Corporate governance
Corporate Governance Code
Qred is a banking company licensed to conduct banking activities as defined in the Banking and Financial Business Act (2004:297).
AGM
The AGM is Qred's highest decision-making body, where shareholders exercise their right to vote and where decisions are made on, among other things, the financial statements and the profit and loss statement of the annual report, discharge, members of the Board of Directors for the coming year and the election of auditors.
Government
The Board of Directors of Qred is responsible for the organization and management of the company's affairs in accordance with, among other things, the Swedish Companies Act and has ultimate responsibility for ensuring that the operations are carried out in accordance with good internal administration and supervision.
The internal administration and control of Qred is formalized in accordance with internal rules and guidelines, routine and process descriptions, and checklists.
The Board of Directors meets at least four times a year and decides on internal rules with regard to governance and supervision, while the Chief Executive is responsible for enforcing them in Qred's operations as directed by the Board of Directors.
The Board is responsible for ensuring that Qred conducts its operations ethically and professionally. The board is also responsible for identifying and resolving conflicts of interest appropriately and maintaining a sensible risk culture.
Chairman of the Board
The Chairman of the Board directs the work of the Board and ensures that the Board fulfils its obligations in accordance with the Swedish Companies Act and other applicable rules. The Chairman of the Board monitors Qred's development together with the CEO.
The Chairman of the Board is responsible for conducting an annual suitability assessment to ensure that the members of the Board of Directors, the CEO and members of senior management are fit for their duties in any given situation. The assessment shall take into account the following:
- reputation of a person
- the knowledge, skills and experience of the person to perform the tasks
- a person's ability to act honestly, ethically, and independently while evaluating and challenging decision-making when necessary
- the ability of a person to allocate sufficient time to perform tasks.
The suitability assessments and their results are documented.
Committees
The government has set up two committees to support it in certain areas of expertise:
- Remuneration Committee
- Risk and Audit Committee
The members of the Remuneration Committee are appointed annually and consist of the Chairman of the Board and one other member of the Board of Directors. The Remuneration Committee meets twice a year and the CEO and other directors may attend meetings when called.
The Risk and Audit Committee meets quarterly before the Board meeting and consists of 2-3 Board members and 1-3 senior level directors. The Board of Directors appoints one of the committee members as chairman of the committee. At least one member of the committee must have experience in identifying, evaluating and managing the risks of the company and its direct or indirect subsidiaries, and at least one member must have accounting or auditing skills.
The committees assist the Government with expertise and prepare appropriate advice and preparation of matters within their respective areas of responsibility. The work of the committees is more precisely regulated in the instructions.
Managing Director
The Board of Directors appoints a Chief Executive Officer for Qred, who has the authority to make decisions on all matters not decided at the level of the Board of Directors or the General Meeting. The CEO is responsible for day-to-day management in accordance with the instructions and regulations of the Board of Directors.
The CEO is responsible for ensuring that regulations, guidelines, and routine and process descriptions are executed and that all necessary documentation is available to employees.
Management Team
The CEO of a company is backed by a group of advisers, a management team whose objective is to ensure the proper and efficient operation of the company. The management team should always take into account the interests of the company and its customers. The management team should normally meet if necessary, but at least once a month. The CEO convenes a management team and presides over meetings. Meetings must have an agenda that is recorded in the meeting minutes.
Internal administration and control
Three lines of defense
Qred applies the principle of three lines of defense to determine responsibility and organizational risk management oversight.
The first line of defense consists of business functions, including the CEO, who are responsible for day-to-day risk management and compliance.
The second line of defense consists of a risk management and legal department, which, in addition to its many functions, monitors and reports on Qred's risks and how the company complies with internal and external rules. Those overseeing the second line of defense report primarily to the CEO and are, as a rule, an independent audit unit of the CEO, but must report directly to both the Board of Directors and the CEO.
The third line of defense consists of the Internal Audit Department, which reports directly to the government and is the government's independent audit unit. The third line of defense evaluates the activities of the first and second defense lines.
Remuneration policy and system
Remuneration policy
Qred has a Remuneration Policy (the “Policy”) designed to describe and establish the principles of how the Company's remuneration system is designed, directed and monitored. Policies should be consistent, promote effective risk management and prevent excessive risk-taking. In addition, the Policy shall ensure that the interests of customers are not jeopardised by the Company's incentive scheme. The remuneration system should contribute to Qred's ability to reach and retain qualified personnel and help achieve the company's long-term objectives.
The Board of Directors is ultimately responsible for the content, establishment, implementation and compliance of the remuneration policy. The policy must be regularly, at least annually, reviewed and, if necessary, updated before approval by the board. Risk analysis must be made as the basis for the Board's decision to adopt the Policy. The board also decides to:
- Remuneration of the Management Team
- on the remuneration of supervisory departments
- the amount and payment of variable premiums
- measures to monitor the application of the Policy.
Remuneration Committee
The Board of Directors has appointed a Remuneration Committee.
The Remuneration Committee is responsible for the annual monitoring and evaluation of the company's remuneration system and for preparing questions related to the remuneration system for the Board of Directors. The Remuneration Committee also monitors the development of the remuneration system and the unjustified differences in pay between men and women.
If necessary, the Board of Directors shall comply with the remuneration decisions made at the Annual General Meeting.
Risk analysis
The company conducts an annual risk analysis to identify those employees whose duties have a significant impact on the company's risk profile. The analysis shall take into account all risks to which the company is or may be exposed, including risks related to the company's Policies and remuneration system. The analysis must be made in writing and attached to this Policy. The Remuneration Committee must review the risk analysis before the Board approves the Policy.
Remuneration system
General principles
The company's remuneration system should be designed in a way that is compatible with risk management and promotes rational and effective risk management and prevents excessive risk-taking. Compensation schemes should encourage employees to perform well and help the company attract and retain qualified employees. The remuneration system should be applied in a gender-neutral manner.
Fixed pay
Fixed wages
The basis of the company's remuneration system is fixed remuneration. The fixed salary is constantly audited, and the first salary check usually occurs 12 months from the beginning of the employment relationship. Salary audits are usually conducted once a year.
The fixed salary of an employee must be determined on the basis of objective criteria and be in line with the market situation. In the case of new employment relationships, a fixed salary must be determined based on the market situation of the corresponding profiles and the expected value of the employee. In the case of continuous salary reviews and situations of change of task, to determine the salary, an individual assessment must be carried out, based on job performance, independence, initiative, responsibility and personal development. Discriminatory or otherwise unjustified differences between the fixed salaries of employees shall not occur.
In connection with the salary review, the foreman must go through a development and salary discussion with the employee, which clarifies the link between job duties, job results, performance, and salary development.
The vacation days are determined in accordance with the current legislation and individually in connection with the employment and salary review.
Variable Commissions
The Board of Directors decides on variable remuneration for members of the management team and employees whose duties have a significant impact on the company's risk profile. The CEO can decide whether other employees (outside of said group) are eligible for variable remuneration.
The company applies a variable remuneration system in the form of performance-based bonus schemes to the CEO, management team and most departments and business units. Performance-based bonuses should be designed to meet the criteria of this section and the General Policy. The criteria for receiving variable remuneration should be based on the overall performance of the company, as well as the individual performance of the employee and the performance of the employee's business unit.
Variable fees are based on the following:
- the achievement of financial budget objectives;
- the operational objectives of the business, and/or
- performance-based goals for an individual or group.
The results on which variable fees are calculated are based primarily on risk-adjusted returns. The company must consider both current and future risks, as well as the cost of capital required by the business and liquidity. The Company shall ensure that variable remuneration is based on long-term and sustainable results by evaluating the results from a multi-year perspective.
In addition, the Company's underlying economic cycle and business risks are taken into account when variable fees are accepted and paid.
When defining variable remuneration, the individual outcomes and performance of employees are considered from the perspective of both economic and non-economic factors. In non-economic factors, the company must consider, among other things, compliance with internal rules, accountability, customer satisfaction, and protecting the interests of customers.
If the Company's risk management, compliance with rules and laws and internal audit personnel are employed by the Company and are entitled to variable remuneration, the Company shall ensure that such remuneration is based on the objectives of each department, regardless of the performance of the business areas.
The Company shall ensure that any variable remuneration will not affect the Company's ability to maintain an adequate capital base or strengthen it if necessary.
The company should maintain a reasonable balance between fixed and variable remuneration for employees. The fixed remuneration of employees should always be at a sufficiently high level so that the variable rate can be set at zero. The total remuneration of employees should never be at a level that would threaten the company's capital base or ability to make a positive result in the long term. An employee's total variable remuneration must never exceed 100% of the employee's annual fixed remuneration. The restriction does not apply to the Company's sales division, which is completely disconnected from the Company's credit operations and credit decisions. However, the variable commission on sales should never exceed €10,000 per month.
Guaranteed variable commissions
The Company primarily does not guarantee variable remuneration to employees. If there is a specific reason for guaranteeing a variable remuneration, the government may guarantee a variable remuneration to the employee, but this should be done at the time of commencement of employment or during the first year of employment.
Ethical Guidelines and Conflicts of Interest
Qred has created a code of ethics designed to ensure that business is conducted in an ethically responsible and professional manner in accordance with Qred's internal and external rules. In addition, the purpose of this Policy is to promote transparency, honesty and a corporate culture that protects Qred's operations from corruption.
The policy sets common standards for Qred's ethical approach and facilitates employees in situations where applicable rules or guidelines are absent or limited.
Conflicts of interest
Qred has developed Policies and Guidelines for managing conflicts of interest arising in the business.
Qred employees are expected to act in Qred's best interests at all times and exercise good judgment unaffected by personal interests or loyalty to others.
No employee shall be involved in the management or decision making of credit matters involving a relative, related company or other similar fraud risk case. Also, the employee may not deal with cases in which he has a personal interest or matters in which such an interest lies with a relative of the employee or a company in which the employee or his relative owns a significant share. In such a situation, the employee must be disconnected from the credit process and the credit decision.
Qred employees should not acquire goods or services from close parties without prior approval from the CEO, and the CEO should not acquire goods or services from close parties without prior approval from the Board of Directors.
