Munich Re Group Annual Report 2006 (PDF, 1.8

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Munich Re Group Annual Report 2006 Notes_Other information Incentive plans 1999–2006 of the Munich Re Group’s reinsurers Incentive Incentive Incentive Incentive Incentive Incentive Incentive Incentive Plan 1999 Plan 2000 Plan 2001 Plan 2002 Plan 2003 Plan 2004 Plan 2005 Plan 2006 Plan commencement 1.7.1999 1.7.2000 1.7.2001 1.7.2002 1.7.2003 1.7.2004 1.7.2005 1.7.2006 Plan end 30.6.2006 30.6.2007 30.6.2008 30.6.2009 30.6.2010 30.6.2011 30.6.2012 30.6.2013 Old initial share price New initial share price after 2003 €182.60 €319.34 €320.47 €260.37 €86.24 – – – capital increase €173.67 €303.72 €304.80 €247.64 €82.02 €88.65 €88.10 €108.87 Intrinsic value 2006 for one right – – – – €46.60 €39.97 €40.52 €19.75 Fair value 2006 for one right €0.00 €0.00 €0.02 €1.09 €47.40 €44.36 €46.03 €37.35 Number of rights on 31 Dec. 1999 110,840 – – – – – – – Additions 9,045 80,582 – – – – – – Number of rights on 31 Dec. 2000 119,885 80,582 – – – – – – Additions – – 109,474 – – – – – Exercised 34,240 – – – – – – – Number of rights on 31 Dec. 2001 85,645 80,582 109,474 – – – – – Additions – – 270 132,466 – – – – Exercised 6,977 – – – – – – – Forfeited – 321 443 – – – – – Number of rights on 31 Dec. 2002 78,668 80,261 109,301 132,466 – – – – Additions 4,009 3,793 5,319 6,696 439,581 – – – Exercised – – – – – – – – Forfeited 3,696 6,199 7,192 3,962 – – – – Number of rights on 31 Dec. 2003 78,981 77,855 107,428 135,200 439,581 – – – Additions – – – – – 456,336 – – Exercised – – – – – – – – Forfeited – 438 600 748 2,354 – – – Number of rights on 31 Dec. 2004 78,981 77,417 106,828 134,452 437,227 456,336 – – Additions – – – – 320 1,697 485,527 – Exercised – – – – 177,748 – – – Forfeited – 23 542 680 121 2,005 – – Number of rights on 31 Dec. 2005 78,981 77,394 106,286 133,772 259,678 456,028 485,527 – Additions – – – – – – – 443,609 Exercised – – – – 63,942 119,363 – – Forfeited 78,981 – – – – – – 1,019 Number of rights on 31 Dec. 2006 – 77,394 106,286 133,772 195,736 336,665 485,527 442,590 Exercisable at year-end – 77,394 106,286 133,772 195,736 336,665 – – Since 1 July 2002, ERGO Versicherungsgruppe AG and some of its subsidiaries, as well as Europäische Reiseversicherung AG and MEAG MUNICH ERGO AssetManagement GmbH, have also set up long-term incentive plans at yearly intervals and with terms of seven years each. The persons entitled to participate – Board of Management members, managing directors and, in individual cases, also top executives – are granted a defined number of stock appreciation rights in respect of Munich Re shares. The design of the plans is identical to that of Munich Re’s long-term incentive plans and they are accounted for in the same way. In the year under review, a total of 173,682 (212,028) stock appreciation rights were granted, 131,040 (184,310) of these to Board of Management members. The future obligations arising from the long-term incentive plans are covered 208 by Munich Re shares. In the year under review, related provisions of €20.4m (14.4m) had to be posted for the primary insurers and asset managers in the Munich Re Group; the personnel expenses totalled €6.4m (13.3m). The weighted average share price for the stock appreciation rights exercised in 2006 was €119.46 for plan year 2003 and €124.50 for plan year 2004. The intrinsic value of the exercisable stock appreciation rights amounted to €4.9m at the balance sheet date.
Munich Re Group Annual Report 2006 Notes_Other information Incentive plans 2002–2004 of the Munich Re Group’s primary insurers and asset managers Incentive Incentive Incentive Incentive Incentive Plan 2002 Plan 2003 Plan 2004 Plan 2005 Plan 2006 Plan commencement 1.7.2002 1.7.2003 1.7.2004 1.7.2005 1.7.2006 Plan end 30.6.2009 30.6.2010 30.6.2011 30.6.2012 30.6.2013 Old initial share price €260.37 €86.24 – – – New initial share price after 2003 capital increase €247.64 €82.02 €88.65 €88.10 €108.87 Intrinsic value 2006 for one right – €46.60 €39.97 €40.52 €19.75 Fair value 2006 for one right €1.09 €47.40 €44.36 €46.03 €37.35 Number of rights on 31 Dec. 2002 45,476 – – – – Additions 12,898 168,681 – – – Exercised – – – – – Forfeited 529 – – – – Number of rights on 31 Dec. 2003 57,845 168,681 – – – Additions – 1,650 154,189 – – Exercised – – – – – Forfeited 3,050 13,414 – – – Number of rights on 31 Dec. 2004 54,795 156,917 154,189 – – Additions – 87 – 211,941 – Exercised – 90,398 – – – Forfeited 11,903 7,498 32,130 24,411 – Number of rights on 31 Dec. 2005 42,892 59,108 122,059 187,530 – Additions – – – – 173,682 Exercised – 31,027 31,390 – – Forfeited – – – 3,072 – Number of rights on 31 Dec. 2006 42,892 28,081 90,669 184,458 173,682 Exercisable at year-end 42,892 28,081 90,669 – – Each stock appreciation right entitles the holder to draw in cash the difference between the Munich Re share price at the time when the right is exercised and the initial share price. The stock appreciation rights may only be exercised after a two-year vesting period and then only if the share price is at least 20% higher than the initial price. In addition, Munich Re shares must have outperformed the DAX 30 (Plan 1999) or the EURO STOXX 50 (from Plan 2000 onwards) twice at the end of a three-month period during the term of the plan. The gross amount that may be obtained from the exercising of the stock appreciation rights is limited to an increase of 150% of the initial share price. When the stock appreciation rights are exercised, the cash payment is made (in the respective national currency) by the company that granted the rights. Stock appreciation rights not exercised on the last trading day of the plan term are exercised on the participant’s behalf insofar as the prerequisites for this are met. If the prerequisites are not met, the stock appreciation rights are forfeited. If another company acquires control of Munich Re or the company’s group of shareholders changes significantly due to a merger or comparable transaction or intended business combination (”change of control”), all plan participants from the Munich Re Group may exercise their stock appreciation rights within 60 days after the change of control becomes effective, even if the prerequisites for exercising the rights are not yet met at that juncture. (43) Remuneration report The total remuneration of Munich Reinsurance Company’s Board of Management amounted to €25.6m (21.2m) and that of the Supervisory Board to €1.9m (1.9m). All other disclosures on the remuneration of and loans to Board members, share trading and shares held by the members of the Board of Management and the Supervisory Board, and the structure of the Board of Management’s remuneration system can be found in the remuneration report on page 114 f. (44) Employee share-ownership programmes In 2006, Munich Reinsurance Company staff were given the opportunity to acquire up to five employee shares at preferential conditions. The purchase price per share was €91.90, resulting in a benefit of €27.00 per share based on the share price applicable at the time the programme was granted. Altogether, 2,493 staff took advantage of the offer and acquired 12,355 shares; personnel expenses totalled T€334. In addition, staff of MEAG MUNICH ERGO AssetManagement GmbH or one of its subsidiaries had the opportunity to acquire up to five employee shares at preferential conditions. The purchase price per share was €82.84, resulting in a benefit of €27.00 per share based on the share price applicable at the time the programme was granted. Altogether, 469 staff took advantage of the offer and 209
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Munich Re Group Annual Report 2006
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The Munich Re Group Our operations
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Munich Re Group in 2006 Tireless an
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Page 238: © 2007 Münchener Rückversicherun
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