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The Sampo Group Remuneration Principles, established by the Board of Directors, are part of Sampo Group's internal governance framework. The Remuneration Principles describe the remuneration structure and the principles for setting up remuneration systems in Sampo 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 and value creation of Sampo Group and shall comply with regulatory and ethical standards. They shall also be aligned with risk management and thus be designed in parallel with the risk management principles and practices.
Compensation mechanisms shall encourage and stimulate employees to do their best and surpass their targets. Remuneration packages shall be designed to reward fairly for prudent and successful performance. At the same time, however, in order to safeguard the interest of other stakeholders, compensation mechanisms shall not generate conflicts of interest and shall not entice or 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 by representing a sufficiently high share of the total remuneration. Fixed salary shall be fair and competitive but not leading in the market.
Variable compensation shall be used to ensure the competitiveness of total remuneration packages. Variable compensation can either be based on the contribution to the company's profitability and on individual performance (short-term incentive programs) or be linked to committing employees to Sampo Group for a longer period and aligning the employees' interests with those of the shareholders by linking the payout to the positive development of Sampo's share price (long-term incentive schemes). Variable compensation shall generally be based on a combination of the assessment of the performance of the individual, the business unit and/or business area and of the overall results of the company, the division and/or Sampo Group. The quantitative and qualitative performance criteria and their relative importance shall be determined in advance. Variable compensation shall always include triggers and caps on the payment.
The payment of variable compensation shall be based on the assessment of the incurred risk exposure and the fulfillment of solvency capital requirements. The payment of a certain portion of the variable compensation payable to the 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 Sampo Group company. After the deferral period, a retrospective risk adjustment review shall be carried out and the Board of Directors of each Sampo Group company shall decide whether the deferred variable compensation shall be paid/released in full, partly or cancelled in whole.
Pension plans shall as a general rule be of defined contribution nature.
Other benefits shall reflect conditions in the relevant labor markets.