SpareBank 1 Østlandet : Report on remuneration to senior executives for 2022

Report on remuneration to senior executives for 2022

SpareBank 1 Østlandet

Content

1	Background	3
	1.1	The purpose of the remuneration scheme	3
	1.2	SpareBank 1 Østlandet's result for 2022	3
2	Overall development in remuneration	4
	2.1	Board of Directors	4
	2.2	Group Management	4
	2.3	Feedback from shareholders	5
3	Remuneration of the Board of Directors	5
	3.1	Remuneration principles	5
	3.2	Remuneration composition	5
	3.3	Board and committee remuneration for 2021 and 2022	6
	3.4	Remuneration to the Board of Directors for 2021 and 2022	7
	3.5	Remuneration of members of the Board of Directors for the period from 2017 to 2022	8
4	Remuneration of Group Management	9
	4.1	Remuneration principles	9
	4.2	General information about executive remuneration	9
	4.3	Components of executive remuneration	10
	4.4	Remuneration of senior executives for 2021 and 2022	11
	4.5	Remuneration of senior executives for the period from 2017 to 2022	12
5	Average remuneration by number of full-time equivalents for the period from 2017-2022	12
6	Establishment, revision, compliance and follow-up of the guidelines	13
7	Summary	13
	7.1	Board of Directors' statement	14

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1 Background

Pursuant to section 6-16(b) of the Public Limited Liability Companies Act, the Board of SpareBank 1 Østlandet must prepare a report each financial year that provides an overall overview of the salary and remuneration paid to senior executives covered by the guidelines defined in section 6-16(a).

The report meets the requirements set out in the 'Regulations on guidelines and reporting of remuneration to senior executives'. The report also satisfies the requirements for note disclosures in annual financial statements pursuant to sections 7-31(b) and 7-32 of the Accounting Act.

The report is designed to ensure transparency regarding SpareBank 1 Østlandet's remuneration policy and the actual remuneration of senior executives. The report is intended to confirm compliance with the 'Guidelines for determining the remuneration of senior executives of SpareBank 1 Østlandet'.

1.1 The purpose of the remuneration scheme

The remuneration scheme at SpareBank 1 Østlandet is an important strategic instrument for retaining and attracting professional, capable managers. It is intended to underpin the Group's financial goals, brand strategy, risk tolerance and long-term interests. The remuneration scheme provides the basis for the business' organisation of its pay and incentive systems, and for how its resources must be managed and distributed to all employees, including senior executives.

The remuneration scheme is intended to help support and further develop the organisation's performance culture. However, the measurement of, and focus on, performance and sales must be balanced in relation to the principles for risk management, conflicts of interest and the interests of customers. Good performance is characterised by prioritisation and the implementation of strategic activities, the achievement of results that provide commercial value, a good learning culture, good collaboration and value creation across the Group.

The main principle behind paying all employee categories a fixed salary as the main component of the remuneration scheme also applies to senior executives. No form of bonus scheme or variable pay system beyond possible one-off supplements as described in the remuneration scheme are offered. Nor are there any incentive schemes or obligations related to share value based remuneration that benefit executive personnel or elected officers. The Group does not use sign-on fees and, as a general rule, severance packages are not used. If this exception is used, it must be used in line with the principles and requirements for severance pay in EBA/GL/2021/04.

1.2 SpareBank 1 Østlandet's result for 2022

SpareBank 1 Østlandet achieved a consolidated profit after tax of NOK 1 948 million in 2022, compared with NOK 2 022 million in 2021. The return on equity for 2022 was 10.5 per cent, compared to 11.6 per cent for 2020, and the Board of Directors proposes to pay out 60 per cent of the majority's share of the consolidated profit as dividend to owners and customers (dividend for 2022 is subject to adoption by the bank's Supervisory Board on 30.03.2023).

Underlying banking activities achieved sound improvements in results in 2022, with volume growth in several business areas and a stronger net interest income and continued good commission income from wholly owned subsidiaries and joint ventures and associated companies. Losses for the full year were low at NOK 27 million.

There was a great influx of customers again in 2022, which contributed to the total growth in lending by 8.7 per cent in the past 12 months. The growth in lending to corporate customers was high and

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increased further compared with the year before, with growth of 16.1 per cent. The growth in lending to the retail market was good and ended the year at 6.0 per cent. The deposit growth in the Group was

7.2 per cent. The corporate market also saw solid growth, at 7.8 per cent. Deposits in the retail market were good and ended at 6.8 per cent.

At the close of the year, the Common Equity Tier 1 capital ratio was 17.7 per cent. This is well above the regulatory requirement of 16.3 per cent.

Table 1: SpareBank 1 Østlandet's results for the period from 2017 to 2022. The table also shows annual changes in the bank's results.

Table 1 - Profit after tax the last 6 years
(in 1 000 NOK)
				Result after tax					Change in %
		2017	2018	2019	2020	2021	2022	2018-2017	2019-20182020-2019	2021-2020	2022-2021
SpareBank 1	Østlandet AS	1.102	1.447	1.856	1.342	1.876	1.982	31,4	28,2	-27,7	39,8	5,7
SpareBank 1	Østlandet Konsern	1.263	1.414	1.928	1.608	2.022	1.948	11,9	36,4	-16,6	25,7	-3,6

2 Overall development in remuneration

2.1 Board of Directors

The Board of Directors is elected by SpareBank 1 Østlandet's Supervisory Board. The Board consists of a chairman, five board members and two employee representatives. In March 2022, two board members were re-elected and three elected for the first time (three were not up for election).

SpareBank 1 Østlandet adjusts board remuneration on an annual basis and they are determined by the Supervisory Board. The decision is based on comparisons with similar organisations.

The fixed remuneration adjustment approved at the Supervisory Board's meeting for the period March 2022 and March 2023 was 60 per cent for board members and 45 per cent for the chairman of the board. The remuneration for the Board's various working committees was increased by 2.3 per cent.

Total board remuneration increased from NOK 1 986 530 in 2021 to NOK 2 612 050 in 2022. The remuneration of the chairman of the board amounted to NOK 509 000 in 2022 (NOK 358 800 in 2021).

2.2 Group Management

Group Management consists of the Group CEO and nine executive vice presidents. Group Management's remuneration for 2022 complied with the guidelines for remuneration approved by the Supervisory Board in March 2022. Fixed remuneration for Group Management amounted to NOK 26 060 072 (NOK 26 383 935 in 2021). The level of remuneration is the result of solid business results and the individual performance of the managers. The average regular adjustment for executive vice presidents was 4.5 per cent (including compensation of 1.4 per cent for moving of pay settlement) in 2022. The reason for the decrease in fixed remuneration from 2021 is that one of the executive vice presidents was on sick leave in 2021 and another was functioning as an acting executive vice president.

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The fixed remuneration of the CEO in 2022 amounted to NOK 4 761 985 (NOK 4 609 960 in 2021). The

3.3 per cent increase in fixed remuneration compared with 2021 is a result of solid business results and a good individual performance by the CEO.

2.3 Feedback from shareholders

The Supervisory Board noted the 2021 remuneration report without significant input or comments in March 2022. The remuneration report of 2022 will be presented to The Supervisory Board at their meeting 30.3.2023.

3 Remuneration of the Board of Directors

3.1 Remuneration principles

The Board of Directors' remuneration was approved at the last ordinary meeting of the Supervisory Board in March 2022, and there were no deviations from this in 2022.

3.2 Remuneration composition

The remuneration of the Board of Directors consists of fixed annual remuneration of the Board of Directors and a fee per meeting according to separate remuneration rates adopted by the Supervisory Board. There are separate rates for participating in working committees and committees. They also have a mileage allowance in accordance with the state tariff, while other travel expenses are covered against presentation of receipts.

Table 2: Composition of board remuneration

	Remuneration		Board	of
		Directors
	Board remuneration		Yes
	Committee remuneration		Yes
	Variable remuneration		No
	Pensions		No

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