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The remuneration of the Group Executive Committee members is reviewed annually and is based on the Sampo Group Remuneration Principles. The remuneration includes fixed salary, fringe benefits and a defined contribution or a defined benefit pension contract, and may also include payments from short-term incentive programs and long-term incentive schemes.
The Group companies’ Boards of Directors decide on one-year company-specific short-term incentive programs separately each year and on cash payouts from the programs in the following year. The Group Executive Committee members participate in one-year company-specific short-term incentive programs, where the payout is triggered by the operative result of each division and the outcome is determined on the basis of the Sampo Group result, individual performance, and where applicable, the business area result. The maximum amount that can be paid to the Group Executive Committee members from the programs corresponds to nine months’ fixed salary. Part of the payout shall be deferred for at least three years as required in the regulatory framework applicable to each Group company.
The Board of Directors decides on multiannual long-term incentive schemes and on cash payouts from the schemes. The Group Executive Committee members participate in the long-term incentive schemes 2011:1/2 and/or 2014:1 for Sampo Group’s key employees, where the outcome is determined on the basis of Sampo’s share price development over a period of three to five years starting from the issue of the scheme. The payout is divided into three annual instalments of 30 per cent, 35 per cent, and 35 per cent respectively. The Group Executive Committee members have been allocated 30,000 incentive units in the 2011:1/2 scheme (of which 65 per cent has vested) and 1,320,000 incentive units in the 2014:1 scheme. The value of one incentive unit is calculated as the difference between the trade-weighted average price of the Sampo A share at the time of payment and the dividend-adjusted starting price. In addition to the share price development, the calculation of the value of one incentive unit takes into account the performance of the insurance margin of If P&C and the return on capital at risk as further specified in the terms of the respective incentive scheme. Both schemes contain a cap for maximum payout. At payout, the Group Executive Committee members are obliged to purchase Sampo A shares with 60 per cent of each instalment after deducting income tax and other comparable charges. The shares are subject to disposal restrictions for three years, after which the Board of Directors shall decide on the possible release.
Under the terms of the employment contracts, the Group Executive Committee members are entitled to supplementary pension schemes, of which part are of a defined benefit type and part of a defined contribution type. The Finnish Group Executive Committee members are entitled to a lifetime defined benefit pension from the age of 60. The pension benefit is 60 per cent of the pensionable salary. The pensionable salary includes fixed salary, fringe benefits, holiday pay and short-term incentives and is calculated as an average of two out of the four last full years, where the best and the worst year are left out. The start of the pension can be postponed until the age of 68. The Swedish Group Executive Committee members are entitled to a defined contribution pension. The premium corresponds to 38 per cent of the fixed annual salary and 25 per cent of the annually paid short-term incentive. The retirement age is 65. The Norwegian Group Executive Committee members are entitled to a defined contribution pension. For the pensionable salary up to 7.1 G (G = National Insurance basic amount) the premium is 7 per cent and for the pensionable salary between 7.1 and 12 G the premium is 25.1 per cent. The Norwegian pension legislation allows for a flexible retirement age between 62 and 75. For the pensionable salary exceeding 12 G, the Norwegian Group Executive Committee members are covered by a defined contribution pension scheme, which entitles to a temporary pension between the age of 67 and 82 and where the premium is 24 per cent.
The notice period for terminating the employment contracts of the Group Executive Committee members is either three or six months if the notice of termination is given by the employee. If the notice of termination is given by the employer, the notice period is either six or twelve months. The Group Executive Committee members are entitled to receive salary during the notice period. In addition, under the terms of the individual employment contracts, part of the Group Executive Committee members may be entitled to severance compensation, provided that the employment contract is terminated by the employer. The severance compensation may be between twelve and twenty-four months’ fixed salary depending on the terms of the individual employment contracts.