OREANDA-NEWS. August 31, 2010. Swedbank's Board of Directors has resolved on extensive changes in the bank’s performance based remuneration program for 2010. The program is the first of its kind in the Swedish banking market to convert a portion of variable cash remuneration to restricted shares. The Board’s resolution that a portion of the variable remuneration will be deferred and paid in the form of shares is subject to the approval of the 2011 Annual General Meeting, reported the press-centre of Swedbank.

The program in summary:
Swedbank's performance and share based remuneration program for 2010 (“Program 2010”) divides variable remuneration into two parts, cash remuneration and deferred remuneration in the form of shares.

The program implies no increase of the total amount of variable remuneration as compared to previously.

The cash remuneration is paid out in the year after the vesting year and the deferred remuneration is held in escrow for three years.

For individuals who qualify as risk-takers according to the Financial Supervisory Authority's definition, 60 percent is deferred, while for others who qualify for variable remuneration 40 percent is deferred.

The program’s performance targets are based on the Group's performance after tax, profit adjusted for capital costs and risks in each business area and risk-adjusted results on an individual and/or team level as well as a number of behavioral variables tied to the Swedbank Group's values.

The program includes approximately 6,400 employees of the business areas Retail, Large Corporates & Institutions and Asset Management as well as certain personnel within the support functions Group Business Support, Group Risk, Group Finance and Group Treasury.

In 2010, around 830 employees of the program qualify as risk-takers according to the Financial Supervisory Authority's definition.

The performance targets for employees who audit operations (including the risk control function) are independent of the results of the units they audit.

Program 2010 does not include senior management who are members of the Group Executive Committee or employees of Baltic Banking or the Russian and Ukrainian operations.

The program contains a ceiling on the deferred share-related component in the Group (a maximum of SEK 333 million excluding social security costs), a ceiling on allotments in each business area and a ceiling on each employee's remuneration.

At a share price of SEK 85 in January 2011, the maximum dilution effect is 0.4 percent.

The delivery of shares in 2014 is contingent on evidence that the performance targets that have been achieved are sustainable long-term.

As proposed the program will be repeated annually.

Swedbank's CEO Michael Wolf comments:

“First it is important to state that the Board has made this decision in order to create a more long-term oriented remuneration system, not because we are being forced to. We have taken a large number of measures since spring 2009 to build a more sustainable bank, and this is another step in that direction. Through this change we harmonize what had become a wide array of more than 70 different remuneration programs previously established in the bank and switch to a single system that is open, transparent and is easy for all to understand by motivating employees to help strengthen the bank long-term.”

Swedbank's Chairman of the Board Lars Idermark comments:
“This program, with a deferred share-based component, harmonizes the interests of employees with those of shareholders and encourages long-term value creation in the bank. We are convinced that this will benefit Swedbank’s shareholders, customers and employees. Through this program we improve our ability to recruit and retain competent personnel and encourage key persons to take actions that strengthen the bank long-term.”

Swedbank has presented the proposal to its largest Swedish shareholders in order to create support for the principles of the program. The resolution regarding the program's deferred remuneration will be taken by the 2011 Annual General Meeting.