Note 12 Compensation, participations and loans of members of governing bodies

The section below is in line with articles 663bbis and 663c para. 3 of the Swiss Code of Obligations, which require disclosure of the elements of compensation paid to Swiss Re’s Board of Directors and Group Executive Committee (Group EC), as well as their shareholdings and loans.

Compensation for acting members of governing bodies

Article 663bbis of the Swiss Code of Obligations requires disclosure of total compensation paid to members of the Board of Directors and the Group EC. Compensation to members of the Board of Directors and the highest paid members of the Group EC are shown by individual. For a description of the elements of this compensation, see chapter Compensation.

Compensation of the Group EC

Aggregate compensation for members of the Group EC was:

The table above covers payments to 16 members in 2012, of whom seven were employed for the full year. This also takes into account changes in the composition of the Group EC, reflecting the Group’s new corporate structure and operating model. The 2011 payments cover nine members, of whom eight were employed for the full year.

The fair value of the Value Alignment Incentive (VAI) is based on the nominal amount of the grant. Subsequently, a disbursement factor, which can vary between 50% and 150%, is applied based on the economic results of the Group. The VAI disclosed in the table above assumes a disbursement factor of 100% at grant date. For a description of the VAI plan see chapter Compensation.

The Long Term Incentive plan (LTI) was replaced by a new plan, the Leadership Performance Plan (LPP) in 2012. The first grant was made in March 2012 under the new plan. The LPP grants made in 2012 and 2013 are expected to be settled in shares, and the requisite service as well as the maximum contractual term are three years. At grant, the award is split into two equal underlying components: a Restricted Share Unit (RSU) and a Performance Share Unit (PSU). The RSU component is measured against a RoE performance condition and will vest within a range of 0–100%. The PSU is based on relative total shareholder return, measured against a pre-defined basket of peers and will vest within a range of 0–200%. The fair values of both components are measured separately, based on stochastic models. For further information on the LPP award, see chapter Compensation.

For US GAAP and statutory reporting purposes, VAI and long-term incentive awards are accrued over the period during which they are earned. For the purpose of the disclosure required of this note, the value of awards granted are included as compensation in the year of performance, for the years 2012 and 2011 respectively.

Certain members of the Group EC and the Board of Directors participate in a defined contribution scheme and their pension funding compensation in the remuneration table above reflects the actual employer contributions. Where defined benefit arrangements exist, the funding is determined on an actuarial basis, which can vary substantially from year to year depending on age and years of service of the benefiting members.

Highest paid member of the Group EC

In 2012, Michel M. Liès, Group CEO, was the highest paid member of the Group EC. The compensation of the Group CEOs for the respective periods was:

Compensation of the Board of Directors

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 vesting period.

In 2009 and 2010, the Chairman and Vice Chairman received half of their fees in the form of a three-year performance share plan and the balance in cash. The performance share plan is measured against total relative shareholder return (TSR). The 2009 and 2010 performance shares were granted at a reference price of CHF 36.00 and CHF 53.60, respectively. The final number of shares to be released after three years can vary between 0% and 150% depending on the relative total shareholder return against a peer group. The Group did not grant a performance share plan in 2011 and 2012. The 2009 plan was settled in 2012.

The share prices as of 14 April 2011 of CHF 54.05 and as of 24 April 2012 of CHF 57.15 were used for calculating the number of shares awarded to the members of the Board of Directors based on the amount of the fee received in shares for 2011 and 2012 grants, respectively.

Aggregate compensation for the members of the Board of Directors was:

Individual compensation for the Chairman and the two Vice Chairmen of the Board of Directors was:

Individual compensation of the remaining members of the Board of Directors was:

Compensation of former members of governing bodies

In 2011, a total of CHF 175 thousand was paid to former members of the Group EC. This figure relates to one individual and covers company taxation commitments. In 2012, in the context of the outstanding mortgages and loans not at market rates for former members as well as of risk benefits, the equivalent of approximately CHF 60 thousand was provided to three former members of the Group EC as a benefit in kind. No other compensation was paid to former members of the Group EC in 2012.

Group EC and Board of Directors share ownership, options and related instruments

Share ownership

The disclosure below is in line with article 663c para. 3 of the Swiss Code of Obligations, which requires disclosure of share ownership, options and related instruments individually for each member of the Board of Directors and the Group EC, including shares, options and related instruments held by persons closely related to, and by companies controlled by members of the Board of Directors and the Group EC.

Number of shares held as of 31 December were:

Restricted shares

Swiss Re grants restricted shares on an ad hoc basis that are subject to a vesting period with a risk of forfeiture during the vesting period.

The following unvested restricted shares were held by members of the Group EC as of 31 December:

The restricted shares granted to Moses Ojeisekhoba, CEO Reinsurance Asia, have a step vesting period until 2014. For the years ended 31 December 2011 and 2012, the members of the Board of Directors did not hold any restricted shares.

Performance shares

In 2009 and 2010, the Chairman and the Vice Chairman received half their fees in the form of a performance share plan with a three-year vesting period. The Group did not grant any such plans in 2011 and 2012.

Number of performance units outstanding as of 31 December 2011 and 2012 were:

Vested options

The following vested options were held by members of Group governing bodies as of 31 December:

The range of expiry years for vested options held by members of Group governing bodies as of 31 December 2011 and 2012 was 2012–2015 and 2013–2015, respectively.

Loans to members of governing bodies

The following loans were granted to members of governing bodies as of 31 December:

All credit is secured against real estate or pledged shares. The terms and conditions of loans and mortgages are the same as those available to all Swiss Re Group employees in the respective locations. In 2011 and 2012, all mortgages held by members of governing bodies were granted at Swiss terms and conditions. Fixed-rate mortgages have a maturity of five years and interest rates that correspond to the five-year Swiss franc swap rate plus a margin of 10 basis points. The variable-rate mortgages have no agreed maturity dates. The basic preferential interest rates equal the corresponding interest rates applied by the Zurich Cantonal Bank minus one percentage point. To the extent that fixed or adjustable interest rates are preferential, such values were factored into the compensation sums given to the governing body members.