Report on compensation

The specifications below follow the directives on information relating to corporate governance issued by the SIX Swiss Exchange and take into consideration the new transparency regulations set out in the Swiss Code of Obligations Art. 663bbis and Art. 663c. Further details on compensation and benefit expenditure for the management and employees of the Swiss Life Group can be found in the Financial Statements (notes 24 and 31). In addition, the compensation of the members of the Board of Directors and the Corporate Executive Board, and their participation interests, are shown in the notes to the Swiss Life Holding Financial Statements.

The information in this Annual Report is presented in the same way as previous years. In accordance with the new transparency requirements, the compensation received by each member of the Board of Directors and the Chairman of the Corporate Executive Board (Group CEO) is disclosed individually.

In view of the fact that Rolf Dörig held the positions of Group CEO until the Annual General Meeting of Swiss Life Holding on 8 May 2008 and Delegate of the Board following his election to the Board of Directors, his compensation in the period under review is shown in its entirety under the compensation to the Corporate Executive Board.

As, during the year under review, the position of Group CEO was transferred, as of 9 May 2008, to Corporate Executive Board member Bruno Pfister, who was previously CEO International, the compensation to Bruno Pfister, as the new Group CEO, is also reported individually for the 2008 financial year.

COMPENSATION POLICY PRINCIPLES | Pursuant to the Organisational Regulations, the Board of Directors as a whole is responsible for establishing the guidelines on the Group’s compensation policy (incl. bonuses and equity compensation programmes) and with regard to employee benefit institutions. The compensation policy underpins the performance culture required by the corporate strategy and forms part of the HR policy. The aim is to retain qualified employees and recruit new, highly skilled staff. The chosen compensation system is in line with the market environment and must be competitive. The overall compensation takes into account the employees’ professional skills, commitment and personal performance. Individual compensation is made up of a basic salary and variable short-, medium- and long-term salary components, as well as contributions to occupational provisions and risk insurance. The basic salary is determined according to the employee’s function and skill-set, and is annually re-assessed and adjusted if appropriate. The variable salary components are linked to the strategic objectives of the company and the individual divisions, and the associated financial and HR-related targets. Personal performance and target achievement are assessed annually in the employee appraisal procedure implemented throughout the Group (Group Performance System) and taken into consideration when applying the defined compensation policy.

PRACTICE AND PROCEDURE | Pursuant to the Organisational Regulations, the Board of Directors as a whole is responsible for determining the level and make-up of compensation for its members, whereas the Chairman’s Committee, in its capacity as a Compensation Committee, is responsible for putting forward corresponding proposals. The Board of Directors also establishes the guidelines for the company’s compensation policy. In doing so, it takes into consideration the compensation policies of other organisations of comparable size and in comparable industries, drawing its findings from publicly available information and, as necessary, studies by external experts. Based on these guidelines, the Chairman’s Committee determines the compensation for the individual members of the Corporate Executive Board and informs the entire Board of Directors accordingly.

The share option programme for Swiss Life Group management, which was introduced in 2000, was discontinued at the end of 2002. Accordingly, no further share options have been allocated since 2003.

Within the framework of the compensation arrangements for the members of the Corporate Executive Board and other key performers within the Swiss Life Group, which are selected by the Corporate Executive Board with the approval of the Chairman’s Committee, a long-term remuneration component was introduced in 2004 on the basis of corresponding regulations. This equity compensation programme was adjusted slightly from 2005 by defining specific performance criteria. These take account of both the performance of the Swiss Life Holding share and its performance vis-à-vis other companies. Based on the programme, participants are granted future subscription rights in the form of Performance Share Units (PSUs) on Swiss Life Holding shares, entitling them to receive Swiss Life Holding shares free of charge after a period of three years has elapsed, insofar as the relevant prerequisites have been satisfied. According to the parameters at the time, the number of PSUs can increase by up to a factor of 1.5 or drop by a factor of 0.5 within three years, depending on how the performance criteria develop. For the equity compensation programme in 2007 and subsequent years, the Chairman’s Committee decided that the retention component (factor of 0.5), which was appropriate during the turnaround phase, would be rescinded in future so that the number of PSUs entitling the holder to shares could drop to zero after three years. The maximum possible factor of 1.5 was maintained.

The equity compensation programmes for 2007 and 2008 continue to be based on two performance criteria, each with a 50% weighting. One criterion is the Total Shareholder Return on Swiss Life Holding shares (TSR Swiss Life Holding), whereby a performance in excess of 20% is required for the subscription right to share allocation to arise. The TSR of the company’s own shares is also compared with the TSR of the shares of the companies included in the Dow Jones STOXX 600 Insurance Index (TSR Outperformance); on the basis of this criterion, a subscription right arises if the performance on expiry of the three-year term is above the first quartile in comparison with the companies in question.

55 members of the Swiss Life Group senior management participated in the 2007 equity compensation programme. A total of 56 222 PSUs were allocated; 24 444 to the Corporate Executive Board, of which 6717 to the Group CEO.

In the period under review, 47 members of the Swiss Life Group senior management took part in the 2008 equity compensation programme with effect from 1 April 2008. A total of 52 618 PSUs were allocated; 23 695 to the Corporate Executive Board, of which 5924 to the new Group CEO, Bruno Pfister. As a result of his election to the Board of Directors on 8 May 2008 and resultant resignation from the Corporate Executive Board, Rolf Dörig was not allocated any PSUs in 2008 in accordance with the compensation regulations pertaining to the Board of Directors.

COMPENSATION PAID TO ACTING MEMBERS OF GOVERNING BODIES | The compensation paid in cash to acting members of the Board of Directors and the Corporate Executive Board during the period under review was as follows:

In CHF20082007
Board of Directors1 543 0001 543 000
Corporate Executive Board11 543 9499 572 243


There were no resignations from the Board of Directors in the period under review. Within the context of succession planning at Board of Director and Corporate Executive Board level, Rolf Dörig was elected to the Board of Directors of Swiss Life Holding as an additional member on 8 May 2008.

Various personnel changes occurred in the Corporate Executive Board vis-à-vis the previous year. Bruno Pfister was appointed Group CEO with effect from 9 May 2008. On the same date, Manfred Behrens, CEO Germany, became a member of the Corporate Executive Board; he assumed the position of Co-CEO of AWD on 1 September 2008. CEO France, Charles Relecom, and the new CEO Germany, Klaus Leyh, joined the Corporate Executive Board on 1 July 2008 and 1 October 2008, respectively. Paul Müller handed over his position as CEO Switzerland to Ivo Furrer as of 1 September 2008. The Corporate Executive Board, including Rolf Dörig as Group CEO, thus consisted of up to ten members during the period under review (2007: six members).

The compensation in cash received by the members of the Corporate Executive Board includes a cash bonus of CHF 4 700 000 for the 2007 financial year, which was paid out in 2008. For the 2008 financial year, no bonus will be paid to the Corporate Executive Board.

Compensation remitted to members of the Board of Directors comprised the basic compensation, compensation in cash and a variable compensation component in shares. The basic compensation takes into account membership of the Board of Directors of Swiss Life Holding and its subsidiary Swiss Life/Rentenanstalt as well as membership of the individual Board Committees. The additional compensation in cash is commensurate to the function and workload and is determined annually by the Board of Directors. It is partly paid in the form of blocked shares. If Swiss Life Group’s business operations have proved successful, a further, variable compensation component is remitted in the form of Swiss Life Holding shares, decided upon by the Board of Directors taking into consideration the business result.

The following compensation was received by acting members of the Board of Directors of Swiss Life Holding in 2008 during the period under review.

   Compensation in cashShares with three-year blocking period        








Part of basic
compensation
Part of variable
compensation
for the 2007
financial year

1



Total
Bruno GehrigCHF655 000385385
Gerold BührerCHF238 000282159441
Volker BremkampCHF126 00021289301
Paul EmbrechtsCHF82 00015959218
Rudolf KellenbergerCHF114 00022983312
Henry PeterCHF82 00015959218
Peter QuadriCHF82 00015959218
Pierfranco RivaCHF82 00015959218
Franziska TschudiCHF82 00015959218
Rolf Dörig 2
1 The variable compensation component in shares relates to the 2007 financial year and was allocated in 2008. No variable compensation component in shares will be allocated for the 2008 financial year.
2 The compensation received in the period under review by Rolf Dörig, Group CEO until 8 May 2008 and Delegate of the Board of Directors following his election by the Annual General Meeting, is disclosed in its entirety under the compensation for the Corporate Executive Board.


Compensation to the members of the Corporate Executive Board comprises a salary, a variable bonus in cash, other compensation (child allowances, allowances for years of service, company cars, premium contributions to 3rd-pillar pension plans) and a variable compensation component in shares. The salary is determined annually by the Chairman’s Committee, in its capacity as Compensation Committee, taking into account the function-related responsibility and workload. If the Swiss Life Group’s business operations have proven successful, a variable cash bonus and variable compensation in the form of shares are also granted. This is decided on by the Chairman’s Committee, taking into account the personal achievement of objectives by the members of the Corporate Executive Board

COMPENSATION PAID TO FORMER MEMBERS OF GOVERNING BODIES | None.

SHARE ALLOTMENT IN THE YEAR UNDER REVIEW | During the 2008 financial year, the members of the Board of Directors and the Corporate Executive Board were allotted Swiss Life Holding shares subject to a three-year blocking period as follows:

Some of the shares allotted to the members of the Board of Directors in the period under review formed part of their basic compensation. The remaining shares are variable compensation components, which were allocated on the basis of the results achieved during the previous financial year.

All the shares allotted to the members of the Corporate Executive Board in 2008 represent variable compensation for the results achieved in the 2007 financial year.

For the 2008 financial year, no variable compensation in shares will be paid to the members of the Board of Directors or the Corporate Executive Board.

Board of Directors 1

2529 shares,
allocated at values of CHF 231.74, 227.75 and 60.452. They are subject to a three-year blocking period.

 
Corporate Executive Board7724 shares,
allocated at a value of CHF 231.743. They are subject to a three-year blocking period.
 
1  The shares allocated in the period under review to Rolf Dörig, Group CEO until 8 May 2008 and Delegate of the Board of Directors following his election by the Annual General Meeting, are disclosed in their entirety under the compensation for the Corporate Executive Board.  
2  Economic value equal to the tax value, taking the blocking period into account. The share prices on allocation amounted to CHF 276, CHF 271.25 and CHF 72.  
3  Economic value equal to the tax value, taking the blocking period into account. The share price on allocation amounted to CHF 276.  


No shares were allocated to closely linked parties4 within the meaning of the law.
4 “Closely linked parties” are natural persons and legal entities pursuant to Art. 678 of the Swiss Code of Obligations that have close personal, economic, legal or de facto ties with members of the governing body. This typically includes spouses, minor children, companies controlled by members of the governing body, and natural or legal persons serving the members of the governing body in a fiduciary capacity.


SHARE OWNERSHIP | On the balance sheet date, acting members of the Board of Directors and the Corporate Executive Board (including closely linked parties) held the following number of Swiss Life Holding registered shares:

Board of Directors14 397Shares
Bruno Gehrig2 021Shares
Gerold Bührer2 166Shares
Volker Bremkamp1 043Shares
Paul Embrechts776Shares
Rudolf Kellenberger1 022Shares
Henry Peter1 856Shares
Peter Quadri1 556Shares
Pierfranco Riva3 181Shares
Franziska Tschudi776Shares
Rolf Dörig 1


Corporate Executive Board42 889Shares
Rolf Dörig (Group CEO until 08.05.2008, then BoD Delegate) 128 607Shares
Bruno Pfister8 841Shares
Ivo FurrerShares
Klaus G. Leyh53Shares
Charles RelecomShares
Reto Himmel2 010Shares
Patrick Frost1 615Shares
Thomas Müller1 065Shares
Manfred Behrens698Shares
1 The shares allocated in the period under review to Rolf Dörig, Group CEO until 8 May 2008 and Delegate of the Board of Directors following his election by the Annual General Meeting, are disclosed in their entirety under the compensation for the Corporate Executive Board.


The number of future subscription rights to Swiss Life Holding shares allocated in the context of the equity compensation programme to members of the Corporate Executive Board in the form of so-called performance share units (PSUs), and whose exercise depends on the fulfilment of specific performance criteria, is shown in the notes to the Swiss Life Holding Financial Statements.

Options | No share options have been granted in the Swiss Life Group since 2003; there are no longer any outstanding options.

ADDITIONAL HONORARIUMS AND REMUNERATIONS | In the period under review no additional honorarium or remuneration payments were made to the members of the Board of Directors or the Corporate Executive Board.

LOANS | On the balance sheet date, there were no loans outstanding to members of the Board of Directors or the Corporate Executive Board:

Board of Directorsnone
Corporate Executive Boardnone


EXPENDITURE FOR OCCUPATIONAL PROVISIONS | Details on the company’s benefit expenditure can be found in the Financial Statements (notes 24 and 31) and the notes to the Swiss Life Holding Financial Statements. For reasons of transparency, information on the following benefits is provided here:

Bruno Gehrig, Chairman of the Board of Directors, and Rolf Dörig, who was Group CEO until 8 May 2008 and became Delegate of the Board of Directors following his election to the Board of Swiss Life Holding, are affiliated to the employee benefits institutions of Swiss Life for the purposes of occupational provisions. No such affiliation exists for other members of the Board of Directors; no contributions have been made on their behalf.

In the period under review, Swiss Life assumed regular annual employer contributions of CHF 104 827 and CHF 195 656 on behalf of Bruno Gehrig and Rolf Dörig, respectively.

In the case of Bruno Pfister, who was CEO International until 8 May 2008 and then became Group CEO, the employer contributions assumed on his behalf totalled CHF 755 148. This comprised the regular annual contribution of CHF 156 648 and a subsequent contribution of CHF 598 500 due to the increase in the insured income.

Expenditure for occupational provisions on behalf of the remaining members of the Corporate Executive Board totalled CHF 813 420.

HIGHEST TOTAL COMPENSATION, BOARD OF DIRECTORS | The highest total compensation for a non-executive member of the Board of Directors in 2008 was paid to Bruno Gehrig as Chairman of the Board. The compensation paid to Rolf Dörig in the period under review is disclosed in its entirety under the compensation to the Corporate Executive Board.

The total compensation paid to Bruno Gehrig in the form of cash, shares and contributions to occupational provisions in the year under review is as follows:

Compensation in cash 1 CHF 655 000  
Shares 2  CHF 89 218  385 SLH shares 
at CHF 231.735
   
Share options none  
Total compensation 2008:  
in cash and shares CHF 744 218
including annual contributions to occupational provisions of CHF 104 827 CHF 849 045      
Total compensation 2007:  
in cash and shares CHF 734 898
including annual contributions to occupational provisions of CHF 99 492 CHF 834 390      
1 Basic compensation and additional compensation in cash determined annually by the Board of Directors.  
2 The 385 shares allocated in 2008 relate to the 2007 financial year. They are subject to a blocking period of three years. The share price at the time of allocation was CHF 276; the allocation was effected at an economic value of CHF 231.735, which is equal to the tax value, taking into account the blocking period. For the 2008 financial year, no variable compensation in shares will be paid to the members of the Board of Directors.
 


HIGHEST TOTAL COMPENSATION, CORPORATE EXECUTIVE BOARD | The compensation received in the period under review by Rolf Dörig as Group CEO and subsequently as Delegate of the Board of Directors following his election by the Annual General Meeting, is disclosed in its entirety under the compensation to the Corporate Executive Board.

The compensation to Bruno Pfister, who was formerly CEO International and assumed the position of Group CEO as of 9 May 2008, is also shown individually.

The total compensation paid to Rolf Dörig in the form of cash, shares and contributions to occupational provisions in the year under review is as follows:

Compensation in cash 1 CHF 2 871 806
Shares 2  CHF 441 455 1905 SLH shares 
at CHF 231.735
Share options none
Total compensation 2008: 1, 2
in cash and shares 1, 2 CHF 3 313 261
including contribution to occupational provisions of CHF 195 656 CHF 3 508 917      
Total compensation 2007:
in cash and shares CHF 3 957 144
including contribution to occupational provisions of CHF 238 856 CHF 4 196 000  
1 Including bonus in cash of CHF 1 250 000 for the 2007 financial year, which was paid in 2008, and other compensation in cash (child allowances, allowance for years of service, company car, premium contribution). As was previously stated, the members of the Corporate Executive Board will not be paid a cash bonus for the 2008 financial year. The members of the Board of Directors and the Corporate Executive Board will also not receive variable compensation components in shares for the 2008 financial year.
2 The shares allocated in 2008 as variable compensation relate to the 2007 financial year. They are subject to a blocking period of three years. The share price at the time of allocation was CHF 276; the allocation was effected at an economic value of CHF 231.735, which is equal to the tax value, taking into account the blocking period.


Disregarding the cash bonus paid for the 2007 financial year and the variable compensation in the form of blocked shares, the total compensation paid to Rolf Dörig for 2008 amounted to CHF 1 817 462.

As a result of his transfer from the Corporate Executive Board to the Board of Directors following his election by the Annual General Meeting on 8 May 2008, Rolf Dörig was not allocated any future subscription rights on Swiss Life Holding shares in the form of Performance Share Units (PSUs) from the 2008 equity compensation programme in accordance with the compensation regulations pertaining to the Board of Directors.

For the 2008 financial year, Rolf Dörig will not receive a cash bonus or a variable compensation component in shares.

The total compensation paid in cash, shares and occupational provision contributions to Corporate Executive Board member Bruno Pfister in 2008, as CEO International up to 8 May 2008 and Group CEO from 9 May 2008, was as follows

Compensation in cash 1 CHF 1 903 193
Shares 2  CHF 367 764 1587 SLH shares
 at CHF 231.735
Share options none
Total compensation 2008: 1, 2, 3
in cash and shares 1, 2 CHF 2 270 957
including annual contributions to occupational provisions of CHF 156 648 CHF 2 427 605  
including additional contribution to occupational provisions of CHF 598 500 4  CHF 3 026 105  
1 Includes a cash bonus of CHF 850 000 for the 2007 financial year, which was paid in 2008, as well as other compensation in cash (child allowances, company car, premium contribution). As was previously stated, the members of the Corporate Executive Board will not receive a cash bonus for the 2008 financial year. The members of the Corporate Executive Board will also not receive variable compensation components in shares for the 2008 financial year.
2 The shares allocated in 2008 as variable compensation relate to the 2007 financial year. They are subject to a blocking period of three years. The share price at the time of allocation was CHF 276; the allocation was effected at an economic value of CHF 231.735, which is equal to the tax value, taking the blocking period into account.
3 Without mathematical value of PSUs allocated.
4 Additional employer contribution to occupational provisions as subsequent contribution in accordance with pension fund regulations due to increase in insured income.


In addition to compensation in the form of cash, shares and contributions to occupational provisions, Bruno Pfister was allocated 5 924 future subscription rights in the form of Performance Share Units (PSU) as part of the three-year equity compensation programme. These entitle him to Swiss Life Holding shares as at 1 April 2011, provided that the relevant requirements have then been met. Depending on how the two defined performance criteria develop, the number of PSUs can increase by up to a factor of 1.5 or drop to 0. On the allocation date of 1 April 2008, the fair value of one PSU was CHF 179.30.

Taking into account the mathematical value of the PSUs allocated, which came to CHF 1 062 173, Bruno Pfister’s total compensation for 2008 amounted to CHF 4 088 278.

Disregarding the cash bonus paid for the 2007 financial year and the variable compensation in the form of blocked shares, the total compensation paid to Bruno Pfister for 2008 amounted to CHF 2 870 514.

For the 2008 financial year, Bruno Pfister will not receive a cash bonus or variable compensation in shares.