Compensation framework for Group EC members
The Group EC including the Group CEO are remunerated under the same compensation framework as all other Swiss Re employees, except for the following:
- Compensation approval: the aggregate compensation is subject to AGM approval as outlined in the Articles of Association.
- Caps on API: two caps apply to actual API awards which are 2x TAPI and 3x annual base salary.
- LPP plan duration: the LPP plan duration is five years comprising a three-year vesting and performance measurement period, and an additional two-year holding requirement.
- Stock ownership guidelines: the Group EC including the Group CEO are subject to the Stock Ownership Guidelines (covered below).
In 2015, for the members of the Group EC including the Group CEO, the total of the aggregate TAPIs was CHF 15.9 million and the aggregate LPP 2015 award was CHF 12.2 million. For the Group CEO the TAPI was CHF 2.5 million and the LPP award was CHF 2.0 million.
The Compensation Committee assesses the performance of the Group EC including the Group CEO against a set of quantitative and qualitative objectives. The main financial performance indicators are based on US GAAP EPS/net income, ROE, EVM profit and economic net worth. The qualitative criteria include client and service quality, franchise building, human capital and talent management as well as risk- and control-related behavioural objectives. These objectives are agreed at the beginning of the year and are aligned with the Group’s strategy.
The external compensation advisor to the Compensation Committee conducts an annual review of the compensation for the Group EC relative to a group of reference companies in the financial services industry to ensure that market competitiveness is maintained. The reference companies are regularly reviewed by the Compensation Committee to ensure their continued relevance. The core peer group consists of the following globally active primary insurance and reinsurance firms: ACE Ltd, Allianz SE, American International Group Inc, Aviva PLC, AXA SA, Generali, Hannover Rueck SE, Metlife Inc, Muenchener Rueckversicherungs-Gesellschaft AG, PartnerRe Ltd, QBE Insurance Group Ltd, Reinsurance Group of America Inc, SCOR SE, XL Group PLC* and Zurich Insurance Group Ltd.
The Group EC including the Group CEO have employment contracts with notice periods of 12 months and no severance clauses. Information on “change of control” clauses is covered in the Corporate Governance section of this Financial Report. Group EC members are covered by the Group’s standard defined-contribution pension plans.
Stock Ownership Guidelines
Swiss Re has Stock Ownership Guidelines which articulate the levels of stock ownership expected of the Group EC including the Group CEO. The guidelines are designed to increase the alignment of individual members of senior management with shareholders.
The guidelines define target ownership by role and the ownership levels required are:
- Group CEO — 3x annual base salary; and
- Group EC members — 2x annual base salary.
Members have a five-year timeframe to achieve these targets. In addition, because Swiss Re believes that a meaningful stock ownership position is essential, restrictions on the immediate cash portion of API delivered will apply if these levels are not met within the specified timeframe.
The determination for whether a Group EC member has met the guidelines will include all vested shares that are owned directly or indirectly by the relevant members and related parties.
* Catlin Group Ltd has now been integrated into XL Group PLC.