13 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 member of the Group EC are shown by individual. For a description of the compensation elements of this, see Compensation.

Compensation of the Group EC

Aggregate compensation for members of the Group EC was:

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16 members9

12 members

CHF thousands1

2012

2013

1

The company contributions to social security systems paid by Swiss Re in line with applicable laws amounted to CHF 4 961 777 in 2012 and CHF 3 116 428 in 2013. The table shows gross amounts.

2

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

3

For 2012, notional loan interest of CHF 8 265 for one Group EC member was not included. For 2013, the notional loan interest is included.

4

For 2012, does not include sign-on bonuses in the amount of CHF 1.4 million as payments were made prior to joining the Group EC.

5

A post-award adjustment was made in 2013 in respect of one employee for the 2012 performance year. This incremental amount of CHF 220 000 related to duties prior to joining the Group EC which is not included in the table above.

6

Disclosure reflects all awards within a compensation cycle eg the 2013 value reflects the fair value of LPP granted in March 2014.

7

Includes payments reflecting the time in the role as Group EC members.

8

Covers legally or contractually required payments for members who were in the role for only a part of the reporting period.

9

Represents incumbents and not positions.

Base salary and allowances2,3

12 985

12 984

Funding of pension benefits

1 656

1 914

Total fixed compensation

14 641

14 898

Cash Annual Performance Incentive4,5

12 394

10 072

Value Alignment Incentive (VAI)

8 359

8 532

Long-term incentives (LPP)6

12 400

11 400

Total variable compensation

33 153

30 004

Total fixed and variable compensation7

47 794

44 902

Compensation due to members leaving8

2 268

 

Total compensation

50 062

44 902

The table above covers payments to 12 members in 2013, of whom all were employed for the full year. The 2012 payments cover 16 members, of whom seven 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 Value Alignment Incentive.

In 2012, the previous Long Term Incentive plan (LTI) was replaced by the Leadership Performance Plan (LPP). The LPP grants made in 2012, 2013 and 2014 are generally expected to be settled in shares. For LPP 2012, 2013 and 2014 the vesting and performance measurement period is three years. For LPP 2014, an additional two year holding requirement applies for all Group EC and GMB members. At grant, the award is split equally into two underlying components: Restricted Share Units (RSU) and Performance Share Units (PSU). The RSU component is measured against a RoE performance condition and will vest within a range of 0–100%. The PSU component 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 Leadership Performance Plan.

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 is included as compensation in the year of performance, for the years 2013 and 2012 respectively.

Each member of the Group EC (including the Group CEO) participates in a defined contribution pension scheme. The funding of pension benefits shown in the table above reflects the actual employer contributions.

Highest paid member of the Group EC

In 2013, Michel M. Liès, 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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CHF thousands1

20122

2013

1

The company contributions to social security systems paid by Swiss Re in line with applicable laws amounted to CHF 613 490 in 2012 and CHF 491 381 in 2013. The table shows gross amounts.

2

For 2012, includes one month for the former Group CEO, Stefan Lippe, and 11 months for the current Group CEO, Michel M. Liès.

3

Disclosure reflects all awards within a compensation cycle e.g. the 2013 value reflects the fair value of LPP granted in March 2014.

Base salary and allowances

1 663

1 639

Funding of pension benefits

175

177

Total fixed compensation

1 838

1 816

Cash Annual Performance Incentive

1 450

1 600

Value Alignment Incentive

1 450

1 600

Long-term incentives3

2 000

2 000

Total variable compensation

4 900

5 200

Total compensation

6 738

7 016

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 blocking period.

The share prices as of 12 April 2012 of CHF 57.15 and as of 9 April 2013 of CHF 78.10 were used for calculating the number of shares awarded to the members of the Board of Directors based on the amount of the fee for 2012 and 2013, respectively.

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

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CHF thousands1,2

Total 2012

Fees and allowances in cash

Fees in blocked shares

Total 2013

1

Compensation for the members of the Board of Directors includes fixed fees and allowances both in cash and shares. No sign-on or severance payments are made.

2

The company contributions to social security systems paid by Swiss Re in line with applicable laws amounted to CHF 1 294 292 in 2012 and CHF 1 282 026 in 2013. The table shows gross amounts.

3

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

4

Elected to Vice Chairman as of 13 April 2012.

5

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

6

Elected to Swiss Re’s Board of Directors at the Annual General Meeting of 10 April 2013.

7

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

8

Includes fees for duties on the board of US Group companies.

9

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

Walter B. Kielholz, Chairman

5 137

2 988

1 976

4 964

Mathis Cabiallavetta, Vice Chairman3

2 556

1 482

988

2 470

Renato Fassbind, Vice Chairman4

461

302

202

504

Jakob Baer, Chairman of the Audit Committee

807

484

323

807

Raymund Breu, Member

360

201

134

335

Raymond K.F. Ch’ien, Member

360

212

141

353

John R. Coomber,Member5

495

248

161

409

Mary Francis, Member6

 

120

80

200

Rajna Gibson Brandon, Member

335

197

131

328

C. Robert Henrikson, Chairman of the Compensation Committee7

306

257

171

428

Malcolm D. Knight, Member

332

212

141

353

Hans Ulrich Maerki, Member

328

197

131

328

Carlos E. Represas, Member8

385

273

111

384

Jean-Pierre Roth, Member

284

166

111

277

Robert A. Scott, former Chairman of the Compensation Committee9

145

 

 

 

Total

12 291

7 339

4 801

12 140

In 2009 and 2010, the Chairman and the then 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 released after three years could 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 from 2011 onwards. The plans were settled in 2012 and 2013 respectively.

Compensation of former members of governing bodies

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 60 000 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.

During 2013, payments in the total amount of CHF 1.1 million were made to seven former members of the Group EC. This amount includes a pro-rata base salary payment, company contributions to social security and pension systems paid by Swiss Re in line with applicable laws, benefits in the context of the outstanding mortgages and loans not at market rates, risk benefits as well as company commitments for tax related services.

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.

The number of shares held as of 31 December were:

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Members of the Group EC

2012

2013

1

Appointed to the Group EC as of 1 February 2012.

2

Appointed to the Group EC as of 1 November 2012.

3

Appointed to the Group EC as of 15 March 2012.

4

Appointed to the Group EC as of 1 April 2012.

Michel M. Liès, Group CEO1

129 562

171 947

Guido Fürer, Group Chief Investment Officer2

1 500

21 253

Agostino Galvagni, CEO Corporate Solutions

69 371

108 060

Jean-Jacques Henchoz, CEO Reinsurance EMEA

12 287

16 335

Christian Mumenthaler, CEO Reinsurance

50 000

50 984

Moses Ojeisekhoba, CEO Reinsurance Asia3

1 139

8 583

George Quinn, Group CFO

57 987

96 506

Matthias Weber, Group Chief Underwriting Officer4

24 237

38 592

Thomas Wellauer, Group Chief Operating Officer

16 714

17 708

Total

362 797

529 968

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Members of the Board of Directors

2012

2013

1

Since 13 April 2012.

2

Elected to Vice Chairman as of 13 April 2012.

3

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

4

Elected to Swiss Re’s Board of Directors at the Annual General Meeting of 10 April 2013.

5

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

Walter B. Kielholz, Chairman

290 230

399 490

Mathis Cabiallavetta, Vice Chairman, Chairman1

54 546

109 177

Renato Fassbind, Vice Chairman2

5 073

7 655

Jakob Baer, Chairman of the Audit Committee

40 568

44 699

Raymund Breu, Member

34 310

36 024

Raymond K.F. Ch’ien, Member

13 240

15 048

John R. Coomber, Member3

138 134

140 200

Mary Francis, Member4

 

1 027

Rajna Gibson Brandon, Member

24 368

26 047

C. Robert Henrikson, Chairman of the Compensation Committee5

2 144

4 339

Malcolm D. Knight, Member

5 857

7 665

Hans Ulrich Maerki, Member

23 915

25 594

Carlos E. Represas, Member

7 479

8 900

Jean-Pierre Roth, Member

5 341

6 762

Total

645 205

832 627

Restricted shares

Swiss Re grants restricted share units 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

2012

2013

1

Appointed to the Group EC as of 15 March 2012.

Weighted average share price in CHF as of grant date

53.10

53.10

Moses Ojeisekhoba, CEO Reinsurance Asia1

13 093

5 693

Total

13 093

5 693

The remaining restricted share units granted to Moses Ojeisekhoba, CEO Reinsurance Asia, vest in 2014. For the years ended 31 December 2012 and 2013, the members of the Board of Directors did not hold any restricted shares.

Performance shares

In 2009 and 2010, the Chairman and the then 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 from 2011 onwards.

The number of performance units outstanding as of 31 December 2012 were 55 971 for Walter B. Kielholz, Chairman, and 27 986 for Mathis Cabiallavetta, Vice Chairman. The plan vested in 2013 and therefore no more units were outstanding as of 31 December 2013.

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

2012

2013

1

Appointed to the Group EC as of 1 February 2012.

2

Appointed to the Group EC as of 1 November 2012.

3

Appointed to the Group EC as of 1 April 2012.

Weighted average strike price in CHF as of grant date

82.32

83.92

Michel M. Liès, Group CEO1

66 000

42 000

Guido Fürer, Group Chief Investment Officer2

7 500

7 500

George Quinn, Group CFO

26 000

20 000

Matthias Weber, Group Chief Underwriting Officer3

9 500

7 000

Total

109 000

76 500

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Number of options

Members of the Board of Directors

2012

2013

1

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

Weighted average strike price in CHF as of grant date

86.26

83.04

Walter B. Kielholz, Chairman

40 000

40 000

John R. Coomber, Member1

210 000

130 000

Total

250 000

170 000

The vested options held by members of Group governing bodies as of 31 December 2012 and 2013 will expire between 2013–2015 and 2014–2015, respectively. The underlying exercise price for the outstanding option series has been adjusted for the special dividend payout in 2013.

The stock options shown in the table above for the members of the Board of Directors were awarded at a period when the recipients were still members of Swiss Re’s executive management.

Loans to members of governing bodies

The following tables provides an overview of loans to members of governing bodies as of 31 December:

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CHF thousands

2012

2013

1

For 2012, a loan to one member of the Group EC of USD 800 000 was not included. For 2013, a remaining loan of USD 550 000 is included.

Total mortgages and loans to members of the Group EC1

3 710

3 956

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

 

 

Christian Mumenthaler, CEO Reinsurance

2 143

1 919

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

4 300

4 300

Mortgages and loans to members of the Board of Directors

 

 

Walter B. Kielholz, Chairman

2 000

2 000

The loan shown in the table above for the member of the Board of Directors was established when the recipient was still a member of Swiss Re’s executive management.

In general, credit is secured against real estate or pledged shares. The terms and conditions of loans and mortgages are typically the same as those available to all employees of the Swiss Re Group in their particular locations to the extent possible. For example, in Switzerland 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.

Swiss based 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 floating interest rates are preferential, such values were factored into the compensation sums given to the governing body members.

Related parties transactions

Disclosure in this note covers members of the Group EC and the Board of Directors as indicated, and for both includes related parties to the extent applicable. Such related parties cover spouses, partners, children and other dependents or closely linked persons. In 2013, no compensation was paid to any related party.