The Oma Savings Bank's own remuneration policy is in line with the company's business strategy, goals and values and is in the company's long-term interest. Remuneration is consistent with and promotes the company's good and effective risk management and risk-bearing capacity.
Remuneration policy is an instrument of long-term guidance and is accountable to both owners and members of the institutions. The reward package is designed to encourage to do your best and exceed the goals. The remuneration policy defines the principles and processes for the remuneration of institutions in the way that, in the Board's opinion, best supports the successful implementation of the company's strategy and thereby the growth of shareholder value. The remuneration policy also enables the recruitment and commitment of talented management and the Board to the company.
The remuneration policy has been prepared in accordance with the remuneration policies applicable to the entire personnel of Oma Savings Bank. However, variable remuneration forms a more significant part of the CEO's total remuneration compared to Oma Savings Bank's personnel on average, as the company intends that there is a very strong link between the CEO's remuneration and the company's performance. At the same time, however, care is taken to ensure that the criteria for variable remuneration are the same or parallel for the CEO, his/her deputy and other employees.
According to jointly agreed operating models and the company's risk strategies, work successfully performed is fairly rewarded. Remuneration takes into account the company's risk management operating principles and ensures that the system does not encourage excessive or unwanted risk-taking.
2. Description of the decision-making process
The Remuneration Committee of the Board of Directors of Oma Savings Bank prepares the remuneration policy and any material changes to it and consults the Shareholders' Nomination Committee regarding the remuneration of the Board.
The Board of Directors discusses and presents the remuneration policy and its material changes to the Annual General Meeting if necessary and at least every four (4) years. The Annual General Meeting will make an advisory decision on whether it supports the proposed remuneration policy. Shareholders may not propose changes to the remuneration policy presented to the Annual General Meeting. If the majority of the Annual General Meeting does not support the remuneration policy presented to it, the revised remuneration policy will be presented to the next Annual General Meeting at the latest. In this case, the remuneration of the Board of Directors and the CEO is based on the remuneration policy presented to the Annual General Meeting until the revised remuneration policy has been discussed at the Annual General Meeting.
The Board's Remuneration Committee monitors annually the implementation of the remuneration policy and, if necessary, submits proposals to the Board of Directors to ensure the implementation of the remuneration policy.
The Board of Directors submits an annual remuneration report prepared by the Remuneration Committee to the Annual General Meeting, which enables shareholders to assess the implementation of the company's remuneration policy. The Annual General Meeting makes an advisory decision on the approval of the remuneration report.
If the company's shares, options or other rights entitling to shares are used to remunerate the interests of the CEO and shareholders in order to remunerate the CEO, the Annual General Meeting or the Board of Directors authorised by the Annual General Meeting shall decide on their issuance.
Information on measures to prevent and manage conflicts of interest in the decision-making process and the role of the Shareholders' Nomination Committee and the Board’s Remuneration Committee at the various stages of the decision-making process are described in the remuneration descriptions of the various institutions below.
3. Description of the remuneration of the Board of Directors
The remuneration of the members of the Board of Directors is decided by the shareholders at the Annual General Meeting.
The company has a Shareholders' Nomination Committee consisting of representatives of the five largest shareholders, whose task is to prepare proposals for the remuneration of the members of the Board of Directors for the next Annual General Meeting and, if necessary, for the Extraordinary General Meeting. The Chairman of the Board, who participates in the meetings of the Nomination Committee as an expert, does not participate in the decision-making of the Board's remuneration proposal.
The rules of procedure of the Shareholders' Nomination Committee, approved by the Annual General Meeting, describe the principles of remuneration and the procedure for preparing and deciding on the proposal. The remuneration of the Chairman and members of the Board of Directors of the bank shall be reasonable in relation to the quality and scope of the task. If a member of the Board has an employment relationship with the company, the terms of the employment relationship and the remuneration based on the employment relationship are in accordance with Oma Savings Bank's normal employment-related procedure. The Annual General Meeting decides on the remuneration of the Board of Directors in accordance with the above. Remuneration must be competitive in order to obtain and maintain the necessary qualification in the Board.
The Nomination Committee shall submit to the bank's Board of Directors its proposal on the Board's remuneration by the end of January each year. In the case of an Extraordinary General Meeting, the proposal must similarly be submitted well in advance of the Annual General Meeting.
4. Description of the CEO's remuneration
COMPONENTS OF THE REMUNERATION USED IN THE REMUNERATION AND THEIR PROPORTIONAL SHARES
The company's Board of Directors decides on the terms and conditions of the CEO's employment and remuneration. Decisions are made within the framework of the remuneration policy presented to the Annual General Meeting. The CEO has a written CEO agreement, according to which the salary is fixed and also includes the terms and conditions of pension plans and fringe benefits, as well as termination benefits.
The Remuneration Committee of the company's Board of Directors is responsible for preparing the CEO's salary and other financial benefits. The CEO is not a member of the Remuneration Committee and does not participate in decision-making on his or her remuneration.
The remuneration of the CEO is regularly assessed in relation to general market practices for persons performing in similar positions, and the remuneration takes into account the regulations and guidelines on remuneration in the financial sector in force at the time.
In the remuneration of the company, a distinction has been made between a fixed base salary and a possible variable remuneration. The basic salary is based on e.g. the difficulty classification of the task as well as the person's competence, qualification, work experience and performance. Variable remuneration complements the basic salary and encourages things that are particularly important for achieving the goals. Variable remuneration may not exceed 100% of the fixed annual salary at the time the remuneration is granted. The variable remuneration scheme is reviewed annually.
CRITERIA FOR POSSIBLE VARIABLE REMUNERATION COMPONENTS
The Board of Directors may decide on a share-based incentive scheme for the company's and CEO and other key personnel. The purpose of the scheme is to combine the goals of owners and key personnel to increase the company's long-term value and to commit key personnel to implementing the company's strategy, targets and long-term interests and to provide them with a competitive reward system based on earning and accumulating shares.
The potential reward is based on meeting criteria targets defined by the government during the earning period. Criterion targets may be based on (a) total return per share, which focuses on the creation of long-term shareholder value, (b) economic and operational earnings criteria, which focus on e.g. profitable growth and / or (c) strategic earnings criteria that focus on strategic priorities such as customer satisfaction. Each earning period can have one or more criteria goals. The Board has the right to review and update the levels of criteria targets annually. The Board clearly defines how the earnings criteria are measured while setting the targets for the earnings criteria. The Board of Directors may set measurement periods of different lengths for the criterion targets within the earning period.
The length of the earning period is at least two (2) years. After the end of the earning period, the payment of the bonus is deferred in accordance with the regulations of the financial sector, in which case the total term of the plan is at least five (5) years.
The reward will be paid at the end of the earning period partly in company shares and partly in cash. At least half of the fee must be paid in shares, unless otherwise provided. The purpose of the cash contribution is to cover taxes and tax-like payments arising from the remuneration to the key employee. The transfer of shares paid as a reward is limited by the waiting period requirements under financial sector regulations.
In addition to the share-based incentive scheme, the Board of Directors may decide on an annual bonus or other variable remuneration to be paid to the CEO.
The key principle related to the CEO's overall remuneration is to ensure the CEO's long-term and significant shareholder ownership. The CEO's shareholding in the company strengthens the entrepreneurial approach and the long-term consistency of the interests of the CEO and shareholders. To facilitate this, long-term incentives include a share ownership condition that the CEO must hold half of the shares he or she receives under long-term incentive plans until the value of his or her shareholding in the company equals his or her fixed annual base salary.
OTHER ESSENTIAL CONDITIONS APPLICABLE TO THE EMPLOYMENT
The Board of Directors decides on other terms and conditions of the CEO's employment, which have been agreed in writing in the CEO's contract. The CEO agreement has agreed on a mutual notice period and termination-related compensation, as well as a supplementary pension plan that complies with the terms agreed in the industry in respective agreements.
Upon termination of the CEO's employment, the Board of Directors may, at its discretion, decide whether to remunerate the CEO for share-based incentive scheme and / or other incentive schemes. The Board of Directors may decide on the terms on which these fees are paid.
CONDITIONS CONCERNING SUSPENSION OF PAYMENT AND POSSIBLE RECOVERY
The Board of Directors has the right to cut fees under the incentive scheme or defer the payment of the fee to a time better for the company when, for example, changes in circumstances or other circumstances beyond the company's control would result in a detrimental or unreasonable outcome for the company or participant.
The Board of Directors has the right to cancel the reward under the incentive scheme in full or in part or to recover the rewards already paid until the end of the waiting period if the company's financial statements need to be changed and have or could have an effect on the reward, manipulation or in violation of related regulations, instructions or policies and procedures, or in violation of criminal law or employment law or the Company’s Code of Ethics, or otherwise unethically.
5. Deviation from the remuneration policy and change of the remuneration policy
Conditions for temporary derogation
The company may temporarily deviate from the remuneration policy presented to the Annual General Meeting if the deviation is necessary to ensure the company's long-term interests and the current remuneration policy would no longer be appropriate in the changed circumstances. Such situations include, but are not limited to, a change of Board or CEO, a significant change in the company's strategy, changes in the company's remuneration decision process, significant corporate arrangements such as a merger, takeover bid or acquisition, and changes in legislation, regulations, taxation or similar changes affecting the operating environment.
The deviation may apply to all aspects of the remuneration, depending on what the Board deems necessary to ensure the long-term success of the company. Deviations from the remuneration of the Board of Directors are decided by the Annual General Meeting and with regard to the CEO by the Board of Directors. The Board of Directors will present the deviations and their reasons to the next Annual General Meeting and they will also be reported in the next remuneration report.
CHANGING THE REMUNERATION POLICY
The company may make non-material changes to the remuneration policy without presenting the amended policy to the Annual General Meeting. Such permissible non-material changes include, for example, technical changes to the remuneration decision-making process or remuneration terminology. A change in legislation may also be a reason to make non-material changes to the remuneration policy.
The company's Board of Directors assesses the need for changes in the remuneration policy and material changes to the remuneration policy are prepared and presented to the Annual General Meeting in accordance with the decision-making process described in section 2 above. The company considers to what extent and to what extent the resolution issued by the Annual General Meeting on the previous remuneration policy or the statements made in the remuneration reports published after the approval of the remuneration policy are relevant to the preparation of the new remuneration policy.
The Remuneration Committee is composed of a minimum of three members, which are elected by the Board of Directors from among its members annually. The Board of Directors specifies the Remuneration Committee’s duties in its adopted charter. The duties of the Remuneration Committee include preparing matters pertaining to the remuneration and other financial benefits of the CEO and other management members, preparing matters pertaining to reward schemes, assessment of the remuneration of the CEO and other management members, attending to the appropriateness of the reward schemes, preparing matters pertaining to the appointment of the CEO and other management members and identifying their potential successors, and the development of the remuneration of other personnel and the organisation.
The members of the remuneration committee are Jarmo Salmi, Jyrki Mäkynen and Aila Hemminki.
Long-term incentive scheme
In February 2022, the company’s Board of Directors decided on an incentive scheme for its key personnel. The aim of the scheme is to combine the interests of owners and key persons in order to increase the value of the company in the long term, and to commit the key persons to implement the company's strategy, objectives and long-term interest and to provide them with competitive earnings of the company's shares and a remuneration scheme based on accrual. The terms of the share-based incentive system follow the principles of variable remuneration presented in the company's remuneration policy. The persons belonging to the systems do not have other variable remuneration reward systems during the earning period.
The company's Board of Directors decided to establish one two-year earning period for the years 2022-2023 in the share incentive scheme. The system's target group includes a maximum of 30 key personnel, including the company's CEO and members of the group's management team. The fees payable under the scheme corresponds to a maximum value of 400,000 shares of Oma Savings Bank Plc, including the amount to be paid in cash.
The share incentive scheme established in February 2020 (2020-2021) had one twoyear earning period. In February 2022, the company's Board of Directors approved 331,790 shares for payment from the incentive system, including the portion to be paid in cash. The system's target group included 10 key personnel.
Salaries and rewards for the financial year are presented in Note G21 Personnel expenses. The company publishes the Remuneration Report alongside the Financial Statements.
|Share-based incentive scheme||2022-2023|
|Maximum estimated number of gross shares at the start of the scheme||400 000|
|Date of issue||1.1.2022|
|Share price at issue, weighted average fair value|
|Earning period begins||1.1.2022|
|Earning period ends||31.12.2023|
|Persons at the close of the financial year||27|