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Annual Report 2015

Compensation context and highlights in 2015

Pay for performance

The Compensation Committee ensures that executive management compensation is linked to the business performance of Swiss Re by delivering a substantial portion of compensation in the form of variable and performance-related incentives.

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Fixed

Variable/performance-related

of which deferred

1

Including Group CEO

All employees

72%

28%

22%

Group EC1

28%

72%

66%

Group CEO

24%

76%

69%
All employees (bar chart)

1 Including Group CEO

The Compensation Committee monitors how compensation is aligned with specific business metrics, including US GAAP net income and EVM profit.

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USD millions (unless otherwise stated)

2013

2014

change

2015

change

1

Dividend payments are made in April of the following year. For 2015 an ordinary dividend of CHF 4.60 is proposed. Special dividends per share for 2013 and 2014 were CHF 4.15 and CHF 3.00, respectively.

2

Disclosure includes all awards for a reporting year, ie the 2015 aggregated compensation values include the fair value of the Leadership Performance Plan (LPP) granted in April 2015. The API for 2015 for members of the Group EC is subject to approval by the shareholders at the 2016 Annual General Meeting (AGM).

3

Represents incumbents and not positions.

4

Including Group CEO.

US GAAP net income

4 444

3 500

–21%

4 597

31%

EVM profit

4 007

1 336

–67%

480

–64%

Regular dividend payments (CHF)1

3.85

4.25

10%

4.60

8%

Financial Strength Rating (Standard & Poor’s)

AA-

AA-

 

AA-

 

Total equity

32 977

36 041

9%

33 606

–7%

Regular staff worldwide

11 574

12 224

 

12 767

 

Aggregate compensation for all employees (CHF m)2

2 065

2 081

1%

2 213

6%

Group EC members3,4

12

13

 

12

 

Aggregate Group EC compensation (CHF thousands)2

45 902

42 612

–7%

47 360

11%

Attribution of Group income to key stakeholders

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USD millions (unless otherwise stated)

2013

%

2014

%

2015

%

1

FY 2013 and 2014 include special dividends of approximately USD 1.6 billion and USD 1.1 billion. FY 2015 is estimated based on average year-to-date CHF/USD FX rates as of February 2016. The dividend is subject to AGM approval and the amount depends on the final number of dividend eligible shares and FX rates upon dividend pay out.

2

Includes shares bought back between 12 November 2015 and 2 March 2016 as part of the buyback programme authorised at the 2015 AGM. The total amount represents an estimate converted at the 2015 average CHF/USD exchange rate.

Income before tax and variable compensation

5 262

100%

4 629

100%

5 758

100%

Variable compensation

506

10%

471

10%

510

9%

Income tax expense

312

6%

658

14%

651

11%

US GAAP net income attributable to shareholders

4 444

 

3 500

 

4 597

 

of which paid out as dividend1

3 129

59%

2 608

57%

1 549

27%

of which share buyback2

 

 

 

 

1 040

18%

of which added to retained earnings within shareholders’ equity

1 315

25%

892

19%

2 008

35%

Attribution of 2015 Group income (in USD millions)

Split of 2015 Group income (in USD million) (pie chart)

Key Developments

In addition to a continued focus on linking pay to performance, changes in 2015 mainly related to the implementation of the simplified Value Alignment Incentive (VAI) as well as the review of the performance conditions for the Leadership Performance Plan (LPP).

Activities in 2015

Performance and compensation

  • Implementation of the simplified VAI structure.
  • The risk-free rate of the Restricted Share Unit (RSU) component of the LPP for the 2016 award will be set at the 10-year US government bond rate.
  • Continued embedding of the two-dimensional performance rating on the ‘what’ and the ‘how’ (achievements and behaviours) for all employees.

Legal and regulatory oversight

Regulatory aspects covered the continued interaction with FINMA and the monitoring of Solvency II developments to ensure alignment of the compensation framework with the new requirements which entered into force on 1 January 2016.

Additionally, reviews of compliance with new local legal and regulatory requirements were conducted.

Annual General Meeting (AGM)

  • At the AGM on 21 April 2015, shareholders voted for the first time on the aggregate prospective compensation of the members of the Board of Directors (86.74% approval). Shareholders voted also on the aggregate prospective fixed compensation and variable long-term compensation and aggregate retrospective variable short-term compensation of the Group Executive Committee (Group EC). The vote outcomes were 90.37% and 90.00% approval respectively.
  • As in previous years, the 2014 Compensation Report was subject to a consultative vote and was approved by 88.64% of the shareholder votes.
  • The members of the Compensation Committee were re-elected with an average of 97.87% of the shareholder votes.

Outlook 2016

The Compensation Committee will continue focusing on legal and regulatory oversight in addition to monitoring and further improving the overall compensation framework and plans.

The interaction with key shareholders and regulators will also be maintained in 2016.

The binding votes on the compensation proposals for the Group EC and the members of the Board of Directors and the consultative vote on the 2015 Compensation Report are taking place at the AGM on 22 April 2016.