talanx group annual report 2011 en

Overall assessment of
the economic situation
Non-financial
performance indicators
Corporate Governance Remuneration report Events of special
significance
Assessment of the variable remuneration
The amount of the variable remuneration depends on certain defined
results and on the achievement of certain targets. The targets
vary according to the function of the Board member concerned. The
variable remuneration consists of a Group bonus and a personal
bonus and – in the case of Board members responsible for a certain
division – a divisional bonus. The weighting of the various components
within the variable remuneration is determined individually
for each member of the Board of Management in the light of the
function that he or she performs.
Group bonus
The Group bonus is paid as an individually determined amount for
each 0.1 percentage point by which the average return on equity
(RoE) exceeds a risk-free interest rate. If the average return on equity
is below the risk-free interest rate or turns negative, this results
in a corresponding penalty amount for each 0.1 percentage point
of undershoot. The maximum amount of the Group bonus and
the maximum penalty are agreed individually. The arrangements
governing the Group bonus may be adjusted if the risk-free interest
rate changes to such an extent that an (absolute) deviation of at
least 1 percentage point arises. The risk-free interest rate is the average
market rate for 10-year German government bonds over the last
five years, the average being calculated annually at year-end on the
basis of the interest rate prevailing in that year.
Divisional bonus
The divisional bonus is to be geared to the average intrinsic value
creation (IVC) of the division for which the Board member is responsible
over the previous three-year period. Work is currently still in
progress to fine-tune a universally applicable concept for measuring
the IVC. The procedure for calculating the performance of the divisions
on the basis of the divisional IVC is to be applied for the first
time to the 2013 financial year.
Risk report Forecast and
opportunities report
Until these arrangements have been finalised, the divisional bonus
will be established by the Supervisory Board at its prudent discretion.
In this context, the Supervisory Board will pay particular attention to
the following criteria: relative change in the IVC in the remuneration
year, absolute amount of the IVC in the remuneration year, IVC in
the remuneration year relative to the target value, distribution ratio
or profit transfer ratio of the division relative to the target value,
general market environment. The individually defined amount for
100% criteria fulfilment is payable if the criteria are achieved in full.
Over- or underfulfilment of the criteria results in additions or deductions.
The minimum divisional bonus amounts to EUR 0, while the
maximum is double the bonus payable on complete fulfilment of
the criteria.
Individual bonus
In addition, individual qualitative and, as appropriate, quantitative
personal goals are defined annually for each Board member to
meet in the next year. The criteria applied may be the individual
Board member’s personal contribution to achieving the overall
business result, their leadership skills, power of innovation and
entrepreneurial abilities, and other quantitative or qualitative
personal goals, making special allowance for the particular features
associated with their area of responsibility within the Board. The
degree to which the goals have been attained is determined by
the Super visory Board at its prudent discretion at the Supervisory
Board meeting at which the consolidated financial statements for
the financial year are approved. The amount payable for 100% goal
attainment is established on a personal basis. Over- or underfulfilment
results in additions or deductions. The minimum personal
bonus amounts to EUR 0, while the maximum is double the bonus
payable on complete attainment of the defined goals.
Total amount of the variable remuneration
The total amount of the variable remuneration is arrived at by
adding the amounts for the individual remuneration components.
If this sum is negative, the variable remuneration amounts to zero
(in other words, there can be no negative variable remuneration).
However, negative amounts are taken into account in the calculation
of the bonus bank (see next section on “Payment of the variable
remuneration“).
The amount of the variable remuneration is set at the Supervisory
Board meeting at which the consolidated financial statements are
approved.
Talanx Group. Annual Report 2011
91