Remuneration

Board emoluments and other benefits

The Annual General Meeting (AGM) decides on Board emoluments and other benefits, proposed by the parent entity, OP Cooperative

The Board members did not receive any separate attendance fees or monthly emoluments in 2019.

Managing Director’s salary and other benefits

The Board of Directors appoints the Managing Director and decides on their salary, benefits and the terms and conditions of their executive contract. A written Managing Director executive contract stipulates the terms and conditions of the contract.

Pension benefits are determined in accordance with pension laws and OP Financial Group's own pension plans. The Managing Director is covered by TyEL (the Finnish Employees Pensions Act) which provides pension benefits based on the years of employment and earnings as prescribed in the Act. The Managing Director is not included in any supplementary pension plan

The period of notice applicable under the Managing Director’s executive contract is six months in case the company terminates the contract. In case the executive contract terminates due to reasons attributable to the company, the Managing Director will be entitled to bonuses under the performance-based bonus scheme for the year of contract termination, provided that the schemes’ performance criteria and the criteria for payment under the schemes' terms and conditions are fulfilled.

Principles governing remuneration paid to the Managing Director and other management

The remuneration schemes approved by OP Cooperative Consolidated are aimed at encouraging and engaging key human resources in the development of business and ensuring that the company attracts new key employees. The Remuneration Committee of OP Cooperative’s Supervisory Board and, if necessary, the Executive Board assess and monitor regularly the effectiveness of the company’s remuneration schemes with the aim of ensuring that remuneration policies and practices with respect to all personnel groups are in line with core values, strategy, targets and goals, risk policies and control systems. The regulations regarding the financial sector’s remuneration schemes have been taken into account in establishing the incentive schemes.

Remuneration of the Managing Director and other management consists of the following two components: 1) basic pay (salary and fringe benefits, the job grade and the person’s competencies as the basis) and 2) performance-based bonuses (achievement of targets in the annual plan as the basis). The Board of Directors is responsible for deciding on remuneration to the Managing Director and other management.

Performance-based bonus scheme

The Board of Directors annually decides on the performance-based bonus scheme. Remuneration is based on metrics deriving from annual targets. Such metrics may be determined at Group-, function-, department- and employee level. In addition to personal performance, bonus payout requires the fulfilment of the conditions set for Group- and/or company-level remuneration

The Group-level precondition for remuneration is that on the bonus payout date OP Financial Group’s LCR (Liquidity Coverage Ratio) is over 110% and the Group’s CET1 ratio is more than the buffer set by the ECB plus 3% (over 14.5% in 2020). The final amount of the bonus earned based on the metrics in the balanced scorecard is also determined by OP Financial Group's EBT.

For 2019, the Managing Director is entitled to a bonus corresponding to their regular three-month salary subject to PAYE tax at a maximum. Bonuses under the performancebased bonus scheme are paid in cash, in view of OP Financial Group’s payment guidelines with respect to persons affecting the company’s risk profile (Identified Staff).

Long-term incentive scheme for other employees

Personnel is included in OP Financial Group’s common personnel fund (OP Financial Group Personnel Fund). The personnel fund is grounded on the achievement of the Group’s shared strategic goals and targets. The target performance metrics in the scheme in 2019 were based on OP Financial Group’s EBT, customer experience and use of digital services. The Board of Directors annually determines the amount of profit-based bonuses transferred to the personnel fund. The maximum amount of the performance-based bonus in 2019 accounted for 5% of the total wages and salaries of the employees included in the personnel fund.