• What our compensation strategy and framework looks like

A fair, transparent and sustainable approach to employee remuneration has always been of crucial importance to the Bank. In 2020, we once again took a balanced approach to compensation against the backdrop of the global COVID-19 pandemic and the macro environment. This resulted in a further refinement of our compensation practices.

Our compensation strategy is focused on supporting a global, client-centric banking model, reinforced by safe and sound compensation practices that operate within the Bank’s capital, liquidity and risk bearing capacity. The compensation framework promotes and rewards sustainable performance and contributions, across all levels of the organization. It provides a clear structure of compensation composition across the Bank, with parameters detailed per division and corporate title.

The HR function continues to drive strategic compensation initiatives, in order to deliver improved management and governance of our compensation costs. Aligning role and reward forms one of the Bank’s Core Transformation Initiatives and 2020 saw further enhancement towards the delivery and monitoring of pay processes.

Our compensation initiatives establish cost-focused foundations, which allow us to continue to better understand, inform and control our pay decisions. They also facilitate our strategic compensation decision making over the long-term and provide transparency and enhanced understanding for employees.

In line with this, the Bank strives to continuously strengthen the link between an employee's role and their compensation. One example in 2020 was the introduction of a new transparent remuneration approach in Germany, to better control and comply with the Bank's compensation processes and improve the management and governance of our compensation costs. In parallel, compensation ranges have been introduced at global level to make the link between base salary and role more transparent.

Ensuring that compensation initiatives support the Bank’s broader strategy will remain a key priority for 2021.

COVID-19 and the macro environment, in addition to our regular dialog with key stakeholders, resulted in a further refinement of our compensation practices in 2020. The output of this exercise is summarized in six key themes.

  • Remuneration Framework

    • Re-affirm the overall components, structure and governance of remuneration
  • Managing & Developing Performance

    • Create clear alignment and documentation of priorities
    • Create alignment and consequences between performance and remuneration
  • Variable Compensation Determination

    • Revise Variable Compensation (“VC”) determination methodology
    • Review appropriateness of bank KPIs
  • Policy Landscape

    • Revise and ensure transparent policy landscape and documentation
    • Clearly communicate policy and framework changes to employees
  • Process Quality & Framework resilience

    • Validate processes and data controls
    • Integrate systems for consistency
    • Improve documentation of VC decisions and quality assurance
  • Extraordinary temporary measures

    • Following the April 2020 Management Board decision to forgo one month of their Fixed Pay, the initiative was extended to a broader group of senior individuals within the Bank.