Annual Report 2010 - Hannover Re

Measurement bases/conditions of payment for variable remuneration from 2011 onwards
Component Measurement basis/parameter Condition of payment
Profit bonus (medium-term)
Proportion of variable
remuneration:
Chief Executive Officer/
Chief Financial Officer: 70%;
Board members except for
CEO/CFO: 50%
Performance bonus (short-term)
Business group bonus
Proportion of variable
remuneration:
Board members except for
CEO/CFO: 25%
Group return on equity (RoE);
x individual basic amount (graduated according to area of responsibility
and professional experience) for each 0.1 percentage point by
which the average RoE of the past three financial years exceeds the
risk-free interest rate;
100% = 11.6% RoE
Cap max: 200%
Cap min: –100% (penalty);
Change in the risk-free interest rate by 1 percentage point or more
necessitates adjustment of the bonus calculation;
RoE calculation: IFRS Group net income (excluding minority inter -
ests) . /. arithm. mean of IFRS Group shareholders’ equity (excluding
minority interests) at the beginning and end of the financial year.
Measurement of the Intrinsic Value Creation (IVC) of the business
groups in the respective area of responsibility;
Primary IVC criteria: relative change year-on-year, absolute amount,
comparison with target value, dividend payout or profit transfer ratio,
general market environment;
100% = amount x = targets achieved in full
Cap max: 200%
Cap min: EUR 0;
Initial application in 2013, until then refinement of the IVC concept
and resolution of the Supervisory Board according to its best
judgement.
Contractual stipulation
Attainment of three-year
targets
Attainment of annual targets
Until 2013:
The Supervisory Board
determines degree of goal
accomplishment according
to its best judgement
From 2013 onwards:
Attainment of the IVC
Management report
Individual bonus
Proportion of variable
remuneration:
Chief Executive Officer/
Chief Financial Officer: 30%;
Board members except for
CEO/CFO: 25%
Personal qualitative, quantitative objectives;
individual contribution to the overall performance, leadership skills,
innovative skills, entrepreneurial skills, special factors.
100% = amount x = targets achieved in full
Cap max: 200%
Cap min: EUR 0
Attainment of annual targets
The Supervisory Board
determines degree of goal
accomplishment according
to its best judgement
Payment procedures for total variable remuneration
Short-term Medium-term Long-term
60% of the variable remu -
ner ation with the next
monthly salary payment
following the Supervisory
Board resolution
20% of the variable remuneration in the
bonus bank; withheld for three years;
the positive amount contributed three years prior
to the payment date is available for payment,
provided this does not exceed the balance of the
bonus bank in light of credits/debits up to and
including those for the financial year just-ended;
an impending payment not covered by a positive
balance in the bonus bank is omitted;
loss of claims due from the bonus bank in special
cases: resignation of office without a compelling
reason; contract extension on the same conditions
is rejected;
Automatic granting of virtual Hannover Re
Share Awards with a value equivalent to 20%
of the variable remuneration.
Payment of the value calculated at the payment
date after a waiting period of four years;
Value of the share on awarding/payment:
unweighted arithm. mean of the Xetra closing
prices five trading days before to five trading
days after the meeting of the Supervisory Board
that approves the consolidated financial statement;
additional payment of the sum total of all
dividends per share paid out during the period;
no interest is paid on credit balances.
changes in a cumulative amount of 10% or more
in the value of the Share Awards caused by
structural measures trigger an adjustment.
Negative variable total bonus = payment of EUR 0 variable remuneration.
Any negative value of the variable total bonus of a financial year is transferred in full to the bonus bank
(see “Medium-term” column).
Hannover Re Group annual report 2010
enterprise management Management report
89