Below we present a clarification of the principles regarding the reward systems of Privanet Group Plc and its companies (“Company” or “Group”) according to the Act on Credit Institutions, section 8, article 15. The Company abides by the applicable regulations of the Act on Credit Institutions, sections 7 and 8, the EU Capital Requirements Directive (2013/36/EU), the EU Capital Requirements Regulation (575/2013) and the EU regulation on remuneration (604/2014). In addition, the Company adheres to the instructions on remuneration by the European Securities and Markets Authority and regulations and instructions by the Financial Supervisory Authority.
The Board has confirmed the instructions regarding remuneration of Company management and personnel (principles regarding reward systems and instructions on remuneration policy and practices). The Board sees to it that the reward systems the Company uses conform to the requirements set for the Company’s risk management and financial stability. Rewarding systems must promote good and efficient risk management, and they must be in accordance with the Company’s business strategy, goals, and values, and they must serve the long-term interest of the Company. Remuneration must not lead to or promote risk-taking that exceeds the desired level of risk set by the Board and the strategy, or behavior that violates regulations or the Company’s internal instructions.
The Company has no obligation based on the Act on Credit Institutions to establish a separate remuneration committee. The Board decides on the conditions and procedures of remuneration. If needed, the Board makes proposals to the general meeting on decisions possibly required by the reward system. The CEO is in charge of implementing and executing the accepted reward system.
The Board supervises and periodically evaluates the functionality of the reward system and compliance with the agreed-upon principles and conditions. The Board also oversees the remuneration of people responsible for supervisory functions independent of the Company’s business. The Compliance function evaluates as part of their inspection if the reward systems accepted by the Board have been respected according to the decisions and conditions regarding them. In addition, internal supervision conducts a similar inspection at least every two years.
Rewards are paid in accordance with the regulations that are in force at the time.
The Company applies the following principles to variable remuneration:
- Remuneration must be based on a total evaluation of the performance of the recipient and the business unit in question, as well as the total result of the Company and its consolidation group and development.
- Fixed remuneration is primarily based on the person’s professional experience, work description, and responsibilities. Variable remuneration must reflect the durable and risk-adjusted result of the Company and the recipient’s personal performance, which exceeds the normal level of performance dictated by their duties.
- Remuneration based on performance evaluation is divided into periods, so that it is in accordance with the business cycle and risks of the Company. In judging the amount of remuneration known risks, capital costs, and the necessary liquidity are taken into account;
- The total sum of remuneration to be paid by the Company must not exceed a level that imposes restrictions on strengthening the Company’s capital base.
- The recipient may be granted a right to receive variable remuneration and the remuneration can only be paid if doing so does not endanger the sufficient amount of capital held by the Company and its consolidation group, and if paying it can be justified by the totality of the results of the Company, its consolidation group, and the recipient’s business unit, as well as the recipient’s personal performance.
- The recipient may be granted a right to receive variable remuneration, and the remuneration can only be paid if the recipient has not violated the regulations and instructions that oblige the Company, the internal principles and procedures defined by the Company, or promoted such behavior by their activities or negligence.
- Only particularly pressing reasons can lead to committing to unconditional remuneration, provided that the remuneration agreed upon only concerns the first year of the recipient’s duties.
- At the end of the discretionary period for remuneration the Board must define, in accordance with the reward system, the highest amount of variable remuneration that can be paid to a recipient.
- The amount of variable remuneration cannot exceed 100 percent of the total amount of fixed remuneration of each recipient, unless otherwise agreed by the general meeting. The general meeting cannot, however, accept a larger share of variable remuneration than 200 percent of the total amount of fixed remuneration.
- The conditions of the reward system must be compatible with the Company’s long-term capital needs.
- The conditions of the reward system must enable the Companies to decide not to pay variable remuneration either entirely or in part, with other requirements set in the conditions of the reward system, and to enable them to decide on the payment schedule and postpone paying remuneration in the manner described in the Company’s internal instructions.
- The recipient must on their part commit to not using financial instruments, insurance, or similar means to shield themselves from the personal risk involved in the reward system.
- The Company must ensure that fixed remuneration is sufficiently large, so that not paying variable remuneration would not unreasonably affect the recipient.
At the moment the Company’s management does not have distinct reward or incentive systems. Instead, the remuneration based on CEO and manager contracts is a fixed monthly salary. Neither does the Company have share or option based incentive systems for the management or the personnel.
To protect the customer’s interest, personnel working in sales must meet quality requirements in order to qualify for receiving variable remuneration. Paying variable remuneration has been divided into periods, so that the employee or tied agent is not only focusing on reaching short-term goals. Conditions of remuneration include appropriate provisions for situations where paying remuneration according to the reward system would endanger the financial stability or liquidity of the Company.
Remuneration for personnel working at the compliance office must not depend on the business unit’s result.