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Allianz Annual Report 2012

48 – Share-based compensation plans Group Equity Incentive Plans The Group Equity Incentive Plans (GEI) of the ­­­Allianz Group support the orientation of senior management, in particu- lar the Board of Management, to substainably increase the valueofthe­­­AllianzGroup.Until2010,theGEIincludegrants of stock appreciation rights (SAR) and restricted stock units (RSU). From the 2011 grant onwards, the ­­­Allianz Equity In- centive Plan (AEI) replaces the GEI plans. With the AEI Plan, only restricted stock units (RSU) are granted to the plan participants. Stock appreciation rights The SAR granted to a plan participant obligate the ­­­Allianz Group to pay in cash the excess of the market price of an ­­­Allianz SE share over the reference price on the exercise date for each right granted. The excess is capped at 150 % of the reference price. The reference price represents the aver- age of the closing prices of an ­­­Allianz SE share for the ten trading days following the Financial Press Conference of ­­­Allianz SE in the year of issue. SAR which were granted until 2008 vest after two years and expire after seven years. From the 2009 grant onwards, the SAR vest after four years and also expire after seven years. Upon vesting, the SAR may be exercised by the plan participant if the following market conditions are attained: A change in the medical cost trend rate by one percentage point would have an effect of € 2 mn on the defined benefit obligation and no material effect on the expense recog- nized in profit or loss. For the year ended 31 December 2012, the weighted expect- ed long-term return on plan assets was derived from the following target allocation and expected long-term rate of return for each asset category: Long-term return on plan assets D 135 % Target allocation Weighted expected long- term rate of return Equity securities 11.9 7.3 Debt securities 62.8 3.9 Real estate 4.3 4.7 Annuity contracts 18.4 4.2 Other 2.6 2.6 Total 100.0 4.4 The determination of the expected long-term rate of return for the individual asset categories is based on capital mar- ket surveys. Plan assets The defined benefit plans’ weighted average asset alloca- tions by asset category are as follows: Allocation of plan assets D 136 % as of 31 December 2012 2011 Equity securities 12.2 11.2 Debt securities 55.9 57.8 Real estate 4.0 4.1 Annuity contracts 16.9 16.4 Other 11.0 10.5 Total 100.0 100.0 The bulk of the plan assets are held by the ­Allianz Versor- gungskasse VVaG, Munich, which is not part of the ­Allianz Group. Plan assets do not include equity securities issued by the ­Allianz Group and include the amount of € 7.9  mn real es- tate used by the ­Allianz Group. Contributions For the year ending 31 December 2013, the ­­­Allianz Group expects to contribute € 277 mn to its defined benefit plans and to pay € 285 mn directly to participants of its defined benefit plans. Defined contribution plans Defined contribution plans are funded through indepen- dentpensionfundsorsimilarorganizations.Contributions fixed in advance (e.g. based on salary) are paid to these institutions and the beneficiary’s right to benefits exists against the pension fund. The employer has no obligation beyond payment of the contributions. During the year ended 31 December 2012, the­­­Allianz Group recognized expenses for defined contribution plans of € 196 mn (2011: € 185 mn; 2010: € 163 mn). Additionally, the ­­­AllianzGrouppaidcontributionsforstatepensionschemes of € 328 mn (2011: € 332 mn; 2010: € 367 mn). Annual Report 2012    Allianz Group344