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:

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9 members

16 members5

CHF thousands

2011

2012

1

Allowances consist of housing and schooling, lump sum expenses, child and similar allowances.

2

Does not include sign-on bonuses in the amount of CHF 1.4 million as payments were made prior to joining the Group EC. These amounts are however included in both "Aggregate compensation" tables.

3

Disclosure reflects all awards within a compensation cycle: the 2011 value reflects the fair value of LPP granted in March 2012, and the 2012 value reflects the fair value of LPP granted in March 2013. Furthermore, the 2011 values disclosed exclude the LPP granted in March 2012 of CHF 2.5 million for the incoming Group CEO, given he was not a member of the Group EC until 1 February 2012.

4

For 2012 includes payments reflecting the time in the role as Group EC member. For comparison purposes, if this approach had been applied in 2011, the 2011 "Compensation due to members leaving" of CHF 1.448 million would have been CHF 1.193 million, with the difference included in the 2011 "Total fixed and variable compensation" above, with no change to 2011 "Total compensation".

5

Represents incumbents and not positions; four new Group EC positions were created (see chapter General compensation for more information).

Base salary and allowances1

10 687

12 985

Funding of pension benefits

1 397

1 656

Total fixed compensation

12 084

14 641

Cash Annual Performance Incentive2

9 573

12 394

Value Alignment Incentive (VAI)

5 378

8 359

Long-term incentives (LPP)3

6 250

12 400

Total variable compensation

21 201

33 153

Total fixed and variable compensation4

33 285

47 794

Compensation due to members leaving

1 448

2 268

Total compensation

34 733

50 062

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:

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Stefan Lippe, Group CEO from February 2009 until January 2012

 

 

Michel M. Liès, Group CEO since February 2012

 

 

CHF thousands

2011

20122

1

The 2011 values disclosed exclude the LPP granted in March 2012 of CHF 2.5 million for the incoming Group CEO, given he was not a member of the Group EC until 1 February 2012. Disclosure reflects all awards within a compensation cycle: the 2011 value reflects the fair value of LPP granted in March 2012, and the 2012 value reflects the fair value of LPP granted in March 2013.

2

For 2012, includes 1 month for the former Group CEO and 11 months for the current Group CEO.

Base salary and allowances

2 180

1 663

Funding of pension benefits

175

175

Total fixed compensation

2 355

1 838

Cash Annual Performance Incentive

3 000

1 450

Value Alignment Incentive (VAI)

0

1 450

Long-term incentives (LPP)1

0

2 000

Total variable compensation

3 000

4 900

Total compensation

5 355

6 738

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:

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CHF thousands

2011

2012

Fees and allowances in cash

7 047

7 429

Fees in blocked shares

4 678

4 862

Total

11 725

12 291

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

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Walter B. Kielholz, Chairman

 

 

CHF thousands

2011

2012

Fees and allowances in cash

2 892

3 092

Total cash

2 892

3 092

Fees in blocked shares

1 912

2 045

Total

4 804

5 137

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Mathis Cabiallavetta, Vice Chairman1

 

 

CHF thousands

2011

2012

1

Chairman of the Finance and Risk Committee since 13 April 2012, Chairman of the Investment Committee.

Fees and allowances in cash

1 434

1 533

Total cash

1 434

1 533

Fees in blocked shares

956

1 023

Total

2 390

2 556

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Renato Fassbind, Vice Chairman1,2

 

 

CHF thousands

2011

2012

1

Since 13 April 2012.

2

Received additional fees in cash for his duties on the board of the Luxembourg Group companies of CHF 130 000 for 2011 and for Q1 2012 (pro-rata); as of 13 April 2012 no such additional fees were paid.

Fees and allowances in cash

150

277

Total cash

150

277

Fees in blocked shares

100

184

Total

250

461

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

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2011
CHF thousands

Fees and allowances in cash

Fees in shares

Total

1

Elected to Swiss Re’s Board of Directors at the Annual General Meeting of 15 April 2011.

Jakob Baer, Chairman of the Audit Committee

480

320

800

Raymund Breu, Member

225

150

375

Raymond K.F. Ch’ien, Member

225

150

375

John R. Coomber, Chairman of the Finance and Risk Committee

426

280

706

Renato Fassbind, Member1

150

100

250

Rajna Gibson Brandon, Member

210

140

350

Malcolm D. Knight, Member

165

110

275

Hans Ulrich Maerki, Member

195

130

325

Carlos E. Represas, Member

165

110

275

Jean-Pierre Roth, Member

180

120

300

Robert A. Scott, Chairman of the Compensation Committee

300

200

500

Total

2 721

1 810

4 531

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2012
CHF thousands

Fees and allowances in cash

Fees in shares

Total

1

Chairman of the Finance and Risk Committe until 13 April 2012.

2

Elected to Swiss Re’s Board of Directors at the Annual General Meeting of 13 April 2012.

3

Received additional fees in cash for his duties on the board of US Group companies of USD 115 000 for 2011; for 2012 this has been included above.

4

Term of office expired as of 13 April 2012 and did not stand for re-election due to retirement.

Jakob Baer, Chairman of the Audit Committee

484

323

807

Raymund Breu, Member

216

144

360

Raymond K.F. Ch’ien, Member

216

144

360

John R. Coomber, Chairman of the Finance and Risk Committee1

299

196

495

Rajna Gibson Brandon, Member

201

134

335

C. Robert Henrikson, Chairman of the Compensation Committee2

183

123

306

Malcolm D. Knight, Member

199

133

332

Hans Ulrich Maerki, Member

197

131

328

Carlos E. Represas, Member3

274

111

385

Jean-Pierre Roth, Member

171

113

284

Robert A. Scott, Chairman of the Compensation Committee4

87

58

145

Total

2 527

1 610

4 137

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:

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Members of the Group EC

2011

2012

1

Member of the Group EC until 31 January 2012.

2

Appointed to the Group EC as of 1 February 2012.

3

Member of the Group EC until 31 October 2012.

4

Appointed to the Group EC as of 1 November 2012.

5

Member of the Group EC until 30 April 2012.

6

Appointed to the Group EC as of 15 March 2012.

7

Appointed to the Group EC as of 1 April 2012.

Stefan Lippe, former Group CEO1

201 733

 

Michel M. Liès, Group CEO2

 

129 562

David J. Blumer, former Group Chief Investment Officer3

81 000

 

Guido Fürer, Group Chief Investment Officer4

 

1 500

Agostino Galvagni, CEO Corporate Solutions

27 546

69 371

Brian Gray, former Group Chief Underwriting Officer5

30 601

 

Jean-Jacques Henchoz, CEO Reinsurance EMEA

 

12 287

Christian Mumenthaler, CEO Reinsurance

20 000

50 000

Moses Ojeisekhoba, CEO Reinsurance Asia6

 

1 139

George Quinn, Group CFO

34 337

57 987

Matthias Weber, Group Chief Underwriting Officer7

 

24 237

Thomas Wellauer, Group Chief Operating Officer

16 714

16 714

Total

411 931

362 797

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Members of the Board of Directors

2011

2012

1

Since 13 April 2012.

2

Elected to Vice Chairman as of 13 April 2012.

2

Until 13 April 2012.

4

Elected to Swiss Re’s Board of Directors at the Annual General Meeting of 13 April 2012.

5

Term of office expired as of 13 April 2012 and did not stand for re-election due to retirement.

Walter B. Kielholz, Chairman

185 000

290 230

Mathis Cabiallavetta, Vice Chairman, Chairman of the Investment Committee, Chairman of the Finance and Risk Committee1

19 652

54 546

Renato Fassbind, Vice Chairman2

1 846

5 073

Jakob Baer, Chairman of the Audit Committee

34 922

40 568

Raymund Breu, Member

31 789

34 310

Raymond K.F. Ch’ien, Member

10 719

13 240

John R. Coomber, Chairman of the Finance and Risk Committee3

134 707

138 134

Rajna Gibson Brandon, Member

22 024

24 368

C. Robert Henrikson, Chairman of the Compensation Committee4

 

2 144

Malcolm D. Knight, Member

3 538

5 857

Hans Ulrich Maerki, Member

21 621

23 915

Carlos E. Represas, Member

5 538

7 479

Jean-Pierre Roth, Member

3 350

5 341

Robert A. Scott, Chairman of the Compensation Committee5

24 096

 

Total

498 802

645 205

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:

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Members of the Group EC

2011

2012

1

Member of the Group EC until 31 October 2012.

2

Appointed to the Group EC as of 15 March 2012.

Weighted average share price in CHF as of grant date

16.74

53.10

David J. Blumer, former Group Chief Investment Officer1

149 342

 

Moses Ojeisekhoba, CEO Reinsurance Asia2

 

13 093

Total

149 342

13 093

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:

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Members of the Board of Directors

2011

2012

Walter B. Kielholz, Chairman

125 415

55 971

Mathis Cabiallavetta, Vice Chairman

69 653

27 986

Total

195 068

83 957

Vested options

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

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Number of options

Members of the Group EC

2011

2012

1

Member of the Group EC until 31 January 2012.

2

Appointed to the Group EC as of 1 February 2012.

3

Appointed to the Group EC as of 1 November 2012.

4

Member of the Group EC until 30 April 2012.

5

Appointed to the Group EC as of 1 April 2012.

Weighted average strike price in CHF as of grant date

99.90

82.32

Stefan Lippe, former Group CEO1

99 000

 

Michel M. Liès, Group CEO2

 

66 000

Guido Fürer, Group Chief Investment Officer3

 

7 500

Brian Gray, former Group Chief Underwriting Officer4

14 000

 

Christian Mumenthaler, CEO Reinsurance

2 000

 

George Quinn, Group CFO

31 000

26 000

Matthias Weber, Group Chief Underwriting Officer5

 

9 500

Total

146 000

109 000

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Number of options

Members of the Board of Directors

2011

2012

Weighted average strike price in CHF as of grant date

103.98

86.26

Walter B. Kielholz, Chairman

110 000

40 000

John R. Coomber, Chairman of the Finance and Risk Committee

250 000

210 000

Total

360 000

250 000

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:

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CHF thousands

2011

2012

Total mortgages and loans to members of the Group EC

3 753

3 710

Highest mortgages and loans to an individual member of the Group EC:

 

 

Christian Mumenthaler, CEO Reinsurance

2 167

2 143

Total mortgages and loans not at market conditions to former members of the Group EC

9 610

4 300

Mortgages and loans to members of the Board of Directors

 

 

Walter B. Kielholz, Chairman

2 000

2 000

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.