ABB Annual Report 2012 PDF - ABB Group Annual Report 2012

Note 11Executive Committeecompensation, continuedThe table below provides an overview of the total compensation of members of the Executive Committee in 2011,comprising cash compensation and an estimate of the value of shares conditionally awarded under a three-yearincentive plan that runs until 2014. Cash compensation includes the base salary, the accrued short-term variablecompensation for 2011, pension benefits, as well as other benefits comprising mainly social security and healthinsurance contributions. The compensation is shown gross (i.e. before deduction of employee’s social insurance andpension contributions).Base salaryShort-term variablecompensation (1)Pension benefitsOther benefits (2)Estimated value ofshare-based awardsgranted in 2011 (3)Name(CHF) (CHF) (CHF) (CHF) (CHF) (CHF)Joe Hogan 1,991,676 3,376,800 280,384 849,768 2,871,650 9,370,278Michel Demaré 1,200,006 1,344,000 267,014 323,361 1,189,349 4,323,730Gary Steel 799,168 901,600 282,501 173,691 687,243 2,844,203Ulrich Spiesshofer 812,502 917,280 229,895 171,064 868,307 2,999,048Diane de Saint Victor 748,258 842,128 267,566 300,585 745,419 2,903,956Bernhard Jucker 945,002 1,064,000 275,936 220,816 811,031 3,316,785Peter Leupp 770,005 862,400 285,712 164,442 – 2,082,559Veli-Matti Reinikkala (4) 701,230 551,861 267,987 320,362 541,126 2,382,566Brice Koch 741,676 840,000 227,416 224,330 769,347 2,802,769Tarak Mehta 660,835 742,560 215,716 244,075 680,105 2,543,291Frank Duggan (joined on March 1, 2011) (5) 597,598 595,962 256,020 140,636 623,213 2,213,429Total Executive Committee membersas of December 31, 2011 9,967,956 12,038,591 2,856,147 3,133,130 9,786,790 37,782,6142011TotalTom Sjökvist (retired from the ECon September 30, 2010) (6) 188,851 – 47,971 617,040 – 853,862Anders Jonsson (retired from the EC on July 31, 2010) (6) – – – 857,284 – 857,284Total former Executive Committee membersas of December 31, 2011 188,851 – 47,971 1,474,324 – 1,711,146Total 10,156,807 12,038,591 2,904,118 4,607,454 9,786,790 39,493,760To reflect widespread market practice, in 2011, the basis of presentation of the short-term variable compensation changed from a cash basis to an accruals basis. Payment is made in thefollowing year, after publication of the financial results.On July 1, 2011, Veli-Matti Reinikkala relocated from the U.S. to Switzerland. According to the Group’s policy, he received in 2011 a pro-rata short-term variable compensation payoutof CHF 244,581 for his service in the U.S. for the period January 1, 2011, to June 30, 2011. The final payout amount for Veli-Matti Reinikkala, which is based on the 2011 results, has beenreduced by this pro-rata short-term variable compensation payment already received.In March 2011, the current and former Executive Committee members received the 2010 short-term variable compensation payments in the amount of CHF 11,951,967. This number doesnot include any short-term variable compensation amount for Frank Duggan, who joined the Executive Committee on March 1, 2011.Short-term variable compensation is linked to the targets defined in the ABB Group’s scorecard. Upon full achievement of these targets, the short-term variable compensation of the CEOcorresponds to 150 percent of his base salary, while for all other Executive Committee members it represents 100 percent of their respective base salary. The Board has the discretionto approve a higher payout than 100 percent, if the targets are exceeded. For 2011, the Board exercised its discretion and awarded a 12 percent higher payout, reflecting the company’sperformance against the targets.Other benefits comprise payments related to social security, health insurance, children’s education, transportation, tax advice and certain other items.The estimated value of the share-based awards is subject to performance and other parameters (e.g. the share price development) and may therefore vary in value from the abovenumbers at the date of vesting, March 15, 2014. The above amounts have been calculated using the market value of the ABB share on the day of grant adjusted, in the case of the performancecomponent, according to the parameters considered in the Monte Carlo simulation model.Veli-Matti Reinikkala received 50 percent of his base salary in USD and 50 percent in EUR at a fixed USD/EUR exchange rate for the period January to June 2011. All USD paymentswere converted into Swiss francs at a rate of 0.94115 per USD. As of July 2011, Veli-Matti Reinikkala relocated to Switzerland and since then receives his compensation in Swiss francs.Frank Duggan received 20 percent of his base salary in AED and 80 percent in EUR at a fixed AED/EUR exchange rate for the period March to December 2011. All AED payments wereconverted into Swiss francs at a rate of 0.2562417 per AED.The above compensation figures related to Tom Sjökvist and Anders Jonsson represent contractual payments for the period January to December 2011.(1)(2)(3)(4)(5)(6)144 Financial review | ABB Annual Report 2012