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The Sampo Group Remuneration Principles, established by the Board of Directors, are part of Sampo Group's general governance framework. The Remuneration Principles describe the remuneration structure and the principles used in setting up remuneration systems within the Group. The Remuneration Principles apply to all companies within Sampo Group.
The core of the Remuneration Principles is that all remuneration systems in Sampo Group shall safeguard the long-term financial stability of the Group and shall comply with regulatory and ethical standards. They shall also be designed to balance the interests of different stakeholder groups such as shareholders, employees, customers and supervisory authorities. Furthermore, all compensation mechanisms shall be designed in parallel with the Risk Management Principles.
The starting point of any compensation mechanism shall be to encourage and stimulate employees to do their best and surpass their targets. Remuneration packages shall be designed to reward for prudent and successful performance. At the same time, however, in order to safeguard the interest of other stakeholders, compensation mechanisms shall neither entice nor encourage employees to excessive or unwanted risk taking. Risk sensitive but fair and rewarding compensation mechanisms enhance Sampo Group’s ability to create stake- and shareholder value.
With regard to the various forms of remuneration, the guiding principles are that:
Fixed compensation (fixed salary) shall support financial stability, represent a sufficiently high share of the total remuneration and be competitive but not leading in the market.
Variable compensation shall be used to ensure the competitiveness of total remuneration packages while still keeping the fixed cost base reasonable. Variable compensation mechanisms shall ultimately be based on the employer’s unilateral decision and contain clauses allowing the Board of Directors to scale down or cancel the payment of variable compensation based on inadequate solvency. Variable compensation programs shall always include triggers and caps on the payment. Variable compensation shall generally be based on a combination of the performance of the individual, the business area/business unit, and the company as well as the overall result of the division or Sampo Group. The quantitative and qualitative performance criteria and their relative importance shall be determined in advance. Variable compensation can either be linked to the contribution to the company’s profitability (short-term incentive programs) or be linked to committing employees to the Group for a longer period of time (long-term incentive schemes). Long-term incentive schemes shall be designed to align the participants’ interests with those of the shareholders’ by linking the payout of the schemes not only to certain performance criteria, but also to the positive development of Sampo’s share price.
The payment of a certain portion of the variable compensation payable to Senior Executive Management and to certain key persons shall be deferred for a defined period of time as required in the regulatory framework applicable to each Group company. After the deferral period, a retrospective risk adjustment review shall be carried out and the Board of Directors shall decide whether the deferred variable compensation shall be paid out in full, partly or cancelled in whole. The deferred variable compensation can be paid out if material non-acceptable risk-taking or breaches against internal or external rules for the business have not materialized and if the payment does not jeopardize the company’s fulfillment of solvency capital requirements.
Pensions shall as a general rule be of defined contribution nature.
Other benefits shall reflect the conditions in the relevant labor markets.