58 Governance Annual Report 2012 Zurich Insurance Group
Remuneration report continued
For 2012, the remuneration highlights were as follows:
Remuneration in USD million, for the year ended Total Total
December 31
highlights Base salary/ Short-term Long-term remuneration remuneration
Fees incentives1 incentives2 Other3 20124 2011 4
Directors 3.4 – 1.2 – 4.6 4.7
Group Executive Committee 12.0 12.3 16.8 5.3 46.4 50.3
All employees 4,036 465 131 1,114 5,746 5,656
1
For all employees equals the cash incentives earned for the year.
2
Includes the fees allocated as sales restricted shares for Directors.
3
Includes other employee benefits, pension benefits and other remuneration costs.
4
Actual, gross and for cash amounts based on the accrual principle.
Remuneration expenditure should be considered in the context of Zurich‘s overall revenues, capital base and profitability.
The key figures are set out in the table below and reflect data for 2012 and 2011:
Key financial figures in USD million, for the year ended December 31 2012 2011 1
Gross written premiums and fees2 56,823 52,967
Business operating profit 4,075 4,243
Net income attributable to shareholders 3,878 3,750
Shareholders’ equity 34,494 31,484
Return on common shareholders’ equity 11.8% 11.9%
Dividends to shareholders3 2,763 2,706
Total variable remuneration pool for all employees gross before tax 608 618
– as a percentage of gross written premiums and fees 1% 1%
– as a percentage of shareholders’ equity 2% 2%
1
December 31, 2011 has been restated as set out in note 1 of the Consolidated financial statements.
2
Consists of USD 53,977 gross written premiums and policy fees as well as USD 2,846 Farmers management fees and other related revenues.
3
Dividend at transaction day exchange rate in 2012, respectively 2011.
As can be seen from these metrics, relative to Zurich’s overall revenues and capital position, expenditure on variable
remuneration is relatively small. Among other factors, in determining the amount of the total variable remuneration
pool (please refer to pages 61 and 79) for all employees, the Board also considers the long-term economic performance
of the Group. In this respect, the Group has generated economic profit over the long-term which exceeds the actual
expenditure on variable pay. For 2012, the Group Short-Term Incentive Plan (Group STIP) overall expenditure resulted in
91 percent of target and the Group Long-Term Incentive Plan (Group LTIP) vesting level for the three years 2010 to
2012 was set at 97 percent of target.
To further align their interests with those of shareholders, the Board and the GEC build their ownership position in the
company. As of December 31, 2012, Directors held 65,620 shares and members of the GEC held 118,899 shares and
439,520 options. Share ownership guidelines are in place and these are discussed further on page 62. To meet the share
obligations under the share-based compensation plans, Zurich issued 914,301 new shares in 2012, and 798,926 new
shares in 2011. Further details on the dilution impact of the share-based compensation plans are set out on page 60.
Summary of further key remuneration aspects in 2012
In addition to the remuneration context and outcomes described, further key aspects for 2012 are outlined below:
• The remuneration system as set out in the Remuneration report for 2011 was subject to a non-binding advisory
shareholder vote at the Annual General Meeting on March 29, 2012 with 84.8 percent votes in favor.
• Following the retirement of Mr. Manfred Gentz and Mr. Vernon Sankey in March 2012, the Annual General Meeting
approved the election of Ms. Alison Carnwath and Mr. Rafael del Pino to the Board. The two new members replaced
the leaving members and joined Mr. Josef Ackermann and Mr. Thomas Escher on the Remuneration Committee.
Mr. Thomas Escher was appointed as the new Chairman of the Remuneration Committee in 2012.
• The Committee reviewed the performance measurements under the short- and long-term incentive plans for 2012.
• With regard to the KRT positions, the criteria and processes used for the identification and performance assessment
of those positions were reviewed and improved. In particular, additional processes were implemented to include
risk-based factors in the performance assessment of KRTs. The Group has expanded the number of KRT positions.