - egory of staff whose professional activities can have a material impact on the firm’s risk level. This normally refers to employees who can enter into agreements or take positions on behalf of the firm or in any other way impact the firm’s risks. Variable remuneration to specially regulated staff shall be based on both the employee’s perfor - mance and the overall performance of both the business unit and the company. Both financial and non-financial criteria shall be considered in the assessment of the employee’s performance. The variable compensation for this category may not exceed the fixed compensation. The company shall ensure that at least 40% of the variable remuneration to specially regulated staff, whose variable remuneration over a peri - od of one year totals at least SEK100,000, is
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