Order on Remuneration Policy and Pay in Insurance Undertakings, Insurance Holding Companies and Occupational Pension Funds

Order on Remuneration Policy and Pay in Insurance Undertakings, Insurance Holding Companies and Occupational Pension Funds 1)

Pursuant to Section 152, paragraphs 1-3, and Section 316, paragraph 1, of the Act on Insurance Business, cf. Act Consolidation No. 169 of 16 February 2025, and Section 43 and Section 117, paragraph 9, of the Act on Occupational Pension Funds, cf. Act Consolidation No. 183 of 26 February 2024, the following is enacted:

Scope and Definitions

Section 1. This Order applies to the following undertakings (hereinafter referred to as "the undertaking"):

1. Group 1 insurance undertakings.
2. Group 2 insurance undertakings.
3. Insurance holding companies.
4. Occupational pension funds.

Paragraph 2. Section 10 does not apply to Group 1 insurance undertakings or insurance holding companies that have a Group 1 insurance undertaking as a subsidiary.

Paragraph 3. Section 11 does not apply to Group 1 insurance undertakings, Group 2 insurance undertakings, and insurance holding companies.

Paragraph 4. Section 12 does not apply to Group 2 insurance undertakings, insurance holding companies that do not have a Group 1 insurance undertaking as a subsidiary, and occupational pension funds.

Section 2. The Order sets out rules on remuneration policy and pay for the board of directors, the management, and other employees whose activities have a material impact on the undertaking's risk profile, cf. Section 3.

Paragraph 2. Section 8, paragraph 2, Section 10, paragraph 2, item 8, and Section 12 apply to the remuneration of employees performing work in connection with control functions.

Section 3. The board of directors shall, taking into account the size and organization of the undertaking as well as the scope and complexity of the undertaking's activities, identify other employees whose activities have a material impact on the undertaking's risk profile.

Paragraph 2. Employees in Group 1 insurance undertakings and insurance holding companies who are identified as key functions in accordance with Section 127, paragraph 1, of the Act on Insurance Business, are employees whose activities have a material impact on the undertaking's risk profile.

Paragraph 3. Employees in occupational pension funds who are identified as key functions in accordance with Section 36, paragraph 2, of the Act on Occupational Pension Funds, are employees whose activities have a material impact on the occupational pension fund's risk profile.

Paragraph 4. Other employees whose activities have a material impact on the undertaking's risk profile are, as a general rule:

1. the head of a control function,
2. the head of internal audit,
3. the responsible actuary,
4. the head of the insurance area and the heads of units under the insurance area,
5. the head of reinsurance, and
6. the head of the investment area.

Paragraph 5. Other employees whose activities have a material impact on the undertaking's risk profile are, as a general rule, also employees who meet one or more of the following criteria, unless the employee, following a specific assessment, does not have a material impact on the undertaking's risk profile:

1. The employee was awarded total remuneration corresponding to 500,000 euros or more in the preceding financial year.

2. The employee is among the 0.3 percent of the undertaking's employees, rounded up to the nearest whole number, who were awarded the highest total remuneration in the undertaking in the preceding financial year.

3. The Order contains provisions implementing parts of Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs), OJ EU 2016, L 354, p. 37, and parts of Directive (EU) 2023/2864 of the European Parliament and of the Council of 13 December 2023 amending certain Directives as regards the establishment of the European Single Access Point and its functioning, OJ EU, L of 20 December 2023. Certain provisions from Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), OJ EU 2015, L 12, p. 1, have been included in the Order. According to Article 288 of the TFEU, a regulation applies directly in each Member State. The reproduction of these provisions in the Order is thus solely justified by practical considerations and does not affect the direct validity of the regulation in Denmark.

Official Gazette A 2025 Published on 19 June 2025 4 June 2025. No. 676. Ministry of Industry, Business and Financial Affairs, Financial Supervisory Authority, ref. no. 24-011008 CQ003253

Section 4. The Order does not apply to matters covered by a collective agreement.

Remuneration Policy

Section 5. The board of directors shall, taking into account the size and organization of the undertaking as well as the scope and complexity of the undertaking's activities, establish the undertaking's remuneration policy, including the undertaking's pension policy, guidelines for the allocation of variable pay components, severance payments, and identification of other employees whose activities have a material impact on the undertaking's risk profile. The board of directors is responsible for the implementation of the remuneration policy.

Section 6. If an undertaking awards the board of directors, the management, or other employees whose activities have a material impact on the undertaking's risk profile, cf. Section 3, variable pay components, the undertaking must ensure that the remuneration policy addresses the limitations on the allocation and payment of variable pay resulting from Section 146 of the Act on Insurance Business and Section 43 h of the Act on Occupational Pension Funds. The undertaking must furthermore comply with the requirements in Section 10, paragraph 2, item 1, or Article 275, paragraph 2, point (a), of the Commission's Delegated Regulation supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).

Paragraph 2. The appropriate balance between fixed and variable pay components in Article 275, paragraph 2, point (c), of the Commission's Delegated Regulation supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), or in Section 10, paragraph 2, item 1, may vary depending on the recipient's function and the undertaking's other circumstances.

Paragraph 3. The remuneration policy must distinguish between criteria for determining the respective fixed pay components, which should primarily reflect relevant professional experience and organizational responsibility, and the variable pay components, which should reflect sustainable and risk-adjusted results as well as results beyond what can be expected in relation to the employee's relevant professional experience and organizational responsibility. The remuneration policy must furthermore comply with the requirements in Article 275, paragraph 2, point (d), of the Commission's Delegated Regulation supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), or the criteria in Section 10, paragraph 2, item 4.

Section 7. The board of directors' review of the remuneration policy shall take place at regular intervals and at least once a year with a view to adapting the remuneration policy to the undertaking's development. The board of directors must furthermore comply with the requirements in Article 275, paragraph 1, point (d), of the Commission's Delegated Regulation supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), or furthermore comply with the requirements in Section 10, paragraph 1, item 4.

Section 8. As part of the supervision of the remuneration policy, the board of directors must ensure that a check is carried out at least once a year to verify whether the remuneration policy is being complied with. The board of directors must establish the guidelines for the check, and the result thereof must be reported to the board of directors. The board of directors must furthermore comply with the requirements in Article 275, paragraph 1, point (e), of the Commission's Delegated Regulation supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), or furthermore comply with the requirements in Section 10, paragraph 1, item 5.

Paragraph 2. The board of directors monitors the remuneration of the management of the part of the organization responsible for controlling compliance with limits on risk-taking, as well as the management of the part of the organization otherwise responsible for control and audit, including the management of the compliance function and the internal audit function. If the undertaking has established a remuneration committee in accordance with Section 151 of the Act on Insurance Business, the committee shall perform this control.

Section 9. The undertaking must ensure that employees involved in drawing up the undertaking's remuneration policy and monitoring compliance therewith possess the necessary expertise. The undertaking must furthermore, taking into account the size, internal organization, scope, and complexity of the undertaking's activities, ensure that employees monitoring compliance with the remuneration policy are independent of the departments in the undertaking that they monitor.

Special Requirements for Remuneration Policy in Group 2 Insurance Undertakings, Insurance Holding Companies and Occupational Pension Funds

Section 10. A Group 2 insurance undertaking, an insurance holding company that does not have a Group 1 insurance undertaking as a subsidiary, and an occupational pension fund must, in connection with the adoption and implementation of the remuneration policy, ensure the following:

1. The remuneration policy and practice are introduced, implemented, and maintained in accordance with the Group 2 insurance undertaking's, insurance holding company's, and occupational pension fund's business and risk management strategy, risk profile, objectives, and risk management practice, as well as their long-term interests and results as a whole, and it must include measures to prevent conflicts of interest.
2. The remuneration policy promotes sound and effective risk management and does not encourage risk-taking that exceeds the Group 2 insurance undertaking's, insurance holding company's, and occupational pension fund's risk tolerance limits.
3. The remuneration policy applies to the Group 2 insurance undertaking, insurance holding company, and occupational pension fund as a whole and contains specific arrangements taking into account the tasks and results of members of the board of directors and management, as well as other employees whose activities have a material impact on the Group 2 insurance undertaking's, insurance holding company's, or occupational pension fund's risk profile.
4. The board of directors of the Group 2 insurance undertaking, insurance holding company, and occupational pension fund establishes the general principles for the remuneration policy for employees whose activities have a material impact on the undertaking's risk profile, and is responsible for monitoring its implementation.
5. There is clear, transparent, and effective management with regard to remuneration, including supervision of the remuneration policy.
6. An independent remuneration committee is established, if relevant in relation to the size and internal organization of the Group 2 insurance undertaking, insurance holding company, or occupational pension fund, with a view to periodically assisting the board of directors in monitoring how the remuneration policy and practice are structured, implemented, and used.
7. The remuneration policy is communicated to all employees in the Group 2 insurance undertaking, the insurance holding company, and the occupational pension fund.

Paragraph 2. The specific arrangements referred to in paragraph 1, item 3, must comply with the following:

1. If the remuneration arrangements include both fixed and variable pay components, there must be an appropriate balance between fixed and variable pay components, so that the fixed pay component constitutes a share of the total remuneration that is sufficiently high to ensure that employees do not become overly dependent on the variable pay components, and to make it possible to conduct a fully flexible bonus policy, including potentially completely refraining from paying variable pay components.
2. If remuneration is performance-dependent, the total remuneration is determined based on a combined assessment of the individual employee's and the relevant department's results and the total results of the Group 2 insurance undertaking, insurance holding company, occupational pension fund, or the group of which the undertaking is a part.
3. The payment of a significant part of the variable pay component must, regardless of the form in which it is to be paid, include a flexible deferred pay component that takes into account the business type and time horizon of the Group 2 insurance undertaking, insurance holding company, or occupational pension fund. The deferral period must be at least three years and adapted to the Group 2 insurance undertaking's, insurance holding company's, or occupational pension fund's business and risks, as well as the activities of the employees concerned.
4. Both financial and non-financial criteria must be taken into account in the assessment of an employee's results.
5. The performance measurement forming the basis for variable remuneration includes an adjustment for exposure to current and future risks, taking into account the Group 2 insurance undertaking's, insurance holding company's, and occupational pension fund's risk profile and cost of capital.
6. Severance payments must be based on the employee's results over the entire period of employment and be designed in such a way as to ensure that errors are not rewarded.
7. The persons covered by the remun policy must commit not to use personal hedging strategies or pay and liability-related insurance to undermine the risk-adjustment effects built into their remuneration terms.
8. If the Group 2 insurance undertaking's, insurance holding company's, or occupational pension fund's remuneration of an employee performing work in connection with the undertaking's control functions includes a variable pay component, the variable pay component must not be dependent on the results of the department that the employee controls.

Paragraph 3. The remuneration policy must be designed taking into account the Group 2 insurance undertaking's, insurance holding company's, or occupational pension fund's internal organization and the nature, scope, and complexity of the risks associated with the undertaking.

Section 11. An occupational pension fund must, in connection with the adoption and implementation of the remuneration policy, ensure:

1. that the remuneration policy is designed, implemented, and maintained in line with the occupational pension fund's financial stability,
2. that the remuneration policy supports sound, prudent, and effective management of the occupational pension fund, and
3. that the remuneration policy is consistent with the long-term interests of the occupational pension fund's members and pension beneficiaries under the pension schemes administered by the occupational pension fund.

Remuneration of Actuaries

Section 12. If the remuneration of an employee acting as an actuary, who is not subject to the requirement in Article 275, paragraph 2, point (h), of the Commission's Delegated Regulation supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), includes a variable pay component, the variable pay component must not be dependent on the department's results.

Pension and Special Remuneration

Section 13. If the undertaking awards pension benefits that can be equated with variable pay to the board of directors, the management, or other employees whose activities have a material impact on the undertaking's risk profile, cf. Section 3, the undertaking's pension policy must be in compliance with the requirements resulting from Section 146, paragraph 6, of the Act on Insurance Business and Section 43 h, paragraph 6, of the Act on Occupational Pension Funds.

Section 14. The requirements for the allocation and payment of variable pay in Section 146 of the Act on Insurance Business and Section 43 h of the Act on Occupational Pension Funds do not apply to agreements on severance payments that meet the following conditions:

1. The agreement on severance payment is entered into in connection with the appointment to the position.
2. The agreed severance payment is not dependent on results achieved in the performance of the position.
3. The agreed severance payment may, at the time of leaving, at most amount to a value corresponding to the last two years' total remuneration including pension.

Paragraph 2. The requirements for the allocation and payment of variable pay in Section 146 of the Act on Insurance Business and Section 43 h of the Act on Occupational Pension Funds do not apply to agreements on severance payments entered into in connection with leaving, for the part of the severance payment that does not exceed a value corresponding to one year's total remuneration including pension.

Paragraph 3. Severance payments not covered by paragraphs 1 and 2 must reflect the results achieved in the performance of the position over a period.

Paragraph 4. Severance payments must not reward misconduct or lack of results.

Paragraph 5. Severance payments that can be derived from law are not covered by Section 146 of the Act on Insurance Business and Section 43 h of the Act on Occupational Pension Funds.

Section 15. The requirements for the allocation and payment of variable pay in Section 146 of the Act on Insurance Business and Section 43 h of the Act on Occupational Pension Funds do not apply to agreements on new employment remuneration that meet the following conditions:

1. The agreement on new employment remuneration is entered into in connection with the appointment to the position.
2. The agreed new employment remuneration is limited to the first year of employment.
3. The undertaking has a sound and solid capital base at the time of the allocation of the new employment remuneration.

Section 16. Remuneration packages linked to compensation or buyouts from other contracts in connection with previous employment must be adapted to the undertaking's long-term interests, including the requirements for the allocation and payment of variable pay, cf. Section 146 of the Act on Insurance Business and Section 43 h of the Act on Occupational Pension Funds.

Section 17. The board of directors or the management may decide that an exemption may be made from the requirements in Section 146, paragraph 1, items 4 and 5, and paragraph 3, of the Act on Insurance Business and Section 43 h, paragraph 1, items 4 and 5, and paragraph 3, of the Act on Occupational Pension Funds, in cases where the accrued variable pay amounts to a maximum of 100,000 DKK per year, if the board of directors or the management assesses that the exemption is reasonable. The undertaking must, upon request from the Financial Supervisory Authority, demonstrate which considerations have been taken into account to exempt the variable pay component from one or more of the requirements in the aforementioned provisions, as well as the reasonableness thereof, cf. first sentence.

Disclosure and Reporting Obligations

Section 18. The undertaking must at least once a year publish the following information regarding its remuneration policy and pay practice for the board of directors, the management, and other employees whose activities have a material impact on the undertaking's risk profile, cf. Section 3:

1. The decision-making process in connection with the establishment of the remuneration policy, as well as the number of meetings held by the board of directors supervising remuneration during the financial year, including information on the composition and mandate of any remuneration committee and on the external expert consulted for the establishment of the remuneration policy, and the role of the relevant stakeholders.
2. The link between pay and performance.
3. The main characteristics of the remuneration system's structure, including information on which criteria are used for performance measurement and risk adjustments, deferral policy, and vesting criteria.
4. The ratio between fixed and variable pay determined in accordance with Section 146, paragraph 1, items 1-3, of the Act on Insurance Business and Section 43 h, paragraph 1, items 1-3, of the Act on Occupational Pension Funds.
5. Which performance criteria are used for the allocation of rights to shares, options, or variable pay components.
6. The main parameters and justifications for any arrangement for variable components and other non-pecuniary benefits.
7. Total quantitative information on remuneration divided by business area.
8. Total quantitative information on remuneration divided by management and employees whose work has a material impact on the undertaking's risk profile, specifying the following: a) The payroll for the financial year divided into fixed and variable pay and number of recipients. b) The size and form of the variable pay divided into cash payment, shares, and share-like instruments or other. c) The size of the outstanding deferred remuneration divided into vested and unvested shares. d) The size of the deferred remuneration allocated during the financial year, paid out, and reduced through performance adjustments. e) New new employment and severance payments paid out during the financial year, and the number of recipients of such payments. f) The size of the severance payments allocated during the financial year, the number of recipients of such allocations, and the highest amount allocated to a single person.
9. Number of persons remunerated with 1 million euros or more per financial year, divided into salary intervals of 500,000 euros for salaries corresponding to between 1 million and 5 million euros, and divided into salary intervals of 1 million euros for salaries of 5 million euros and above.

Paragraph 2. The provision in paragraph 1, items 7 and 8, applies only in relation to employees whose activities have a material impact on the undertaking's risk profile, provided that publication does not result in the disclosure of the individual's specific salary.

Paragraph 3. The provision in paragraph 1, item 8, points (e) and (f), applies only to remuneration that cannot be derived from law or collective agreement.

Paragraph 4. The undertaking may, taking into account its size, internal organization, scope, and complexity of its activities, completely or partially refrain from publishing one or more of the information items mentioned in paragraph 1. An undertaking that does not have securities admitted to trading on a regulated market in Denmark and that has a balance sheet total of less than 500 million DKK in two consecutive financial years may refrain from publishing the information items mentioned in paragraph 1.

Paragraph 5. The undertaking must submit the information mentioned in paragraph 1, items 7 and 8, to the Financial Supervisory Authority immediately following the closing of the annual accounts, and simultaneously publish the information mentioned in paragraph 1 on its homepage in a place where it naturally belongs. If the undertaking does not have a homepage, interested parties must be able to obtain or receive the information upon inquiry to the undertaking. If the publication of the information is made to comply with accounting, stock exchange listing, or other requirements, the disclosure obligation is considered fulfilled hereby. If the information in paragraph 1 is not contained in the annual report, the undertaking must state in the annual report where the information can be found.

Paragraph 6. The Financial Supervisory Authority forwards the information mentioned in paragraph 5, which occupational pension funds submit to the Financial Supervisory Authority, to the European Single Access Point (ESAP). Occupational pension funds must ensure that the information according to Section 18, paragraph 5, is submitted in a data-extractable or machine-readable format cf. Article 2, items 3 and 4, of the Regulation of the European Parliament and of the Council on the establishment of a European Single Access Point, which provides centralized access to publicly available information relevant to financial services, capital markets, and sustainability, and is accompanied by the following data:

1. The legal name of the occupational pension fund to which the information relates.
2. The occupational pension fund's legal entity identifier.
3. The occupational pension fund's size by category.
4. The type of information, including whether the information is submitted on a mandatory or voluntary basis.
5. Indication of whether the information contains personal data.

Paragraph 7. To be able to fulfill the requirement in paragraph 6,