talanx group annual report 2011 en

92
The Talanx Group Strategy Enterprise
management
Talanx Group. Annual Report 2011
Research and
development
Payment of the variable remuneration
60% of the total amount of the variable remuneration is paid out
in cash in the month following the Supervisory Board meeting that
approves the consolidated financial statements. The remaining 40%
of the total variable remuneration is initially withheld and is paid
out only after a reasonable retention period. Of the withheld portion,
half (i.e. 20% of the total variable remuneration) is allocated
to a bonus bank, while the other half is granted in the form of share
awards to take account of the longer-term development of the value
of the company in accordance with the procedure described below.
Bonus bank
Each year, 20% of the defined variable remuneration is allocated to
the bonus bank, where it is held interest-free for a period of three
years. If the calculated amount of the variable remuneration in
any year is negative, 100% of this negative amount is allocated to
the bonus bank, reducing the balance in the bonus bank accordingly.
A positive balance in the bonus bank after deduction of any
amounts paid out is carried forward to the next year, but a negative
balance is not carried forward. The amount allocated to the bonus
bank in each year is paid out after three years, provided and to the
extent that it is covered by the balance present at that time after
all credits/debits up to and including those for the most recent
financial year. Any portion of the variable remuneration due for
disbursement that is not covered by the balance in the bonus bank
is forfeited.
Share awards
The other 20% of the total defined variable remuneration is
granted as a share-based entitlement in the form of virtual share
awards. The total number of share awards allocated depends –
once Talanx AG has gone public – upon the value per share of
Talanx AG at the time of allocation. The value per Talanx AG share
is established as the unweighted arithmetic mean of the Xetra
closing prices of Talanx shares over a period of five trading days
before to five trading days after the meeting of the Supervisory
Board that approves the consolidated financial statements. The
share awards are allocated automatically, without the need for a
declaration by Talanx AG or the Board member. Until such time as
Talanx shares are listed on the stock exchange, the value per share
of Talanx AG shall be taken as the book value of the shareholders’
equity obtained from the consolidated financial statement for the
Markets and
general conditions
Business
development
Assets and
financial position
financial year just-ended, drawn up in accordance with international
financial reporting standards as defined by § 315a of the
Commercial Code (HGB). The total number of share awards to be
allocated is arrived at by dividing the amount to be credited by the
value per share, rounded up to the next full share. For each share
award, the value of one Talanx share calculated (using the same
procedure as for allocation) on the disbursement date is paid out
after expiry of a vesting period of four years. The Board member is
not entitled to demand crediting of actual shares.
One member of the Board of Management is also allocated virtual
share awards, the total number of which depends on the value
per share of Hannover Re at the time of allocation. The value per
share of Hannover Re is established as the unweighted arithmetic
mean of the Xetra closing prices of Hannover Re shares over
a period of five trading days before to five trading days after the
meeting of the Supervisory Board that approves the consolidated
financial statements of Hannover Rückversicherung AG for the
financial year just ended. In this case, the value of one Hannover
Re share calculated (using the same procedure as for allocation)
on the disbursement date, plus an amount equal to the dividend if
dividends are paid out to shareholders, is paid out for each share
award after expiry of a vesting period of four years. The Board
member is not entitled to demand crediting of actual shares.
Under the remuneration model applicable until 31 December
2010 the variable remuneration of the Board member in question
consisted of a profit bonus and a performance bonus. In contrast
to the current remuneration structure, the profit bonus was
measured by the arithmetic mean of the actual earnings per share
(EPS under IFRS) for the last three complete financial years; the
performance bonus corresponded roughly to the individual bonus
in the new remuneration model. Instead of virtual share awards,
the old remuneration structure provided for the award of stock
appreciation rights of Hannover Re. Stock appreciation rights were
awarded for the last time in the year under review for the 2010 financial
year. The virtual stock option plan with stock appreciation
rights remains in force until all awarded stock appreciation rights
have been exercised or have lapsed. The detailed conditions are
explained in the section of the notes to this Group Annual Report
entitled “Share-based remuneration”.