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Allianz Annual Report 2012

Annual Report 2012    Allianz Group Board of Management. The Board of Management provided the Supervisory Board with a summary of the analyses, rec- ommendationsforimprovementsintheremunerationand governance systems, and an overall assurance of compli- ance with regulations. REMUNERATION PRINCIPLES Remuneration structures and incentives are designed to encourage sustainable value-creating activities for ­Allianz. As a result, we deploy a number of different remuneration structures and strategies across the Group which take into account the particular roles of executives, business activi- ties and local remuneration and regulatory environments. The key additional principles of our executive remunera- tion strategy are to: −− align pay with both the performance of individuals and the achievement of the ­Allianz Group’s financial and strategic goals in a way that is consistent with share- holder interests −− vary the mix and weight of fixed versus variable remu- neration and short-term versus long-term incentives to reflect the executive’s influence on the results of the Group, business division or operating entity −− deliver total rewards that are competitive in relevant markets. REMUNERATION COMPONENTS The primary model is that of the ­Allianz insurance busi- nesses. Most executives are covered by the ­Allianz Sustained Performance Plan (ASPP). 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 operations the following components set the remuneration structure for senior executives to comply with applicable regulations, although not everyone receives all of them, or has the same mix of components: −− Base salary −− Variable remuneration, including: −− Short- and, where applicable, mid-term incentives −− Long-term incentives in the form of Equity-related remuneration. The outline below discusses the component’s purpose, performance link and operation. Base salary Base salary is the fixed remuneration component. Annual adjustments also take account of sustained performance in the post, the performance of the company, general eco- nomic conditions and the level of increases awarded else- where in the Group. The proportion of the fixed component within total remuneration is designed to balance perfor- mance incentives to avoid excessive risk-taking. Base salary is expressed as an annual cash sum paid in monthly in- stallments. Variable remuneration Variable remuneration is designed to encourage and re- ward 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 strat- egy and to reward personal contributions. Annual targets and, where applicable, multi-year targets are set, commu- nicated and documented in advance of the performance period and generally conform with SMART (specific, measur- able, attainable, relevant and time-bound) principles. In the case of breaches of the ­Allianz’s Code of Conduct, compli- ance 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 mar- kets in which they operate. These may deviate from the general ­Allianz variable remuneration program descrip- tions and may include profit sharing, co-investment, carry and other cash-based incentive plans. These businesses use appropriate risk control measures. Oversight is per- formed by their respective Compensation Committees. Additionally, depending on the specific country or operating entity, ­Allianz operates a number of pension and flexible benefitplansinparticulardeferredcompensationschemes – which may provide participants with other opportunities to accumulate retirement income. 2012 REMUNERATION For senior executives who assume positions of high risk in the sense of the VersVergV, we disclose aggregate percent- ages of the 2012 target remuneration. The number of func- tions across the Group identified for analysis was 167(2011: 164), as outlined above. 86