SEB's remuneration system aims to attract, retain and motivate employees with the right competence who thereby contribute to the Bank's long-term success. Employees' compensation should encourage good performance, sound behaviour and risk-taking that are aligned with customer and shareholder expectations. The compensation is based on experience and performance and promotes a long-term commitment to creating value.
Remuneration Report 2016
SEB's remuneration structure is based on the components base pay, long-term equity-based compensation and pensions and other benefits. The components are used to achieve an overall remuneration structure. Most employees in SEB also take part in collective profit-sharing programmes based on group performance.
The fixed salary SEB offers shall be competitive and reflect the employee's competence and experience. It should also be in line with comparable industries in each geographic market in which the Bank operates.
SEB has reduced the share of employees who are eligible for individual cash-based variable compensation. This decrease reflects the gradually changing market practice and the shift from variable to fixed compensation. Cash-based variable compensation is only used where it is common market practice, for example within investment banking. In 2016 the cash-based variable compensation corresponded to 3 per cent of SEB's total staff costs (2).
At SEB, cash-based variable compensation is based on the risk-adjusted results and performance of the individual employee, of the individual's respective team/business unit and of SEB as a whole. SEB has a well-established model for calculation and internal allocation of capital. The risk-adjusted result is based on this model.
Long-term equity-based compensation is a means to attract and retain staff with key competencies. It also builds long-term commitment to SEB and creates an incentive for the employees to become SEB shareholders. The equity-based programmes provide scope for risk adjustment for both current and future risks, and thus the final outcome can subsequently be reduced in part or in full, in compliance with the rules of the Swedish Financial Supervisory Authority.
The principles for the determining, applying and following up of remuneration within SEB, as well as the identification of employees who are classified as specially regulated staff, are laid out in SEB's Remuneration Policy. The Remuneration Policy is updated annually. The Remuneration and Human Resources Committee prepares a proposed revised version, with input from the relevant control functions, for final adoption by the Board.
In 2016, the number of specially regulated staff was 1,167.