Other notes to the Group’s Financial Statements 1–40

Select note 1–40 arrow_icon
The tables for the Financial Statements are also available in Excel format and the complete Financial Statements in Pdf format.
34 Incentive schemes
Long-term incentive schemes 2011 I - 2017 I
The Board of Directors of Sampo plc has decided on the long-term incentive schemes 2011 I - 2017 I for the management and key employees of Sampo Group. The Board has authorised the CEO to decide who will be included in the scheme, as well as the number of calculated incentive units granted for each individual used in determining the amount of the incentive reward. In the schemes, the number of calculated incentive units granted for the members of the Group Executive Committee is decided by the Board of Directors. Some 130 persons were included in the schemes at the end of year 2017.
The amount of the performance-related bonus is based on the value performance of Sampo's A share and on the insurance margin (IM) and on Sampo's return on the risk adjusted capital (RoCaR). The value of one calculated incentive unit is the trade-weighted average price of Sampo's A-share at the time period specified in the terms of the scheme, and reduced by the starting price adjusted with the dividends per share distributed up to the payment date. The pre-dividend starting prices vary between eur 39.07 - 43.81. The maximum value of one incentive unit varies between eur 33.37 - 62.81, reduced by the dividend-adjusted starting price. In all the schemes, the incentive reward depends on two benchmarks. If the IM is 6 per cent or more, the IM-based reward is paid in full. If the IM is between 4 - 5.99 per cent, half of the incentive reward is paid. No IM-related reward will be paid out, if the IM stays below these. In addition, the return on the risk adjusted capital is taken into account. If the return is at least risk free return + 4 per cent, the RORAC-based incentive reward is paid out in full. If the return is risk free return + 2 per cent, but less than risk free return + 4 percent, the payout is 50 per cent. If the return stays below these benchmarks, no RORAC-based reward will be paid out.
Each plan has three performance periods and incentive rewards are settled in cash in three installments. The employee shall authorise Sampo plc to buy Sampo's A-shares with 50 per cent (scheme 2017 I) or 60 percent (schemes 2014 and 2011 I) of the amount of the reward after taxes and other comparable charges. The shares are subject to transfer restrictions for three years from the day of payout. A premature payment of the reward may occur in the event of changes in the group structure or in the case of employment termination on specifically determined bases. The fair value of the incentive schemes is estimated by using the Black-Scholes pricing model.
2011 I/2 2014 I 2014 I/2 2017 I
Terms approved *) 14/09/2011 17/09/2014 17/09/2014 14/09/2017
Granted (1,000) 31 Dec. 2014 100 4,434 - -
Granted (1,000) 31 Dec. 2015 70 4,380 62 -
Granted (1,000) 31 Dec. 2016 35 4,211 62 -
Granted (1,000) 31 Dec. 2017 0 2,874 62 4,092
End of performance period I 30 % Q2-2015 Q2-2017 Q2-2018 Q2-2020
End of performance period II 35 % Q2-2016 Q2-2018 Q2-2019 Q2-2021
End of performance period III 35 % Q2-2017 Q2-2019 Q2-2020 Q2-2022
Payment I 30 % 9-2015 9-2017 9-2018 9-2020
Payment II 35 % 9-2016 9-2018 9-2019 9-2021
Payment III 35 % 9-2017 9-2019 9-2020 9-2022
Price of Sampo A at terms approval date *) 18.10 37.22 37.22 44.02
Starting price **) 24.07 38.26 43.38 43.81
Dividend-adjusted starting price at 31 December 2017 16.97 31.86 38.93 43.81
Sampo A closing price at 31 December 2016 45.80
Total intrinsic value, meur 0 29 0 2
Total debt 30
Total cost for the financial period, EURm (incl. social costs) 28
*) Grant dates vary
**) Trade-weighted average for ten trading days from the approval of terms
Long-term incentive scheme of Topdanmark
Topdanmark's share option scheme is for its Executive Board and senior executives. The strike price has been fixed at 110% of the market price on the last trading date in the prior financial year (average of all trades). The options may be exercised 3-5 years subsequent to the granting. The scheme is settled by shares.
The option scheme requires employment during the whole year of the allocation. Options are allocated at beginning of year and in connection with resignation in the year of allocation a proportional deduction in the number of allocated options is made.
Strike price Executive board Senior executives Resigned Total
Total number of options (1,000)
At 1 January 2017 339 1,179 265 1,701
Granted 26 96 352 0 407
Transferred -112 -15 127 0
Exercised -131 -530 -126 -326
At 31 December 2017 192 986 266 1,783
Average strike price at 31 December 2017 26 27 26 27
Per granting
2013, exercise period January 2016 - 2018 18 0 12 18 30
2014, exercise period January 2017 - 2019 21 50 94 52 195
2015, exercise period January 2018 - 2020 30 39 249 75 363
2016, exercise period January 2019 - 2021 29 41 291 75 407
2017, exercise period January 2020 - 2022 26 62 341 46 448
At 31 December 2017 192 986 266 1,444
Average strike price exercised options 2017 17 19 18 18
Average market price on date of exercise 2017 28
Fair value of granting 2017 0 1 1
Fair value at 31 December 2017 2 9 3 14
The fair value of the granting for the year has been calculated using the Black and Scholes model assuming a share price of EUR 24. The interest rate corresponds to the zero coupon rate based on the swap curve on 31 December of the previous year. Future volatility is assumed to be 22% and the average life of the options approximately 4 years.
At 31 December 2017, there were 225,000 options which could be exercised.