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Allianz Annual Report 2012

Annual Report 2012    Allianz Group Remuneration Report This report comprises three sections covering the remu- neration arrangements for the: −− Allianz SE Board of Management, −− Executives below the Board of Management of ­Allianz SE and −− the Supervisory Board. The report is prepared in accordance with the require- ments of the German Commercial Code (HGB) and Interna- tional Financial Reporting Standards (IFRS). It also takes into account § 64b Law on the Supervision of Insurance Undertakings (“Versicherungsaufsichtsgesetz – VAG”), the requirements of the German Ministry of Finance’s Insur- anceRemunerationRegulation(“Versicherungs-Vergütungs­ verordnung–VersVergV”)andtherecommendationsofthe German Corporate Governance Code. Allianz SE Board of Management remuneration GOVERNANCE SYSTEM The remuneration of the Board of Management is set by­ the full Supervisory Board. Meetings are prepared by the Personnel Committee while Group HR and other corporate functions provide internal support as requested or required. Outside advice is sought from time-to-time from external consultants. The Personnel Committee and Supervisory Board consult with the Chairman of the Board of Manage- ment as appropriate in assessing the performance and ­remuneration of members of the Board of Management. The Chairman of the Board of Management is not present when his own remuneration is discussed. Regarding the activities and decisions taken by the Personnel Committee and the Supervisory Board, please refer to the Supervisory Board Report section. The remuneration system for the Board ­of Management was presented and approved at the 2010 Annual General Meeting. REMUNERATION PRINCIPLES AND MARKET POSITIONING Remuneration is designed to be competitive compared to peers given the Group’s scale of business activities, operat- ing environment, general economic conditions and perfor- mance. While structured to attract and retain highly quali- fiedexecutives,theoverallgoalistosupportandencourage sustained value-oriented management. The key principles of Board of Management remuneration are as follows: −− Support for the Group’s strategy:  Performance targets reflect the ­Allianz Group’s business strategy. −− Alignment of pay and performance:  A significant perfor- mance-based, variable component. −− Variable remuneration focused on sustainability: Two thirds of the variable remuneration reflect sustained performance. Thereof, 50 % is subject to a multi-year target achievement and sustainability assessment with a deferred payout after three years. The remaining 50 % rewards sustained performance through share price development with a deferred payout after five years. −− Alignment with shareholder interests:  25 % of total target remuneration is dependent upon share price perfor- mance. −− Integration and balance:  Incentives complement each other and represent an appropriate balance of oppor­ tunity and managed risk that is effective over varying performance scenarios and consistent with good gover- nance. The structure, weighting and level of remuneration is dis- cussed by the Supervisory Board. Survey data is provided by external consultants. The peer group consists primarily of other DAX 30 companies. Compensation levels are usually around the median or third quartile of this group. The structure of ­Allianz’s total remuneration is more strongly weighted to variable, longer-term components. Remune­ ration and benefit arrangements are also periodically compared with best practices. Board of Management remu- neration relative to remuneration levels within the Group is also taken into account when the Supervisory Board deter­ mines the need for any adjustments. REMUNERATION STRUCTURE AND COMPONENTS There are four main remuneration components. Each has approximately the same weighting within annual target remuneration: Base salary, Annual bonus, annualized Three- year bonus and Equity-related remuneration. In addition ­Allianz offers pensions/similar benefits and perquisites. 74