Compensation principles for Norges Bank Investment Management employees

Laid down by Norges Banks Executive Board 2 March 2011, last amended 6 February 2019.

2 March 2011

Main principles

Norges Bank Investment Management (“NBIM”) shall have a compensation system that is aligned with the business strategy, overall objectives, risk tolerance and long-term interests for the Government Pension Fund Global (“GPFG”). The compensation system shall be designed to support NBIM’s long-term strategy, objectives, vision and values.

The compensation system shall not encourage risk-taking which is inconsistent with NBIM’s risk profile, the Ministry of Finance Mandate for the GPFG or other rules and regulations that apply. The compensation system shall include measures to avoid conflicts of interest.

The compensation system shall include employees at all levels of NBIM, regardless of employment location, including employees employed by Norges Bank’s subsidiaries. NBIM shall ensure that the subsidiaries adopt adequate compensation policies, where relevant.

Compensation structure

The Executive Board shall approve and ensure that NBIM always maintains and practices guidelines and limits for a compensation system. The compensation system shall include special provisions for

  • Executives
  • Employees and employee representatives with assignments that are significant to the risk exposure for the GPFG or Norges Bank
  • Employees and employee representatives in control functions
  • Employees and employee representatives receiving compensation that is comparable to the compensation for executives and risk takers, whose assignments are significant to the risk exposure of the GPFG or Norges Bank.


The term “compensation” shall have the same meaning as “salary and other compensation” as specified in section 6-16a) of the Norwegian Public Limited Liability Companies Act.

Compensation shall be closely tied to the individual’s competencies, responsibilities and performance. It must be aligned with the local market compensation practices to ensure that NBIM is able to recruit and retain the best professionals. NBIM shall offer competitive compensation but shall in general not be a market leader.

NBIM’s compensation system may consist of both fixed and variable components. NBIM’s compensation system shall provide an appropriate balance of fixed and variable components for employee groups, depending on their function and responsibilities, as well as their contribution to the risk profile of NBIM’s investment activities.

Employees in Norway shall be covered by collective personnel insurances and pension plan. For local employees of foreign offices, personnel insurances and pension plans shall be established in accordance with local market practice.

Compensation levels and structures shall be benchmarked annually in the local markets where NBIM operates. This benchmarking shall be presented to the Executive Board.

NBIM shall conduct an annual review of the practices of the compensation system. Following such reviews, a report shall be submitted to the Executive Board through the Board’s Compensation Committee. This report shall be subject to independent internal control of compliance with the regulatory framework by Norges Bank Internal Audit, in accordance with the Regulation on risk management and internal control at Norges Bank.

The Executive Board shall review the compensation system annually, at a minimum. The Board shall monitor the practices and the effects of the system. The review and monitoring shall be carried out by Board members who do not have any management functions in Norges Bank and who have expertise in risk management and compensation.

Compensation of executives

Employees who are members of the NBIM Leader Group shall be considered executives in relation to the requirements set out in section 2-4 of the Regulation of financial reporting of Norges Bank. Members of the NBIM Leader Group shall not receive variable pay.

Compensation to executives with risk management and compliance functions in NBIM shall be subject to direct supervision by the Compensation Committee.

The NBIM CEO shall submit proposals for salary intervals for NBIM executives, to be decided by the Executive Board following discussion in the Compensation Committee in accordance with the Committee’s mandate. The NBIM CEO may in special situations decide on salary levels outside these intervals. The Executive Board shall be informed of such decisions in a timely manner. The Chairman of the Executive Board prepares proposals for Executive Board’s decision regarding compensation to the NBIM CEO.

Compensation of investment personnel

Investment personnel in NBIM may be entitled to variable compensation. The fixed and variable components of the total compensation shall be appropriately balanced. The fixed component of the compensation shall represent a sufficiently high proportion of the total compensation to allow for the possibility to pay no variable compensation component.

Guaranteed variable pay is exceptional, shall occur only in the context of hiring new staff and is limited to the first year of employment.

Where compensation is variable, the total amount of compensation shall be based on a combination of the assessment as to the performance of the individual, the performance of the relevant organisational unit and NBIM as a whole. When measuring performance current and future risks shall be taken into account. The basis for variable compensation related to the performance of NBIM shall be a period of at least two years.

Maximum limits for variable pay shall be established. As a main rule, the variable component shall not exceed 100 per cent of the fixed component of the total compensation for any individual. For employees based outside Norway, a higher maximum level of the variable component may be agreed, where this is considered necessary due to the local market practice where NBIM operates. In this case, the variable component shall not exceed 200 per cent of the fixed component. The total number of individuals eligible for variable compensation at a higher level than 100 per cent of the fixed component shall be presented to the Executive Board for approval.

At least 50 per cent of the variable component shall be deferred and paid out in equal instalments over a period of at least three years, or over a longer period if so indicated by the investment horizon aligned with the nature of the risks of the GPFG. If the variable component constitutes a particularly high amount, at least 60 per cent shall be deferred and paid out in equal instalments over the period mentioned above. The deferred amount shall be adjusted with the absolute return of the GPFG.

Variable compensation shall vest or be paid only if it is sustainable according to the performance of NBIM, the relevant business unit and of the individual. The total variable compensation shall as a general rule be considerably contracted or terminated if the financial performance of NBIM or the GPFG is weak or negative.

Payments related to the early termination of a contract shall reflect performance achieved over time and shall be designed in a way that does not reward failure.

Norges Bank’s pension policy shall be in line with the business strategy, objectives, values and long-term interests of Norges Bank and the GPFG.

Investment personnel shall not have agreements or insurance that ensures against loss of variable compensation.

Compensation of other employees

All other employees in NBIM shall receive fixed compensation only, unless specifically determined by the NBIM CEO. Any variable compensation determined by the NBIM CEO shall comply with the regulations for variable compensation to investment personnel.

Annual reporting on the compensation system

The annual reporting of the GPFG shall contain information on the total amount of paid compensation for the financial year, split into fixed and variable compensation, specifying the number of beneficiaries by the categories of employees covered by the compensation system, how the compensation is calculated, the outcome of periodic review of compensation system and significant changes in the compensation system.

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