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Notes to the Accounts

36 Incentive Schemes  
               
Long-term incentive schemes 2006 II - 2009 I  
               
  The Board of Directors for Sampo plc has decided on the long-term incentive schemes 2006 II - 2009 I for the management and experts of the Sampo Group. The Board has authorised the Nomination and Compensation Committee of the Board, or the CEO, to decide who will be included in the scheme, as well as the number of calculated bonus units granted for each individual used in determining the amount of the performance-related bonus. In the schemes, the number of calculated bonus units granted for the members of the Group's Executive Committee is decided by the Board of Directors. Over 100 persons were included in the schemes at the end of year 2010.  
     
  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, regarding already terminated schemes, also on Sampo's return on the risk adjusted capital (RORAC). The value of one calculated bonus 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 8.88 - 20.17. The maximum value of one bonus unit varies between eur 19 - 30, reduced by the dividend-adjusted starting price. The IM criteria in the schemes has three levels. If the insurance margin reaches 4 per cent or more, the bonus is paid in its entirety. If the insurance margin is between 2 - 3.99 per cent, the payout is 50 per cent. In the case of insurance margin staying below these benchmarks, no bonus will be paid out.  
     
  Each plan has three performance periods and bonuses are settled in cash in three installments. In the schemes 2008 I, 2008 II and 2009 I when the bonus is paid, the employee shall buy Sampo's A-shares at the first possible opportunity, taking into account the provisions on insiders, with 30 per cent of the amount of the bonus after taxes and other comparable charges, and in schemes 2008 I and 2008 II to keep the shares in his/her possession for one year and in the scheme 2009 I for 2 years. A premature payment of the bonuses 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 princing model.  
               
      2006 II 2008 I 2008 II 2009 I  
  Terms approved *)   21/12/2006 16/01/2008 07/05/2008 27/08/2009  
  Granted (1,000) 31 Dec. 2007   180 - - -  
  Granted (1,000) 31 Dec. 2008   112 3,961 95 -  
  Granted (1,000) 31 Dec. 2009   47 2,723 63 4,392  
  Granted (1,000) 31 Dec. 2010   - - 32 4,369  
               
  End of performance
period I 30 %
  Q3-2008 Q1-2009 Q3-2009 Q2-2011  
  End of performance
period II 35 %
  Q1-2009 Q3-2009 Q1-2010 Q2-2012  
  End of performance
period III 35 %
  Q3-2009 Q2-2010 Q4-2010 Q2-2013  
  Payment I 30 %   12-2008 6-2009 12-2009 9-2011  
  Payment II 35 %   6-2009 1-2010 6-2010 9-2012  
  Payment III 35 %   1-2010 9-2010 3-2011 9-2013  
               
  Price of Sampo A at terms approval date *)   20.25 18.23 18.02 16.74  
  Starting price **)   20.17 17.26 18.44 16.49  
  Dividend-adjusted starting price at 31 Dec. 2010   16.97 14.26 16.64 15.49  
               
  Sampo A - closing price
31 Dec. 2010
20.05          
               
  Total intrinsic value, meur   0 0 0 10  
               
  Total debt   10        
  Total cost for the financial period, meur (incl. social costs)   13        
               
  *) Grant dates vary  
  **) Trade-weighted average for ten trading days from the approval of terms  
               
               
Sampo 2006 share-based incentive programme
               
  On 5 April 2006, the Annual General Meeting of Sampo plc agreed on the ”Sampo 2006” share-based incentive programme. The programme applies to senior executive management of Sampo plc and its subsidiaries, and to Sampo’s president and CEO. On 11 May 2006, the Board of Directors of Sampo plc allocated 1,300,000 shares of the maximum of 1,500,000 shares of the programme. The programme ended in 2010.  
     
  50 per cent of the amount of the reward eventually payable was based on the price performance of Sampo's A-share, and the other 50 per cent was based on the development of insurance margin (IM). The programme had three performance periods that covered the years 2006 – 2010. Each installment corresponded, at the maximum, to one third of the total amount of shares. The terms of the programme included a limitation according to which the amount of the reward payable was decreased, if Sampo's share price increased by more than 160 per cent during an individual performance period. The shares to be distributed as a reward were partly subject to a two-year lock-up.  
     
  In accordance with the programme, the reward was paid in three installments. The last installment (EUR 3,571,863) was paid in December 2010. The reward was paid in cash so that the employee was obliged to buy Sampo's A-shares at Helsinki Stock Exchange at the least with 50 percent of the amount of the bonus after taxes and other comparable charges.  
     
  Performance Periods      
    Period I Period II Period III
  Share price *) 5 2006 - Q3 2008 Q4 2006 - Q3 2009 Q4 2007 - Q3 2010
  Insurance margin 1/2006 - 9/2008 1/2007 - 9/2009 1/2008 - 9/2010
               
  Performance conditions for periods
            Increase of dividend adjusted share price Insurance margin
  Minimum payout requirement         26 % 5 %
  Maximum payout requirement         64 % 10.5 %
  Payout of the total maximum reward if the minimum is achieved       20 % 40 %
               
  The cost from the incentive scheme during the reporting period 2010 was EURm 0.4.
               
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