Compensation framework for the Board of Directors

The objective in compensating members of the Board of Directors is to attract and retain experienced individuals who are highly motivated to perform a critical role in the strategic oversight of the company and to contribute their individual business experience and expertise. The structure of compensation for members of the Board of Directors must, however, take account of the way their contribution to the success of Swiss Re differs from that of the Group EC.

It is important that the compensation components are structured to achieve a strong alignment with the interests of the other shareholders of Swiss Re. In line with best practice, a significant portion (40%) of the compensation for the Board of Directors consists of Swiss Re Ltd shares.

The fees for the Board of Directors are approved by the AGM in advance of the term of office for which the Board of Directors are elected. The Board of Directors receive no variable or performance-based compensation. The fee level for each Board member, subject to their re-election, is reviewed annually to ensure that it remains appropriate.

Compensation structure

Group fees for the members of the Board of Directors are delivered 60% in cash, and a mandatory 40% in Swiss Re Ltd shares, with a four-year blocking period.

Roles and time commitment

The fees for the members of the Board of Directors reflect different responsibilities and committee memberships. The individual levels of pay therefore vary. Certain committees, such as the Audit Committee as well as the Finance and Risk Committee, meet more frequently with longer meetings and hence have higher workloads. Chairpersons of these committees have to devote even more time to their tasks.

The Chairman of the Board of Directors devotes himself full-time to his role. In defining the position of Chairman as a full-time role, Swiss Re applies best practice for highly regulated, complex financial institutions. The Chairman participates in developing the firm’s strategy, supervises the implementation of the agreed strategy and organises the work of the Board of Directors and its committees so these bodies can fulfill their responsibilities and authorities. The Chairman also has the important task, together with the Group CEO, in representing the firm to outside parties including shareholders, industry associations, the media, political and regulatory authorities (including the Group regulator FINMA), government officials and the general public, in all key locations where Swiss Re operates.

Swiss Re’s Vice Chairman was appointed in 2012, acting also as the Lead Independent Director since 2014. He is a member of the Chairman’s and Governance Committee, chairs the Audit Committee and is a member of the Compensation Committee. His overall responsibility is to act as a deputy of the Chairman, if the Chairman is prevented from performing his duties or if a conflict of interest situation arises. The Board of Directors may assign further tasks to the Vice Chairman.

The degree of in-depth oversight requires a high level of professional experience and expertise from each Board member in their field. Swiss Re is confident that the skill set of its Board of Directors is well balanced, which in turn ensures an effective level of supervision.

Valid cross-border comparisons of the roles and responsibilities of the Swiss Re Board against the boards of other international companies are clearly difficult to make, given both the differing legal environment and operating context within each country. Nevertheless, it is apparent that the demands on the Swiss Re Board members continue to be high. In addition to their core responsibilities, Board members, similar to the Chairman, are regularly asked to meet with external stakeholders including regulators and investors, all of which warrant additional time, dedication and commitment from the individuals concerned.

Fee approval

The aggregate compensation of the Board of Directors for the term of office between two subsequent AGMs is subject to shareholder approval at the AGM as outlined in the Articles of Association.

Subsidiary boards of directors

The majority of the members of the boards at the subsidiary level are Swiss Re executives and they receive no additional fees for their services in this role. The non-executive members of the subsidiary boards receive their fees 100% in cash.