Remuneration in Sampo Group is based on the Remuneration Principles which Sampo plc’s Board approved on 9 November 2012.
The core of the Remuneration Principles is that all remuneration systems in Sampo Group shall safeguard the financial stability of the Group and comply with regulatory and ethical standards. They shall also be designed to balance the interests of different stakeholder groups such as shareholders, employees, customers and supervisory authorities. Furthermore, all compensation mechanisms shall be designed in parallel with the Risk Management Principles. The Remuneration Principles apply to all companies within the Sampo Group and are available at www.sampo.com/remuneration.
With regard to the various forms of remuneration, the guiding principles are that:
- Fixed compensation (fixed salary) shall support financial stability, represent a sufficiently high share of the total remuneration and be competitive but not leading in the market.
- Variable compensation shall be used to ensure the competitiveness of total remuneration packages while still keeping the fixed cost base reasonable.
- Pensions shall as a general rule be of defined contribution nature.
- Other benefits shall reflect the conditions in the relevant labor markets
The payment of a certain portion of the variable compensation payable to 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 Group company. After the deferral period, a retrospective risk adjustment review shall be carried out and the Board shall decide whether the deferred compensation can be paid out or not. For the year 2012, part of short-term incentives has been deferred. Payout from agreements or programs decided prior to the publishing of FSA deferral recommendations has not been deferred.
Variable compensation is based either on the contribution to the company’s profitability (e.g. short-term incentive programs) or linked to committing employees to the Group for a longer period of time (long-term incentive programs). During 2012 Sampo plc's Board did not adopt new long-term incentive schemes.
In 2012 EUR 17 million (7), including social costs, was paid on the basis of the long-term incentive scheme 2009:1. EUR 28 million (25), including social costs, was paid as short-term incentives during the same period. The outcome of the long-term incentive schemes is determined by Sampo’s share price development over a period of approximately three years starting from the issue of the respective program. The programs are subject to thresholds on share price development and company profitability, as well as ceilings for maximum payout. Furthermore, the programs are subject to rules requiring part of the paid incentive reward to be used to acquire Sampo shares, which must in turn be held for a specified period of time.
The terms of the long-term incentive schemes are available at www.sampo.com/remuneration.