Note 22 - 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. This entails inter alia that  the basis for variable remuneration related to the entity's performance shall be a period of one year, and the earning period shall not be less 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. 

SpareBank 1 SMN's compensation arrangements also contain special rules for senior employees. For these groups the basis for variable renumeration related to undertaking's risk adjusted result is a period of  at least  two years. A minimum of 50 per cent of the variable renumeration is allocated in the form of equity certificates, which are tied and allocated in portions of one-third per year over three years. 

An assessment has 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. 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

¹⁾ Defined-contribution pension scheme, pension rights accrued is paid amount for the year.

Until 30 June 2017 SpareBank 1 SMN has had an individual top pension scheme for employees with salaries above 12G and these employees receive 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 and can not be predisposed until retirement (62 years). To ensure equality with the phased-out scheme, compensation will be provided for tax on this pension add-on. This arrangement was closed 30. June 2017.

From 1 July 2017 a new pension scheeme was established for employees with salaries above 12G. These employees receive pension add-on of 15 per cent of salary above 12G on an individual retirement account in SpareBank 1 Forsikring. Employees can decide investement profile and the savings are locked up until retirement age.

An early retirement agreement has been entered with the CEO in the event of his stepping down before reaching age 67, entailing a pension equal to 68 percent of pensionable income. This agreement is effective until the end of the month the CEO reaches 67 years. 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.

Executive directors has established early retirement agreements of up to 12 months. The size of these agreements will be in accordance with the compensation arrangements. 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.

 The Board chairman has neither a bonus agreement nor any agreement on post-employment salary. The number of equity capital certificates includes certificates owned by related parties and companies over which the individual exerts substantial influence.