Compensation framework for the Board of Directors
The objective in compensating members of the Board of Directors is to attract and retain experienced individuals who are motivated to perform a critical role in the strategic oversight of the company and to contribute their individual business experience and expertise. The structure of compensation for members of the Board of Directors must, however, take account of the way their contribution to the success of Swiss Re differs from that of the Group EC.
It is important that the compensation elements be used so as to achieve a strong alignment with the interests of the shareholders of Swiss Re. Therefore, a significant portion of the compensation arrangements for the Board of Directors consists of shares of the company or instruments linked to the performance of the company’s shares, in line with best practice.
Unlike the annual performance incentive for the Group EC, which is determined in arrears based on the results of the performance year, the fees for the Board of Directors are determined in advance at the start of the financial year. The fee level for each Board member is reviewed annually to ensure that it remains appropriate.
Group fees for the members of the Board of Directors are delivered as 60% in cash, and a mandatory 40% in Swiss Re shares, with a four-year blocking period.
Roles and time commitment
The fees for the members of the Board of Directors reflect differing levels of responsibility and time commitment. The individual levels of pay therefore vary considerably. Certain committees, such as the Audit Committee and the Investment Committee, meet more frequently with longer meetings and require more preparation time than other committees and hence have higher workloads. Chairpersons of the committees devote even more time to their task.
The Chairman of the Board of Directors devotes himself full-time to his role. In defining the position of Chairman as a full-time role, Swiss Re applies international best practice for highly regulated, complex financial institutions. The Chairman participates in developing the firm’s strategy, supervises the implementation of the agreed strategy and organises the work of the Board of Directors and its committees. He also has an important task, together with the Group CEO, in representing the firm to outside parties including shareholders, industry associations, the media and the general public, at all key locations where Swiss Re operates.
Swiss Re has two Vice Chairmen. One Vice Chairman was appointed in 2009 and chairs the Investment Committee, and since 2012 also the Finance and Risk Committee. Additionally he is a member of the Chairman’s and Governance Committee. Throughout the year, this Vice Chairman devotes about three-quarters of his time to this task. An additional Vice Chairman was appointed in 2012 and is also a member of the Chairman’s and Governance Committee and furthermore is a member of the Audit Committee and the Compensation Committee. The Board of Directors may assign further tasks to the Vice Chairmen. Additional tasks include representation of the Board of Directors in the Boards of the Group’s US or European subsidiaries, which are highly relevant to Swiss Re from both a risk and revenue perspective.
The degree of in-depth oversight requires from each Board member a high level of professional experience and expertise in their respective field. Furthermore, the demands on the chairs of the respective Board committees continue to increase. Swiss Re is confident that the skill set of its Board of Directors is well-balanced, which in turn promotes a high level of supervision and integrity.
Valid cross-border comparisons of the roles and responsibilities of the Swiss Re Board against the boards of other international companies are clearly difficult to make, given both the differing legal environment and operating context within each country. Nevertheless, it is apparent that the demands on the Swiss Re Board members are particularly significant, and that these requirements continue to increase. In addition to their core responsibilities, Board members, similar to the Chairman, are regularly asked to meet with multiple external stakeholders including regulators, political authorities and investors, all of which warrant additonal time, dedication and commitment from the individuals concerned.
Subsidiary boards of directors
The majority of the members of the boards at the subsidiary level are Swiss Re executives and they receive no additional fees for their services in this role. The non-executive members of the boards only receive their fees 100% in cash.