Allianz strengthens its sustainable remuneration system

Today, the Supervisory Board of Allianz SE has approved changes to the remuneration system of the board of management. In the future, Allianz SE’s executive remuneration will be tied even more closely to sustainability and long-term performance. The remuneration system meets all requirements of the German Act on Appropriateness of Management Remuneration (VorstAG) as well as the German Corporate Governance Code. In spring 2009, Allianz had already extended the vesting period for the annual allocation of virtual share options from two to four years. From next year, the new remuneration system will be rolled out to top managers across the Group.

The main components of remuneration, which are already designed to support sustainability, will remain unaffected. The short-, mid- and long-term elements of variable compensation will be divided into three equal parts. Overall, mid-term pay for top managers with operations responsibility will gain further importance. For Allianz SE board members, the proportion of this component will even increase from 11 to 25 percent of total target compensation.

"Executive remuneration at Allianz has been based on sustainability for many years. This approach has proven its worth even in years of crisis," says Henning Schulte-Noelle, Chairman of the Supervisory Board of Allianz SE. "Performance is now being increasingly measured in terms of the long-term success of the Allianz Group, and the entire Supervisory Board reviews the appropriateness of the remuneration. We also welcome the fact that national and international standards attach increasing importance to sustainability and appropriate compensation, which we fully support."

The amount of the total target-linked remuneration will remain unchanged. For the variable compensation there is an upper limit of 165 percent if targets are exceeded. In addition, the potential growth in the value of the virtual shares based on the share price development over the four-year holding period, is limited to 200 percent. Thus, all three elements of variable compensation are subject to upper limits.

At the same time, performance contracts will be simplified, and all components of variable compensation will be integrated into one plan. Thus all targets will be oriented even more consistently to the strategy and long-term success of the Allianz Group.

The existing malus system will be further strengthened. Each year, one third of variable compensation will be paid out. One third will be set aside for the three-year bonus and the final third for equity-based remuneration. At the end of the three-year period a plenary session of the Supervisory Board reviews whether the goals achieved are sustainable before it decides on a appropriate amount to be paid out. The amount of the three-year bonus depends not only on the extent to which targets are met in comparison to competitors and taking the economic situation into account, but also on factors that reflect the interests of customers and employees, e.g. customer and employee satisfaction and responsible staff management. The amount allocated to equity-based remuneration will be assessed at the end of each year and paid out after a four-year vesting period.

"Across the Group, the new remuneration system will consistently link compensation for all top managers of our subsidiaries to Allianz’s sustainable business goals. This simplification and transparency will enhance our appeal as an international employer – an essential step to securing consistent performance worldwide," summarizes Michael Diekmann, CEO of Allianz SE.

In 2004, Allianz became one of the first DAX companies to introduce multi-year components in its variable remuneration system. Several years before the German Corporate Governance Code was introduced, Allianz began itemizing individual executive remuneration in a transparent manner in its annual remuneration report.

 
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