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The Group CEO Kari Stadigh has informed to retire on 31 December 2019, pursuant to which the Board of Directors of Sampo appointed Torbjörn Magnusson, the CEO of If P&C Insurance Holding Ltd as the new Group CEO on 7 February 2019. Magnusson will start as the Group CEO on 1 January 2020, but in order to promote the principle of transparency established in the CG Code 2015, his remuneration will be described in the Remuneration Statement already now beside the remuneration of the current Group CEO.
The remuneration of the Group CEO is reviewed annually and is based on the Sampo Group Remuneration Principles. The remuneration includes fixed salary, fringe benefits and a supplementary defined contribution pension contract, and may also include payments from short-term incentive programs and long-term incentive schemes.
The Board of Directors decides on one-year short-term incentive programs separately each year and on cash payouts from the programs in the following year. The Group CEO participates in a one-year short-term incentive program, where the payout is triggered by the operative result of Sampo and the outcome is determined on the basis of the Sampo Group result and the individual performance of the Group CEO. The maximum amount that can be paid to the Group CEO from the program 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 Sampo.
The Board of Directors decides on multiannual long-term incentive schemes and on cash payouts from the schemes. Both the current and the future Group CEO participate in the long-term incentive schemes 2014:1 and 2017:1 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. Kari Stadigh has been allocated 500,000 incentive units in the 2014:1 scheme and 300,000 incentive units in the 2017:1 scheme. Torbjörn Magnusson has been allocated 250,000 incentive units in the 2014:1 scheme and 350,000 incentive units in the 2017:1 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 from the 2014:1 scheme, the Group CEO is obliged to purchase Sampo A shares with 60 per cent of each instalment after deducting income tax and other comparable charges. At payout from the 2017:1 scheme, the Group CEO is obliged to purchase Sampo A shares with 50 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.
In addition to the statutory pension, the Group CEO Kari Stadigh is entitled to a supplementary defined contribution pension in accordance with the present pension contract. The annual supplementary pension premium is fixed at EUR 400,000. According to the pension contract, pension starts at the age of 63, but the start of the pension can be postponed until the age of 70. If the service relationship ends before the age of 63, the Group CEO has the right to start the pension before the age of 63.
Torbjörn Magnusson is also entitled to a supplementary defined contribution pension in addition to the statutory 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 notice period for terminating the service contract of the Group CEO Kari Stadigh is six months, from which period the Group CEO is entitled to receive salary. The Group CEO is not entitled to severance compensation.
The notice period for terminating the service contract of Torbjörn Magnusson is 12 months, from which period he is entitled to receive salary. Magnusson is also, in accordance with his current service contract, entitled to a severance compensation corresponding to a maximum of 24 months’ fixed salary should Sampo terminate his service contract without a specific reason.