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Allianz Annual Report 2013

Annual Report 2013    Allianz Group 37 B Corporate Governance 27 Corporate Governance Report 32 Statement on Corporate Management pursuant to § 289a of the HGB 34 Takeover-related Statements and Explanations 37 Remuneration Report Remuneration Report This report covers the remuneration arrangements for the Board of Management and the Supervisory Board of ­Allianz SE. The report is prepared in accordance with the requirements of the German Commercial Code (HGB) and the International Financial Reporting Standards (IFRS). It also takes into account § 64b Law on the Supervision of Insurance Undertakings (“Versicherungsaufsichts­ gesetz – VAG”), the requirements of the German Ministry of Finance’s Insurance Remuneration Regulation (“Versicherungs-Vergütungs­ verordnung – VersVergV”), and the recommendations of the German Corporate Governance Code. Allianz SE Board of Management remuneration GOVERNANCE SYSTEM The remuneration of the Board of Management is decided upon by the entire Supervisory Board. Such decisions are prepared by the Per­ sonnel Committee. If required, outside advice is sought from inde­ pendent external consultants. The Personnel Committee and the Super­visory Board consult with the Chairman of the Board of Manage­ ment as appropriate in assessing the performance and remunera­ tion of members of the Board of Management. The Chairman of the Board of Management is not present when his own remuneration is discussed. Regarding the activities and decisions taken by the Person­ nel Committee and the Supervisory Board, please refer to the Super­ visory Board Report section. The remuneration system for the Board of Management was presented and approved at the 2010 Annual ­General Meeting. REMUNERATION PRINCIPLES AND MARKET POSITIONING The key principles of Board of Management remuneration are as follows: −− Support of the Group’s strategy:  Performance targets reflect the ­Allianz Group’s business strategy. −− Alignment of pay and performance:  A significant performance- based, variable component. −− Variable remuneration focused on sustainability:  Two thirds of the variable remuneration reflect longer-term performance. One third is a deferred payout after three years based on a sus­ tainability assessment covering the three-year period. The other third rewards sustained performance through share price devel­ opment with a deferred payout after five years. −− Alignment with shareholder interests:  25 % of total target direct remuneration is dependent upon share price performance. The structure, weighting and level of remuneration is decided by the Supervisory Board. Remuneration survey data is provided by external consultants. The peer group consists primarily of other DAX 30 com­ panies. Compensation levels usually vary between the median and around the third quartile of this group. The structure of ­Allianz Group’s total remuneration is more strongly weighted to variable, longer-term components than in other DAX 30 companies. Remu­ neration and benefit arrangements are also periodically compared with best practices. The Supervisory Board takes remuneration levels within the Group into account when assessing the appropriateness of the remuneration of the Board of Management. REMUNERATION STRUCTURE, COMPONENTS and target setting process There are four main remuneration components. Each has approxi­ mately the same weighting within annual target remuneration: base salary, annual bonus, annualized mid-term bonus (MTB) and equity- related remuneration. The target compensation of each variable component does not exceed the base salary, with the total target vari­ able compensation not exceeding three times the base salary. In addition ­Allianz offers pensions/similar benefits and perquisites. Base salary Base salary is the fixed remuneration component and is expressed as an annual cash sum, paid in twelve monthly installments. Variable remuneration Variable remuneration aims to balance short-term performance, longer-term success and sustained value creation. Each year, the Supervisory Board agrees on performance targets for the variable remuneration with the members of the Board of Man­ agement. These are documented for the upcoming financial year. Every three years the MTB sustainability criteria are set for the follow­ ing mid-term period. All variable awards are made under the rules and conditions of the “Allianz Sustained Performance Plan” (ASPP) which consists of the equally weighted components below. The grant of variable remu­ nerationcomponentsisrelatedtoperformanceandcanvarybetween 0 % and 165 % of the respective target values. For a regular member of the Board of Management with a base salary and target variable com­ pensation of € 700  Thou for each variable remuneration component the minimum payout is € 700  Thou if the performance was rated with 0 % and no variable component was granted. The maximum total direct compensation (excluding perquisites) is € 4,165 Thou if the

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