The primary model is that of the Allianz insurance businesses. The model provides for a balance of fixed and variable remuneration components with a stronger focus on the longer-term realization of results in determining the final value of total remuneration. For the majority of businesses the following components set the remuneration structure for senior executives to comply with applicable regulations with some individual variations in the mix of components:
- Base salary
- Variable remuneration, including short- and long-term incentives in the form of equity-related remuneration.
Base salary is the fixed remuneration component. Annual adjustments also take account of sustained performance in the position, the performance of the company, general economic and compensation market conditions. The proportion of the fixed component within total remuneration is designed to balance performance incentives to avoid excessive risk-taking. Base salary is expressed as an annual cash sum paid in monthly installments.
Variable remuneration is designed to encourage and reward achievement of both annual performance goals and the sustainable success of the Group and local companies. It is structured to align with Allianz’s risk positioning strategy and to reward personal contributions. Annual targets, both quantitative and qualitative are set and communicated in advance of the performance period and generally conform with SMART (specific, measurable, attainable, relevant and time-bound) principles. In the case of breaches of the Allianz’s Code of Conduct, compliance rules, risk limits or other relevant criteria, payout can be reduced partially or in full.
For operations that represent either asset management or alternative investment business for Allianz or third-party assets, incentive programs and remuneration structures are consistent with the risk positions and competitive markets in which they operate. These may deviate from the general Allianz variable remuneration program descriptions and may include profit sharing, co-investment, carry and other cash-based incentive plans. These businesses use appropriate risk control measures. Oversight is performed by their respective Compensation Committees.
Additionally, depending on the specific country or operating entity, Allianz operates a number of pension and flexible benefit plans in particular deferred compensation schemes – which may provide participants with other opportunities to accumulate retirement income.