Munich Re Group Annual Report 2006 (PDF, 1.8

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
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