Forms of remuneration

The different forms of remuneration used in Sampo Group are fixed and variable remuneration as well as pension and other benefits.

Fixed compensation

Fixed compensation is the basis of an employee's remuneration package. 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. As a rule, fixed salary shall be based on the employee's general responsibility level and position in the organization. Local collective agreements set the framework for salary development for most of the Sampo Group employees.

Variable compensation

Variable compensation is 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 of the schemes to key performance criteria and, if applicable, 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.

Short-term incentives

Short-term incentives are based on the individual employee's contribution to the respective Group company's profitability and on individual performance. The performance criteria and contribution assessment are generally based on an individual performance analysis combined with relevant business unit and/or business area performance as well as with the overall result of the company, the division and/or Sampo Group.

In Sampo plc, employees participate either in an annual short-term incentive program where the maximum payout corresponds to 2-9 months' fixed salary or in an annual profit-sharing program where the maximum payout corresponds to 1 month’s fixed salary. The programs are triggered by the earnings per share (EPS) of Sampo Group needing to be at a certain level for payout to take place. The programs include a personnel fund element, applicable to Finnish employees. In addition to these short-term programs, discretionary one-time cash payments may be used to reward for exceptionally good performance.

In If Group, the majority of the employees participate in an annual profit-sharing program with a fixed maximum payout. Managers and key specialists participate in an annual short-term incentive program where the maximum payout is 10-100 per cent of the annual fixed salary. Both programs are triggered by the net profit of If Group. Sales personnel may participate in annual sales incentive programs, which are capped at a maximum amount. In addition to these short-term programs, discretionary one-time cash payments may be used to reward for exceptionally good performance.

In Mandatum Group, the majority of the employees participate in an annual short-term incentive program where the maximum payout corresponds to 1-12 months' fixed salary. The program is triggered by the net profit of Mandatum Group. The program comprises a group pension plan and a personnel fund element. Sales personnel may participate in annual sales incentive programs. In addition to these short-term programs, discretionary one-time cash payments may be used to reward for exceptionally good performance.

In Topdanmark Group, top executives and key employees participate in an annual short-term incentive program, where the maximum payout is 40 per cent of fixed base salary including pension. Payout is made partly in cash and partly as shares in Topdanmark. In addition, discretionary one-time incentives may be awarded for exceptionally good performance in the form of e.g. cash, shares in Topdanmark, options or other financial instruments. For more information, please see topdanmark.com

In Hastings, all employees are eligible to participate in an annual short-term incentive program, designed to reward employees for the annual performance and contribution. The overall spend on bonuses depends on performance against financial and non-financial targets. The annual profit target forms the basis of the financial target, with threshold and maximum levels. Non-financial targets include a balanced scorecard of objectives related to colleagues, customers, company and community. Individual bonuses are based on individual performance against pre-agreed personal goals. The relative weightings of financial and non-financial objectives, and the maximum individual bonus opportunity varies based on level in the organisation.

Long-term incentives in Sampo Group

In Sampo Group, key employees are entitled to the following long-term incentive schemes based on financial instruments of Sampo plc.

Terms and conditions of the long-term incentive schemes

Scheme	2017:1/2	2020:1	2020:1/2	2020:1/3
Allocated incentive units (pcs)	29,750	3,794,500	210,000	208,000
of which to Group Executive Committee members*	0	1,180,000	0	0
of which to Group CEO*	0	350,000	0	0
Starting price (EUR)**	33.38	27.14	39.39	44.74
Theoretical market value (EURm)***	0.3	62.9	1.6	1.2
Persons	9	108	11	16
Terms	Terms	Terms	Terms	Terms
* Figures represent the outstanding part of the initial allocation. Dividend adjusted starting price * Calculation based on Black & Scholes model. Insurance margin and return on capital at risk criteria assumed to be fulfilled at 100 per cent.

The weightings of the LTI performance metrics, target thresholds and their outcome are described in the tables below.

Long-term incentive scheme 2020:1

Performance metrics	Threshold	Outcome
Sampo A-share price	Threshold for 2020:1 Starting price 27.14 EUR* Threshold for 2020:1/2 Starting price 39.39 EUR* Threshold for 2020:1/3 Starting price 44.74 EUR*	2023: performance to be assessed 2024: performance to be assessed 2025: performance to be assessed
Return on capital at risk (RoCaR) Weight 100%	Risk-free return**) plus 3% but less than plus 5%: 50% of installment is paid plus 5% or above: 100% of installment is paid	2023: performance to be assessed 2024: performance to be assessed 2025: performance to be assessed
* Dividend adjusted starting price as of June 2022 ** Risk-free return is defined as Finnish Government 3-year average bond yield during the period Q3 2020 to Q2 of the respective installment year.

Long-term incentive scheme 2017:1

Performance metrics	Threshold	Outcome
Sampo A-share price	Threshold for 2017:1* 2020: Starting price 36.29 EUR 2021: Starting price 34.59 EUR 2022: Starting price 30.49 EUR	Outcome for 2017:1 2020: 31.71 EUR (Value of one incentive unit 0.00 EUR) 2021: 43.14 EUR (Value of one incentive unit 8.55 EUR) 2022: 44.75 EUR (value of one incentive unit 14.26 EUR)
Sampo A-share price	Threshold for 2017:1/2* 2021: Starting price 37.48 EUR 2022: Starting price 33.38 EUR	Outcome for 2017:1/2 2021: 43.14 EUR (value of one incentive unit 5.66 EUR) 2022: 44.75 EUR (value of one incentive unit 11.37 EUR) 2023: performance to be assessed
Insurance Margin (IM) Weight 60%	at least 4% but less than 6%: 30% of installment is paid 6% or above: 60% of installment is paid	2020: above threshold levels 2021: above threshold levels 2022: above threshold levels
Return on capital at risk (RoCaR) Weight 40%	Risk-free return**) plus 2% but less than plus 4%: 20% of installment is paid plus 4% or above: 40% of installment is paid	2020: above threshold levels 2021: above threshold levels 2022: above threshold levels
* Dividend adjusted starting prices ** Risk-free return is defined as Finnish Government 3-year average bond yield or zero, during the period Q3 of launch year to Q2 of the respective installment year, whichever is higher.

In Topdanmark Group, key employees are entitled to share option schemes. The options are granted at the beginning of a financial year entitling the key employees to buy or subscribe for shares in Topdanmark. The strike price is fixed at 110% of the market price of Topdanmark's share on the last trading date in the prior financial year (average of all trades). The options can be exercised during 3-5 years subsequent to the granting. The value of the options is calculated based on the Black & Scholes model. The options are covered by Topdanmark's holding of own shares.

In Hastings, employees who are considered key long-term talent and critical to the strategy of the company, are eligible to receive a long-term incentive award. Long term incentives are designed to align remuneration with the long-term vision and performance of the company, and to retain key talent.

Participants are granted an initial cash-based award, the value of which is linked to the value of the company. Awards vest after three years, to the extent the performance conditions are met. Performance conditions are aligned with Hastings´ three-year plan.

Pension

Pensions are based on collective agreements and/or reflect conditions in the relevant labor markets. New pension plans shall be of defined contribution nature.

Other benefits

Other benefits are based on local practices in the relevant labor markets.

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