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Nordea defends costly CEO flat purchase
Nordea CEO Christian Clausen

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.

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.

TT/The Local/dl (news@thelocal.se)

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Your comments about this article

13:08 November 4, 2011 by axiom
the 1% continue their reign :D
13:43 November 4, 2011 by Mib
Whether it's a Socialist state, communist state or capitalist state, the top 1% who have power and influence.....will say...do as I say, but than do the opposite. You don't need to be a rocket scientist to know that it's insensitive to spend so much money on one residence for 1 employee. Surely, he can afford to buy his own place. If he doesn't like it, then he can F..off!

Despite the credit crunch and the realisation that the top few are a law onto themselves, it just continues. The only conlcusion is that the politicians and media are getting very nice favours from allowing this to continue and just like in Greece, the politicians are not going to vote for REAL tax enforcement when they themselves are likely to be benefiting the most!!
14:25 November 4, 2011 by star10
Company executives are ripping all the benefits. Though sometimes argued the need for retaining capable managers, it doesn't really have anything to do with their contribution to the companies. It is maily because the shareholders are so disbursed that they have little influence on how the company benefits are distributed. Now a days, investing on company shares is like giving away your money to theif executives. It is not only about the inequality where the top 1% percent taking the most, it is also threatening the entire system where the real investors who save and invest their money have very little faith in company mangers.
14:39 November 4, 2011 by engagebrain
Companies are run for the benefit of senior management, sod the workers, shareholders, customers.
15:13 November 4, 2011 by conboy
Ah the holy cow "free market?" raises it's media worshipped head again but where are the cries of outrage from the Riksdag?
15:21 November 4, 2011 by Online Personality
Yet another The Local article about poop.
15:23 November 4, 2011 by Svensksmith
Different sets of rules for the people at the top.
15:30 November 4, 2011 by engagebrain
It explains why he is smiling
16:48 November 4, 2011 by mombassa
If Nordea was a government owned company then I'd definitely have a problem but it is a non-government owned corporation.

What they do with THEIR money is THEIR business.

If people don't like it they can take their business elsewhere or quit if they work for Nordea.

Stupid whining Euro sods.
16:56 November 4, 2011 by Tall swede
Actually, nordea is owned to 13.5 % by the government since we bailed them out in the 90:s...
17:19 November 4, 2011 by Abe L
I don't consider the flat purchase a problem at all really. A bank CEO is usually responsible for pulling in billions in profit, purchasing a 3mln USD flat is nothing. This is part of the package when you're a top level exec and well there are simply only a handful of people capable of doing these jobs.

I am left wondering as to why a Swedish bank employs a Danish CEO.
18:41 November 4, 2011 by james_g
@ mombassa #9 - actually, isn't it money deposited with them by their customers rather than THEIR money..:? And, as the man said, the government DOES own 13,5% of it...

@ Abe L #11 - "there are simply only a handful of people capable of doing these jobs" - well, that's certainly what they WANT you to believe! And, in view of what we're seeing going on all over the world (and have been for a long time, but it seems to be getting worse, and more blatant), how many of this handful really ARE capable of doing their jobs? Greed, corruption, incompetence and more greed wherever you look!
19:17 November 4, 2011 by Grant___
SO WHAT

They are buying property, it not like they are burning the money.

The apartment will be the banks property so its just an investment, this chap lives there for a few years and after that they sell it and get the money back, so they are not really spending anything.

Its not that hard to comprehend is it?

Boring sad lonely people with no life and nothing better to do than moan because someone has made a success of their lives and they wonder why they haven't....
19:29 November 4, 2011 by vancer
A company paying for its CEOs accomodation???

Shock, horror, dismay...the world is coming to an end...

YAWN...

I expect they have to that to persuade someone to come over here!
20:44 November 4, 2011 by Tall swede
The problem is that after the crisis the government tried to limit bonuses in their companies cause its mean to grab huge bonuses when every company downsizes. To then buy yourself a condo worth 80 times a normal yearly salary and then claiming "well, suck it, i still want to raise my salary. Oh, and by the way, if you fire me, i get four times that in compensation, because i wrote my own contract!"
23:45 November 4, 2011 by bcarroll
The wealthy should suffer with the rest of us. If the company is laying off workers, execs should have their salaries and perks slash first. I say revolution. Eat the rich.
23:48 November 4, 2011 by vancer
its not mean to take a bonus at all.

Nobody should feel guilty about being rich and successful.

And staff cuts are a part and parcel of live and business. survival of the fittest.

rather than spend all day complaining about the 1% having the money they earned, the 99% should be more productive with their time, take a few tips from the successful 1% and try to make something of themselves and stop blaming others for their failures.
23:52 November 4, 2011 by bcarroll
It doesn't work like that, Vancer. I have a graduate degree, own and run my own business, have a relatively good head on my shoulders, and I work like a dog. The system is rigged and designed to keep wealth AT THE TOP. I am an occupier in the US and I won't stop until the world revolutionizes the way that it deals with wealth disparity. This pig getting this fat bonus should be roasted and eaten.
23:55 November 4, 2011 by vancer
plenty of people come from nothing to make a fortune, most of the worlds richest people made the money themselves coming from nothing.

saying the system is rigged is just an excuse.
00:40 November 5, 2011 by Tall swede
@vancer It is mean if the company is owned by the government. If it is his company, go ahead. If he is that productive, why dont he start his own firm then? To say those things he (and the head of the board) said is mean. It was rude, inconsiderate and arrogant. Rich people can actually say things that are rude. Being rich doesnt make things rude, but to be that condescending is rude. And if it is not rude, then it is stupid, because everyone now hates him for something he easily could have avoided by not being a Richardhead.
01:34 November 6, 2011 by vancer
the company is not owned by the government, they only have a 13.5% share.

That is not a controlling share, they don't own it.

Also surely if you want the government to get a return on its 13.5% investment you want the bank to be the most profitable it can be, and if this chap is the one to do that than this apartment is nothing.
03:00 November 6, 2011 by Keith #5083
#11 Abe L

agree with you. The reason for the Danish CEO? Flats are cheaper in Sweden.

#13 Grant

Totally agree.

People who have no control over their own lives, that is they exercise no responsibility but simply like to blame others, these people really need conspiracy theories. I mean, it's just gotta be someone else's fault.Right?

"Nordea's strong results evidenced the Group's solid momentum, the continued efforts towards advancing its operational efficiency, funding and liquidity profile, and overall financial profile." DBRS credit rating.July 2011

Why shouldn't he get well paid if he is honestly and prudently producing the results ? Well, maybe it's HIS fault they are doing so good!
10:05 November 15, 2011 by Victor Alexandre
I recently closed my Nordea account after the scandals with the funds.

Good luck to you Nordea!
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