Introduction
Eika Boligkreditt AS is the covered bond company in the Eika Alliance, and offers financing to the banks in the Eika Alliance and the Local Bank Alliance in exchange for the transfer of residential mortgages. The company is licensed as a credit institution and finances its lending business primarily through the issue of rated covered bonds. Eika Boligkreditt makes an important contribution to ensuring that customers of the owner banks achieve competitive terms for their residential mortgages.
As part of one of the country’s leading bank alliances, Eika Boligkreditt wants to offer its employees remuneration arrangements which are equitable, motivating, and in line with the company’s policy for risk management and control.
These guidelines have been developed by Eika Boligkreditt’s remuneration committee and approved by the board of directors. They apply to remuneration, including pay, benefits in kind, pension and insurance plans, and termination payments. The guidelines apply to all employees.
Main principles for determining remuneration
General
Eika Boligkreditt’s remuneration policy is intended to help the owner banks secure access to long-term and competitive financing through the issue of covered bonds.
Eika Boligkreditt’s remuneration policy is entrenched in the company’s business strategy, and is at all times compatible with the company’s risk tolerance and long-term interests, as defined in its policy and guidelines for risk management and internal control. Eika Boligkreditt places great emphasis on having remuneration arrangements which are sustainable both in the short term and in a long-term perspective, including the promotion of lasting, inclusive and sustainable economic growth, full employment and decent work for all.
The remuneration of Eika Boligkreditt’s employees is determined by individual contracts of employment.
Eika Boligkreditt has established certain main principles for its reward strategy. These are general in scope, but will vary in their application to the various remuneration arrangements and job categories.
The main principles for Eika Boligkreditt’s reward strategy will be as follows.
• The remuneration system will help the owner banks secure access to long-term and competitive financing through the issue of covered bonds.
• The remuneration system will be competitive but not a market pacesetter, and encourage a long-term community of interest between the employee, the company and the company’s shareholders.
• The remuneration system will differentiate on the basis of the individual’s responsibility, performance and qualifications.
• The remuneration system will be equitable and non-discriminatory.
• The remuneration system will reward the attainment of goals by individuals, units and the company.
• The remuneration system will help to promote and incentivise good management and control of the company’s risk, and discourage excessive risk-taking.
• The remuneration system will contribute to avoiding conflicts of interest between employees, the company and the company’s customers, investors and shareholders. The system will therefore comply with the company’s guidelines on conflicts of interest
• The remuneration system will align with the company’s strategy, goals, core values and long-term interests.
• The remuneration system will comply with applicable external and internal regulations as well as Eika Boligkreditt’s principles with respect to good corporate governance
Forms of remuneration
Eika Boligkreditt’s remuneration system currently comprises the following main elements:
• fixed pay
• pension and insurance plans
• benefits in kind and refunding of expenses
Fixed pay
Fixed pay consists of the employee’s agreed fixed pay. Its level will be competitive but not a pacesetter, and will reflect the individual’s responsibility and performance.
Fixed pay is normally assessed once a year
Pension and insurance plans
Eika Boligkreditt provides legally mandated occupational pension and insurance plans, within the frameworks for such schemes in effect at any given time. It also provides certain non-mandatory plans.
The following pension and insurance plans have been established by Eika Boligkreditt for its employees.
• Defined-contribution occupational pension plan
This plan is based on the company paying an annual contribution of 7 per cent of pay up to 7.1 times the National Insurance base rate (G) and 20 per cent of pay from 7.1 to 12G. In addition, the company provides insurance cover for disability and child pensions to members of the defined contribution plan. Employees who had a defined benefit plan in the spring of 2016 were transferred to the defined contribution scheme with full pay compensation.
• Supplementary pension agreement
The commitment related to supplementary pension provision is covered by means of a securities-fund-based savings scheme. Only the CEO is included in this agreement today.
• Contractual early retirement pension (AFP)
Providing the employee fulfils the defined requirements, this scheme gives them the right to a contractual pension from their 62nd birthday. For more detailed information on the AFP scheme (in Norwegian only), see https://www.afp.no/soker/vilkar-for-afp/.
In addition, all employees of Eika Boligkreditt are covered by personal insurance (including collective life and accident insurance as well as travel insurance) and health insurance.
Eika Boligkreditt’s goal is to maintain a pension and insurance system for the company which is as uniform as possible. Every individual agreement on pension and insurance must accordingly be submitted to the company’s remuneration committee before being entered into.
Severance payment, etc
Eika Boligkreditt does not provide severance payments or the like unless justified by special considerations. Such payments must not be made if the conditions for summary dismissal pursuant to section 15-14 of the Norwegian Working Environment Act apply.
The board of directors can enter into individual agreements with members of the company’s executive management whereby the person concerned waives their protection against dismissal pursuant to the Working Environment Act in exchange for a severance payment.
Benefits in kind
Eika Boligkreditt will not provide benefits in kind which exceed normal market practice in terms of type or value. The following main benefits provided today by Eika Boligkreditt are:
• free newspapers/magazines
• working from home (up to two days per week)
• free mobile phone
• free car
• residential mortgage on certain terms, with up to 0.5 percentage point of the interest subsidised.
Eika Boligkreditt’s policy is to tailor benefits in kind to the category and requirements of each position.
Variable remuneration
Directors and employees of Eika Boligkreditt do not receive variable remuneration after the company’s bonus scheme was discontinued with effect from 1 January 2017.
Other provisions
The company covers the difference between full pay and parental pay from the Norwegian Labour and Welfare Service (NAV) during statutory parental leave. The same applies for employees on sick leave for up to 12 months.Special rules for certain employee categories
Introduction
Pursuant to section 15-2 of the Norwegian regulations on financial institutions, Eika Boligkreditt has established special rules for the remuneration of senior executives, employees with jobs of particular significance for the company’s risk exposure, and personnel with control functions. The board of Eika Boligkreditt is also subject to special requirements in relation to the regulations on financial institutions. The company has, moreover, established specific rules for employees with responsibility for credit assessments, pursuant to section 15-7 of the Norwegian regulations on financial institutions.
Senior executives
A list will be maintained of categories of positions and employees defined in Eika Boligkreditt as senior executives. This list will be kept updated at all times, and will be revised and approved by the remuneration committee at least once a year. The list will also be revised in connection with reorganisations which could affect its accuracy.
Senior executives do not receive variable remuneration.
Employees with jobs of particular significance for the company’s risk exposure
A list will be maintained of categories of positions and of employees defined as having jobs of particular significance for the company’s risk exposure. This list will be kept updated at all times, and will be revised and approved by the remuneration committee at least once a year. The list will also be revised in connection with reorganisations which could affect its accuracy.
Employees with jobs of particular significance for the company’s risk exposure receive no variable remuneration.
Employees with control functions
A list will be maintained of categories of positions and of employees defined as having control functions. Employees exercising control functions will be independent of the business areas they exercise control over, have sufficient authority to discharge their duties, and be remunerated in accordance with goal attainments related to their functions independently of the financial results of the business area they exercise control over.
Remuneration for senior executives in the risk management and compliance functions will be subject to direct supervision by the remuneration committee.
Employees with control functions do not receive variable remuneration.
Employees with responsibility for credit assessments
A list will be maintained of categories of positions and of employees defined as having responsibility for credit assessments. Employees with responsibility for credit assessments must not be remunerated or assessed in any way that is likely to impair their ability to ensure the customer’s interests are properly safeguarded. Nor shall their remuneration depend on the number and percentage of mortgages granted, or their fulfilment of targets in this respect. Employees in this area do not normally have direct contact with customers. However, the management of the credit framework, and associated checks, will be deemed to constitute credit assessments.
Employees with responsibility for credit assessments receive no variable remuneration. The list will be kept updated at all times, and will be revised and approved at least once a year. It will also be revised in connection with reorganisations which could affect its accuracy.