Note 9 - Personnel expenses and emoluments to senior employees and elected officers

All compensation arrangements at SpareBank 1 SMN are formulated in accordance with the Financial Institutions Act and with the Securities Trading Act with associated regulations concerning compensation arrangements at financial institutions, investment firms and mutual fund management companies.

The compensation committee conducts an annual review of compensation arrangements, and a written report is forwarded to the Board of Directors for scrutiny and approval. The compensation committee is required to ensure that the practising of the compensation arrangements is examined at least once yearly by independent control functions.

The Board of Directors is charged with approving and maintaining the compensation arrangements, and with ensuring that the documentation underlying decisions is safekept. The Board of Directors also approves any material change in or exception from the compensation arrangements.

The Group’s guidelines for variable compensation are designed to assure that employees, groups and the business as a whole are compliant with the risk management strategies, processes and tools that the Group has put in place to protect assets and values. The compensation arrangements are formulated in such a way as to ensure that neither individuals nor the organisation take unacceptable risk in order to maximise the variable compensation. To this end the basis for variable compensation based on the entity’s risk-adjusted result must be a period of at least one year, and the qualifying period shall not be shorter than one year. SpareBank 1 SMN has no compensation arrangements for customer facing units that would be likely to encourage conduct which challenges the Bank’s risk tolerance, ethical guidelines or which may contribute to conflicts of interest. The Bank has no compensation arrangements for control functions that would be likely to encourage conduct which challenges competence, and reduction clauses have been introduced for instances where breaches of applicable rules or guidelines are brought to light. Reduction has its basis in the Group’s sanction system.

The following employee groups are covered by the arrangement:

Category 1: CEO and members of the Bank’s management team
Category 2: Senior employees
Category 3: Employees with tasks of material significance for the Bank’s risk exposure
Category 4: Employees with compensation corresponding to that of senior employees
Category 5: Employees with control functions

An assessment has in addition been made of whether other employees with compensation corresponding to that of the above groups should be subject to special rules under the above criteria.

Parent Bank     Group
2009 2010 2011 (NOK million) 2011 2010 2009
             
451 447   480 Wages 749 653 638
59 -95   24 Pension costs (Note 33) 32 -97 59
25 24   25 Social costs 29 27 28
536 376   528 Total personnel expenses 810 583 725
             
800 825 820 Average number of employees 1,125 1,109 1,070
767 764 786 Number of man-labour years as at 31 December 1,109 1,035 1,017
834 825 828 Number of employees as at 31 December 1,153 1,117 1,108

 

Emoluments to Top Management             
2011 (thousands of NOK)            
Name Title

Salary and other short-
term benefits

Of which bonuses
1)
Pension
contribution
for salaries
above 12G
Of which
share- based
bonus
payments
Current value of pension liability Pension
rights
accrued in
past year
Loans
at
31.12.
No. of
equity
capital
certificates
Finn Haugan Group CEO   4,964   494   1,337 - 15,846   627   7,268 126,902
Tore Haarberg Executive Director, Retail Division (Deputy Group CEO)   2,510   251   305 -   1,942   158   5,640 3,640
Wenche Seljeseth Executive Director, Marketing and Public Relations   1,035   -   10 11 -   58   2,240 2,463
Vegard Helland 3) Executive Director, Corporate Division   1,888   117   161 -   1,250   128   1,554 5,254
Kjell Fordal Executive Director, Finance   2,460   267   332 -   5,108   741   2,320 243,896
Tina Steinsvik Sund 4) Executive Director, Business Operations   2,066   233   197 - -   58   4,788 4,205
                   
2010 (thousands of NOK)                
Name Title Salary and other short-
term benefits
Of which bonuses
1)
Pension
contribution
for salaries
above 12G
Of which
share- based
bonus
payments
Current value of pension liability Pension
rights
accrued in
past year
Loans
at
31.12.
No. of
equity
capital
certificates
Finn Haugan Group CEO   4,429   -   1,337 170 12,457   610   7,465 126,902
Tore Haarberg Executive Director, Retail Division (Deputy Group CEO)   2,247   -   284 127   1,545   144   5,818 27,640
Reidar Stokke 2) Executive Director, Corporate Division   1,887   -   184 127   1,032   111   3,002 81,495
Vegard Helland 3) Executive Director, Corporate Division   1,396   -   83 20 917   93   2,236 5,254
Kjell Fordal Executive Director, Finance   2,111   -   297 127   3,704   979   3,543 243,896
Tina Steinsvik Sund 4) Executive Director, Business Operations   1,755   -   162 127 -   55   2,670 4,205
                   
2009 (thousands of NOK)                
Name Title Salary and other short-
term benefits
Of which bonuses
1)
Pension
contribution
for salaries
above 12G
Of which
share- based
bonus
payments
Current value of pension liability Pension
rights
accrued in
past year
Loans
at
31.12.
No. of
equity
capital
certificates
Finn Haugan Group CEO   4,623   542   1,289 - 12,416   215   7,639 89,154
Tore Haarberg Executive Director, Retail Division (Deputy Group CEO)   2,252   194   274 -   1,429   229   4,130 24,166
Reidar Stokke 2) Executive Director, Corporate Division   1,948   219   184 -   1,097 307   2,930 56,890
Kjell Fordal Executive Director, Finance   2,026   219   261 -   2,978 164   3,480 176,509
Tina Steinsvik Sund 4) Executive Director, Business Operations   1,608   184   117 - -   52   2,810 1,800

1) Paid bonuses for previous year.
2) Appointed Executive Director, Corporate market Division, up to and including 31 July 2010. Benefits stated are for the entire accounting year.
3) Appointed Executive Director, Corporate market Division, as from 1 August 2010. Benefits stated are for the entire accounting year.
4) Defined-contribution pension scheme.
5) Appointed Executive Director, Marketing and Public Relations, as from December 2011. Benefits stated are for the entire accounting year.

As a result of changes to the tax rules on top pensions, the Board of Directors decided to phase out the group pension scheme for salaries above 12G as from 1 January 2007. The Board has adopted virtually identical pension rights for all employees. For that reason an individual top pension scheme was introduced in 2007 whereby employees with salaries above 12G receive a pension add-on of 16 per cent of salary above 12G. The pension add-on will go to pension saving in products delivered by SpareBank 1. To ensure equality with the phased-out scheme, compensation will be provided for tax on this pension add-on.

Under the employment agreement with the Group CEO, the Bank undertakes to pay salary and other benefits for up to 24 months. The Group CEO is entitled to retire at age 60 on a pension of 68 per cent of pensionable income. The Bank’s group occupational pension is included in the Bank’s pension obligation to the Group CEO. The Group CEO also has an agreement on a dependants’ benefit. The Group CEO has a contractual bonus which is dependent on goal achievement with reference to specific criteria set by the Board of Directors compensation committee.

The Executive Directors have bonus agreements which are dependent on goal achievement with reference to specific criteria set by the Board of Directors compensation committee. The Executive Directors have  agreement on post-employment salary of between 1 -  24 months, reduced however by any salary earned in other employment.

An early retirement agreement has been established with one of the executive directors, granting this person the right to retire on reaching age 62. The pension is 68 per cent of pensionable income. The benefit associated with this arrangement is included in the basis for accumulated pension entitlement in the table above.

The number of equity capital certificates includes equity capital certificates owned by related parties and companies over which the individual exercises substantial influence.

 

Emoluments to the Board of Directors and the Control Committee    
2011 (thousands of NOK)          
Name Title Fee Fees to audit and renumeration committee Other benefits Loans as of 31.12. No. of equity capital certificates
Per Axel Koch Board chairman 330   16   16 - 35,000
Eli Arnstad Deputy chair 180   71   17   2,380   4,000
Kjell Bjordal Board member 155   -   18 - 27,428
Aud Skrudland Board member as from April 2010 155   -   18 239   1,346
Arnhild Holstad Board member as from April 2010 155   -   17   2,282 -
Paul E. Hjelm-Hansen Board member 155   70   16 - 37,536
Bård Benum Board member 155   68   1 - -
Venche Johnsen Board member, employee representative 155   -   611 399 16,706
             
Rolf Røkke Chair, Control Committee 135   -   0 - -
Tone Valmot Member, Control Committee to end March 2011 26   - - -   8,012
Anders Lian Deputy Chair, Control Committee 90   - - - -
Terje Ruud Member, Control Committee as from April 2011 71   - - - -
             
             
2010 (thousands of NOK)          
Name Title Fee Fees to audit and renumeration committee Other benefits Loans as of 31.12. No. of equity capital certificates
Per Axel Koch Board chairman 320   15   2 - 26,000
Eli Arnstad Deputy chair 175   75   2   2,201   4,000
Anne-Brit Skjetne Board member to end-March 2010   38   -   1 -   5,109
Christel Borge Board member to end-March 2010   38   - - - -
Kjell Bjordal Board member 150   -   3 - 27,428
Aud Skrudland Board member as from April 2010 113   -   7 349   1,346
Odd Tore Finnøy Board member to end-March 2010   75   -   1 - -
Paul E. Hjelm-Hansen Board member 150   78   2 - 37,536
Bård Benum Board member 150   75 - - -
Venche Johnsen Board member, employee representative 150   -   524 544 16,473
Arnhild Holstad Board member as from April 2010 113   -   2   2,344 -
             
Rolf Røkke Chair, Control Committee 130   -   2 - -
Tone Valmot Member, Control Committee   85   -   8 -   8,012
Anders Lian Member, Control Committee   85   - - - -
             
2009 (thousands of NOK)          
Name Title Fee Fees to audit and renumeration committee Other benefits Loans as of 31.12. No. of equity capital certificates
Per Axel Koch Board chairman 320   3 - - 18,000
Eli Arnstad Deputy chair 175   37   0   2,002 -
Anne-Brit Skjetne Board member 140   -   1   0   3,727
Christel Borge Board member 140   - - - -
Kjell Bjordal Board member 140   -   2 - 20,000
Kjell Eriksen Board member to end-March 2009   35   12 - -   2,400
Odd Tore Finnøy Board member 140   -   2 - -
Paul E. Hjelm-Hansen Board member 198   52   0 - 27,600
Bård Benum Board member as from April 2009 105   12 - - -
Venche Johnsen Board member, employee representative 140   -   513 685 11,944
             
Rolf Røkke Chair, Control Committee 130   - - - -
Tone Valmot Member, Control Committee   85   -   12 -   5,886
Anders Lian Member, Control Committee   85   - - - -

The Board chairman has neither a bonus agreement nor any agreement on post-employment salary. The no. of equity capital certificates includes certificates owned by related parties and companies over which the individual exerts substantial influence.

Emoluments to Supervisory Board      
(thousands of NOK)  2011 2010 2009
Supervisory Board chair Terje Skjønhals 77 67 55
Other members  670 607 690

Annual report and notes

© SpareBank 1 SMN