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 2-12 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 an underlying performance criterion of Sampo Group (during 2023, insurance service result per share), below which payout will be zero. 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 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
Long-term incentive scheme 2024
On 6 March 2024, the Board of Directors of Sampo plc decided to adopt a performance based long-term incentive scheme for the Group Executive Committee (including the Group CEO) and other senior leaders and key employees of Sampo Group.
The long-term incentive scheme 2024 (LTI 2024) covers the members of the Group Executive Committee (including the Group CEO) and approximately seventy (70) senior leaders and key employees whose efforts and abilities have a direct impact on Sampo Group’s operational performance and strategy. Sampo Board Members are not included in the scheme.
The incentive scheme LTI 2024 participants will be granted performance incentive units in 2024 and the performance incentive units have a three-year performance period covering financial years 2024-2026, with subsequent deferral periods according to the rules and regulations applicable to Sampo Group.
The reward will be settled as a cash compensation. Participants subject to the deferral rule according to the remuneration policies in force in the relevant Sampo Group companies at the launch of LTI 2024 are mandated to purchase Sampo A shares net after tax with 50 per cent of the reward. The deferral period is three years, and the Board of Directors will perform a risk and compliance assessment before any shares are released to participants.
The Group CEO’s grant equals 150 per cent of his annual base salary at launch, and other participant receive grants equal to 30-150 per cent of their respective annual base salaries. The granted number of performance incentive units represents the maximum number of performance incentive units that may vest if the performance criteria are fulfilled. In total no more than 370,00 units will be granted to participants.
To achieve a maximum reward from the LTI 2024, excellent financial and operational performance is required. The performance assessment will be based on the following performance criteria:
- Relative total shareholder return: 25 per cent of the reward is subject to the performance of the Sampo A share’s relative TSR over the performance period against a peer group of companies. The vesting level depends on the Sampo A share’s TSR performance versus the other companies in the peer group. The peer group consists of the following 8 companies, weighted on geographical presence: Admiral Group plc, Allianz SE, Alm.Brand A/S, Aviva plc, Direct Line Insurance Group plc, Gjensidige Forsikring ASA, Tryg A/S, and Zurich Insurance Group Ltd.
- Adjusted absolute total shareholder return: 25 per cent of the reward is subject to the performance of the Sampo A share’s growth and combined dividends over the performance period.
- Underwriting profit growth: 40 per cent of the of the reward is subject to the performance of Sampo Group’s underwriting profit growth over the performance period.
- Sustainability charter: 10 per cent of the reward is subject to the performance of Sampo Group’s work related to sustainability. The sustainability performance criterion consists of Group and subsidiary balanced scorecards relating to development, implementation, and execution on Science Based Targets (SBT).
In addition, the performance incentive units are subject to Sampo A share price movements over the performance period. The share price growth is capped at a maximum increase to avoid excessive pay-outs and minimize risk.
The estimated cost of the LTI 2024 is approximately EUR 25.73 million. The estimation is based on a maximum vesting of incentive units and a 50 per cent increase of the Sampo A share price compared to 1 January 2024.
Overview, LTI 2024
| Total | of which to Group Executive Committee | of which to Group CEO | |
| Grant level % | 30%-150% | 150% | 150% |
| Maximum number of performance incentive units | 370,000 | 134,026 | 37,909 |
| Number of participants | 75 | 7 | 1 |
| Estimated cost (EURm) | 25.73 | 9.32 | 2.64 |
Long-term incentive scheme 2020:1
| Allocation (allocation year) |
2020:1 (2020) |
2020:1/2 (2021) |
2020:1/3 (2022) |
| Allocated incentive units (pcs)* | 1,055,075 | 119,000 | 158,000 |
| of which to Group Executive Committee members* | 343,000 | 35,000 | 0 |
| of which to Group CEO* | 122,500 | 0 | 0 |
| Theoretical market value (EURm)** | 30.9 | 1.6 | 1.6 |
| Persons | 77 | 7 | 12 |
| Terms | Terms | Terms | Terms |
|
* Figures represent the outstanding part of the initial allocation. |
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The weightings of the LTI performance metrics, target thresholds and their outcome are described in the tables below.
| Performance metrics | Threshold | Outcome |
| Sampo A-share price |
Threshold for 2020:1* 2nd instalment, 35% |
Outcome for 2020:1 |
|
Threshold for 2020:1/2* 2nd instalment, 35% |
Outcome for 2020:1/2 |
|
|
Threshold for 2020:1/3* 1st instalment, 30% 2nd instalment, 35% |
Outcome for 2020:1/3 |
|
|
Return on capital at risk (RoCaR) |
Risk-free return**)
|
2023: above threshold levels 2026: performance to be assessed 2027: performance to be assessed |
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* Dividend adjusted starting price as of October 2024 |
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The vesting 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 starting price, which is adjusted downward with paid dividends during the instalment’s performance period. Furthermore, the maximum value and the starting price for the instalments to be paid from September 2025 onwards shall be reduced by the value of the trade-weighted average price of the Mandatum share on Nasdaq Helsinki Ltd for twenty-five (25) trading days commencing the day after Mandatum plc’s publication of its Half-Year Financial Report in 2024 and the dividends per share of Mandatum plc decided up until Mandatum plc’s publication of its Half-Year Financial Report in 2024.
In addition to the share price development and paid dividends, the calculation of the value of one incentive unit takes into account the performance of the return on capital at risk as further specified in the terms of the incentive scheme. The scheme contains a cap for maximum payout. In the 2020:1 scheme, the capped value of one incentive unit is set at EUR 24 above the initial starting price.
Long-term incentive scheme 2017:1
| Performance metrics | Threshold | Outcome |
|
Sampo |
Threshold for 2017:1* |
Outcome for 2017:1 |
|
Threshold for 2017:1/2* |
Outcome for 2017:1/2 |
|
|
Insurance Margin (IM) |
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2020: above threshold levels |
|
Return on capital at risk (RoCaR) |
Risk-free return**)
|
2020: above threshold levels |
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* Dividend adjusted starting prices |
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There are no outstanding payments related to LTI 2017:1. The final restricted shares may be released, following the expiration of the applicable restriction period and based on the decision of the Board of Directors, in 2026.
Other long-term incentive schemes in Sampo Group
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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