Longer-term targets set and bonuses spread over years
Allianz is to change its bonus scheme to get top managers to focus more on the group's long-term success,
The package already includes short-, mid- and long-term incentives. The mid-term element will be raised from 11% to 25%. Each year just one third of variable compensation will be paid out. A third kept for the three-year bonus and a third put into equity.
"Executive remuneration will be tied even more closely to sustainability and long-term performance," Allianz's supervisory board said.
“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 supervisory board statement said: “The amount of the total target-linked remuneration will remain unchanged. For the variable compensation there is an upper limit of 165% 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%. 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.”
Henning Schulte-Noelle, Chairman of the Supervisory Board, said: "Executive remuneration at Allianz has been based on sustainability for many years. This approach has proven its worth even in years of crisis.
“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."
Michael Diekmann, CEO of Allianz said: "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.”