Prinsipper for godtgjøring til ansatte i Norges Bank Investment management

Norges Banks hovedstyre har fastsatt prinsipper for avlønning som bestemmer rammene for et lønnssystem for Norges Bank Investment Management. Prinsippene skal bidra til å fremme god styring og kontroll av investeringsvirksomheten, samt å forhindre for høy risikoeksponering og interessekonflikter.

Dokumentet finnes bare på engelsk.

These principles govern the compensation of all employees in Norges Bank Investment Management (“NBIM”), regardless of employment location, including employees of Norges Bank’s subsidiaries.

NBIM’s compensation system shall support the long-term interest of the Government Pension Fund Global (“GPFG”) and prevent excessive risk taking. The compensation system shall include measures to avoid conflicts of interest, and retain and motivate the people needed to manage the fund well over time.

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

These principles have been issued with reference to Chapter 2, Section XI of the Regulation of 21 December 2011 No. 1467 relating to the Securities Fund Act (“Verdipapirfondforskriften”), applied with necessary adjustments as required by Section 5-2 (3) of the Ministry of Finance’s management mandate of the GPFG. Where local law at any NBIM office imposes stricter requirements, local law takes precedence.

NBIM’s compensation system may consist of both fixed and variable components. 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 component.

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 shall be administered without discrimination on gender, ethnicity, age or any other protected characteristic. NBIM shall conduct an annual pay equity review, and findings shall be reported to the Executive Board.

The Executive Board shall approve and ensure that NBIM maintains and practices guidelines and limits for the compensation system. The compensation system shall include special provisions for the following categories of employees.

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 NBIM Leader Group shall not receive variable compensation. NBIM CEO shall submit proposals for salary intervals for NBIM executives, to be decided by the Executive Board. 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 Chair of the Executive Board prepares proposals for Executive Board’s decision regarding compensation to the NBIM CEO.

Investment personnel with duties of material importance

Investment personnel in NBIM may be entitled to variable compensation. For the purposes of these principles, employees on career level 1 and 2 are not considered to have duties of material importance to the GPFG or Norges Bank’s risk exposure.

Employees in control functions

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

Employees with compensation comparable to executives or risk takers

Employees whose compensation is comparable to that of executives or identified risk takers, and whose assignment are significant to the risk exposure or the GPFG or Norges Bank, shall be subject to the same requirements as the categories above, as applicable.

Other employees

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

Maximum limits

Maximum limits for variable compensation shall be established. As a main rule, the variable component shall not exceed 100 percent 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 special circumstances, the Chair of the Executive Board may grant exemptions for individual employees based in Norway. The variable component shall not exceed 200 percent of the fixed component.

The total number of individuals eligible for variable compensation at a higher level than 100 percent of the fixed component shall be presented to the Executive Board for approval.

Performance measurement

Variable compensation is based on a combination of the performance of the individual, the performance of the relevant organisational unit and the relative return on the fund’s investment portfolio. When measuring performance, current and future risks shall be taken into account.

The basis for variable compensation related to related to the relative return of the fund’s investment portfolio shall be a period of at least two years.

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

Deferrals

At least 50 percent 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 deemed appropriate to take into account the time horizon of the investment strategies used in the execution of the management assignment. If the variable component constitutes a particularly high amount, at least 60 percent shall be deferred and paid out in equal instalments over a period of at least three years. The deferred amount shall be adjusted with the absolute return of the GPFG.

Investment personnel on career level 1 and 2 are not considered to have duties of material importance to the GPFG or Norges Bank’s risk exposure and may get the full variable compensation paid out the consecutive year.

Departing employees

Employees who leave will generally get the deferred variable compensation paid out unless otherwise is decided by NBIM CEO. 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.

Conditions for payment

NBIM CEO shall annually propose total payout for variable compensation, to be decided by the Executive Board.

Variable compensation, including the deferred portion, shall be paid only if it is justified according to the performance of the total investment portfolio, the relevant business unit and of the individual concerned. The total variable compensation shall generally be contracted or terminated if the relative return of NBIM is severely negative. Actions or omissions that represent breaches of relevant rules and regulations may lead to a reduction of individual employee’s variable compensation.

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

Executive Board

• Issues compensation principles for NBIM, and approves any amendments
• Reviews the compensation system at least annually
• Approves salary intervals for members of the NBIM Leader Group
• Approves compensation to NBIM CEO
• Approves the annual variable pay payout following a recommendation from the Remuneration Committee
• Approves the number of individuals above the 100 percent variable pay threshold
• Receives the annual benchmarking report

Remuneration Committee

• Prepares all compensation-related matters for the Executive Board
• Directly oversees compensation for executives with risk and compliance functions

NBIM CEO

• Administers the compensation system day-to-day basis
• Proposes salary intervals for the members of the NBIM Leader Group and decides individual salaries within approved intervals
• Proposes the annual variable pay payout
• Decides whether deferred pay for departing employees is released, adjusted or forfeited

Internal audit

• Carries out an annual independent review of compliance with the applicable regulatory framework and reports findings to the Remuneration Committee

Annual review

NBIM shall conduct an annual review of the practices of the compensation system. Following such review, a report shall be submitted to the Executive Board through the Board’s Remuneration Committee. The report shall be subject to independent internal control of compliance with the regulatory framework by Norges Bank Internal Audit.

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 the Executive Board’s Remuneration Committee.

Public disclosure

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 to the compensation system.