Nordea defends costly CEO flat purchase
Published: 04 Nov 2011 12:27 GMT+01:00
Updated: 04 Nov 2011 12:27 GMT+01:00
Swedish bank Nordea has been embroiled in an executive compensation controversy after it was revealed that the company purchased Danish CEO Christian Clausen a 22.5 million kronor ($3.4 million) flat so he could live in Stockholm.
- Nordea earnings hit by euro debt crisis (19 Oct 11)
- Nordea cuts 2,000 jobs (30 Aug 11)
- Nordea reports fall in profits (19 Jul 11)
On Thursday, the Svenska Dagbladet (SvD) reported that Nordea had purchased the 256-square-metre flat at a time when the bank is set to make around 2,000 staff redundant.
The bank is also planning to invest another 10 million kronor to renovate the flat, which is currently being used as office space.
The bank defended the purchase of the apartment, arguing it was a decision taken by the Nordea board of directors, something disputed by two union representatives who sit on the board.
According to union representative Steinar Nickelsen, who has been on the board since 2007, the question of purchasing a flat for Clausen was discussed, but not such a large and stately property as the one which was eventually purchased.
“It sends the wrong signals to spend so much money on an apartment when Nordea finds itself in its current situation with huge personnel reductions. We should have never made the purchase,” he told SvD.
Nordea board chair Bengt Wahlroos also defended the purchase of the costly flat explaining the size of the apartment was all a matter of perspective.
“People actually need to live. 250 square metres may sound like a lot to an editor, but Christian is actually the head of Europe's fifth largest bank,” he told Sveriges Television (SVT).
When asked whether or not Clausen's current compensation level was high enough to allow him to purchase his own apartment, Wahlroos responded by saying he would happily pay the Nordea CEO even more.
“I'd gladly raise his salary so that he could buy more apartments if he wanted,” he said.
Financial markets minister Peter Norman said in a statement that he understood how Nordea's customers and employees could take offence at the deal, but emphasized that the Swedish state, which has an ownership stake in Nordea, hadn't "participated or been a part of in any other way" in the decision to buy the apartment.
In addition to the flat, located in Stockholm's upscale Östermalm district, Clausen has also been granted a generous pension arrangement whereby he will earn half of his salary for the rest of his life upon retirement.
According to SVT, Clausen, who earned 10 million kronor in salary and stock bonuses in 2010, stands to earn at least 98 million kronor from the pension deal.
The fact that the Swedish state has an ownership stake in Nordea prompted Green Party spokesperson Gustav Fridolin to pose questions about the deal to Norman regarding Clausen's pension agreement, which was drawn up according to Danish guidelines, rather than Swedish.
“The state's guidelines are based on the assumption that the principles on which we've reached a political agreement should be applied. The state's [principles] should not be bonus boosting nor should they contribute to pushing up the levels of these types of compensation,” Fridolin told the TT news agency.