The amount and structure of the remuneration of the Executive Board are geared to the size and activities of the company, its economic and financial position, its success and future prospects as well as the customariness of the remuneration, making reference to the benchmark environment (horizontal) and the remuneration structure otherwise applicable at the company (vertical). The remuneration is also guided by the tasks of the specific member of the Executive Board, his or her individual performance and the performance of the full Executive Board.
The correlation between the performance of our company and the remuneration of our Executive Board is assured by a remuneration scheme with two components: fixed salary/non-cash compensation and variable remuneration. The bases for measurement of the variable remuneration extend over several years, thereby promoting the sustainable development of our company.
The profit- and performance-based remuneration (variable remuneration) is contingent in part on the attainment of individual targets. On the other hand, allowance is also made for targets that refer to key performance indicators of the company (e.g. return on equity). The set targets vary according to the function of the Board member in question. Environmental and social goals are not currently reflected in the performance criteria under the remuneration policy.
The Standing Committee of the Supervisory Board prepares matters of content relating to the remuneration of the Executive Board for discussion and adoption of a resolution by the full Supervisory Board. The remuneration scheme for the members of the Executive Board was presented at the Annual General Meeting 2012 and put to the vote. The shareholders were thus able in this forum to express their opinion on the remuneration scheme. The motion to approve the system of remuneration for the members of the Executive Board was adopted. We draw upon the services of an external independent consultant not only for the elaboration of the remuneration scheme for the members of the Executive Board; outside independent advice is also sought when it comes to making the annual horizontal comparison with the benchmark environment, which is mapped on the basis of typical or average figures from comparable companies.
In accordance with Item 5.6 of the German Corporate Governance Code we evaluate the efficiency of the Supervisory Board at regular intervals in order to explore potential options for improvement in its work. In the context of this self-assessment each member of the Supervisory Board evaluates the quality of the work currently performed by the Supervisory Board in anonymised form and makes suggestions for future optimisation.
The remuneration of the Supervisory Board is determined by the Annual General Meeting of Hannover Rück SE and regulated by § 14 of our Articles of Association as amended on 30 May 2016, which are made publicly accessible on our website.
The remuneration scheme for senior executives below the Executive Board (management levels 2 and 3) and for key function holders in Germany belonging as a matter of principle to the ranks of senior executives consists of a fixed annual salary and a system of variable remuneration. This is comprised of a short-term variable remuneration component, the annual cash bonus, and a long-term share-based remuneration component, the Share Award Plan. This variable remuneration has been uniformly applied worldwide since 1 January 2012 to all Group senior executives (i.e. Managing Directors, Directors and General Managers). As part of the reorientation of the remuneration system for senior executives the Share Award Plan of the Executive Board was consciously extended to include management levels 2 and 3.
Members of staff on the levels of Chief Manager, Senior Manager and Manager are also able to participate in a variable remuneration system through the Group Performance Bonus (GPB). The Group Performance Bonus (GPB) is a remuneration model launched in 2004 that is linked to the success of the company. This tool is geared to the minimum return on equity of 750 basis points above the risk-free interest rate defined for the specific financial year and the return on equity actually generated.
Detailed information on the remuneration of the Executive Board, Supervisory Board and senior executives below the Executive Board is published in the remuneration report from page 127 onwards of the Group Annual Report 2018.