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 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 Consolidated Financial Statements (Notes 23 and 30). 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 report is mainly presented in the same way as the previous year. Also included in the information on compensation disclosed for the period under review is the variable compensation to Corporate Executive Board members for the 2009 financial year, determined and payable as a cash bonus at the beginning of 2010. The members of the Board of Directors have not been granted variable compensation for the 2009 financial year.

As already stated in the 2008 compensation report, the members of the Board of Directors also did not receive any variable compensation in the form of blocked shares for the 2008 financial year. The members of the Corporate Executive Board did not receive a cash bonus and were not granted variable compensation in shares. Besides this information, last year’s report also contains details of the variable compensation for the 2007 financial year.

In accordance with the 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.

The compensation reported for the Board of Directors in 2009 includes the entire compensation received by Rolf Dörig as Delegate of the Board of Directors until 7 May 2009 and as Chairman of the Board of Directors from that date on. 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 for the 2008 financial year is shown in its entirety under the compensation to the Corporate Executive Board.

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, engagement 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 Nomination and 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 Nomination and Compensation Committee also submits proposals to the Board of Directors with regard to the determination and distribution of the bonus pool for all employees and determination of the compensation for the individual members of the Corporate Executive Board.

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 were selected by the Corporate Executive Board with the approval of the Chairman of the Board of Directors, 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. The number of PSUs can increase by up to a factor of 1.5 or drop to zero within three years, depending on how the performance criteria develop.

The equity compensation programmes for 2007, 2008 and 2009 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 Rolf Dörig as Group CEO.

In the 2008 equity compensation programme, 47 members of the Swiss Life Group senior management took part. A total of 52 618 PSUs were allocated; 23 695 to the Corporate Executive Board, of which 5924 were allocated to Bruno Pfister in his capacity as CEO International up to 8 May 2008 and as Group CEO from 9 May 2008. In accordance with the compensation regulations pertaining to the Board of Directors, Rolf Dörig, who held the position of Group CEO up to 8 May 2008, was not allocated any PSUs for the 2008 financial year due to his election to the Board of Directors on 8 May 2008 and resultant resignation from the Corporate Executive Board. Consequently, he was also not allocated any PSUs for the 2009 financial year.

In the period under review, 65 members of the Swiss Life Group senior management participated in the 2009 equity compensation programme which came into effect on 1 April 2009. A total of 53 216 PSUs were allocated; 22 200 to the Corporate Executive Board, of which 6500 to Group CEO, Bruno Pfister.

COMPENSATION PAID TO ACTING MEMBERS OF GOVERNING BODIES — The following compensation in cash was received by acting members of the Board of Directors and the Corporate Executive Board during the period under review:

In CHF
20092008
Board of Directors
2 426 21711 543 000
Corporate Executive Board
9 573 34226 843 9493
1 Incl. compensation for Rolf Dörig as Delegate and Chairman of the Board of Directors in 2009. His compensation for the 2008 financial year for his positions as Group CEO and BoD Delegate is shown in its entirety under the disclosure for the Corporate Executive Board.
2 Incl. cash bonus of CHF 3 550 000 for the 2009 financial year, determined at the beginning of 2010.
3 The Corporate Executive Board members were not paid a cash bonus for the 2008 financial year.


There were no resignations from the Board of Directors during the 2008 financial year. 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.

Two members of the Board of Directors resigned in the 2009 financial year. Bruno Gehrig resigned from his position as Chairman of the Board of Directors of Swiss Life Holding after the Annual General Meeting on 7 May 2009 due to his election to the Board of Directors of UBS Ltd in October 2008. After serving for six years, Pierfranco Riva also stepped down from the Board of Directors at the 2009 Annual General Meeting due to reaching the statutory age limit. Two new members were appointed: Frank Schnewlin and Carsten Maschmeyer. Rolf Dörig ceded the position of Delegate of the Board of Directors on 7 May 2009 to take over from Bruno Gehrig as Chairman of the Board of Directors.

In 2008 the following personnel changes took place in the Corporate Executive Board: Bruno Pfister was appointed Group CEO with effect from 9 May 2008 to replace Rolf Dörig, who was elected to the Board of Directors at the Annual General Meeting of 8 May 2008 and thus stepped down from the Corporate Executive Board. In addition, Manfred Behrens joined the Corporate Executive Board as CEO Germany with effect from 9 May 2008. He went on to assume 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.

In the 2009 financial year, the composition of the Corporate Executive Board changed as follows. Reto Himmel, Group Chief Technology & Operations Officer (Group CTO), left the Corporate Executive Board effective 31 March 2009 due to the discontinuation of the Group CTO function. Thomas Buess joined the Board as of 1 August 2009 as the new Group Chief Financial Officer (Group CFO), replacing Thomas Müller who resigned from the Corporate Executive Board with effect from 30 June 2009.

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

On the balance sheet date, the following compensation was received by acting members of the Board of Directors of Swiss Life Holding:

Compensation in cash in CHFShares with three-year blocking period





Part of basic
compensation
Part of variable
compensation
for the 2009
financial year



Total
Rolf Dörig 1
1 121 1321 093 1 093
Gerold Bührer
248 667319 319
Frank Schnewlin 2
116 000188 188
Volker Bremkamp
126 000224 224
Paul Embrechts
82 000169 169
Rudolf Kellenberger
124 667264 264
Carsten Maschmeyer 2
54 66794 94
Henry Peter
82 000169 169
Peter Quadri
82 000169 169
Franziska Tschudi
82 000169 169
1 Delegate of the Board of Directors until 07.05.2009 / Chairman of the Board of Directors from 07.05.2009.
2 Member of the Board of Directors from 07.05.2009.


Until leaving the Board of Directors at the Annual General Meeting of 7 May 2009, Bruno Gehrig was paid compensation in cash to the amount of CHF 272 917 in his capacity as Chairman of the Board of Directors. As part of his basic compensation, Pierfranco Riva received for the same period compensation in cash of CHF 34 167 and 82 shares, which were subject to a three-year blocking period.

As Chairman of the Board, Bruno Gehrig was affiliated to the employee benefits institutions of Swiss Life for the purpose of occupational provisions and obtains the corresponding pension benefits under the pension fund regulations. Rolf Dörig, in his former role as Delegate of the Board of Directors and current position as Chairman of the Board, is also insured for occupational provisions with the employee benefits institutions of Swiss Life. No such affiliation exists for other members of the Board of Directors; no contributions have been made on their behalf.

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, possibly, variable compensation in shares. The salary is determined annually by the Board of Directors at the request of the Nomination and 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, possibly, variable compensation in shares are also granted. This is decided on by the Board of Directors, taking into consideration both the business results and 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 — The shares allotted to the members of the Board of Directors in the period under review formed part of their basic compensation, 80% of which was granted in cash and 20% in shares of Swiss Life Holding. The shares are subject to a three-year blocking period.

For the 2009 financial year, like the 2008 financial year, no variable compensation in shares has been granted to the members of the Board of Directors or the Corporate Executive Board.

As part of their basic compensation for 2009, the members of the Board of Directors were allotted the following Swiss Life Holding shares, subject to a three-year blocking period:

Board of Directors
2940 shares,
allocated at values of CHF 77.6649 and CHF 107.55531. The shares are subject to a three-year blocking period.
Corporate Executive Board
none
1 Economic value equal to the tax value, taking the blocking period into account. The share prices on allocation amounted to CHF 92.50 and CHF 128.10.


No shares were allocated to closely linked parties2 within the meaning of the law.

2 “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:

SLH shares
31.12.2009
Rolf Dörig
33 277
Gerold Bührer
2 485
Frank Schnewlin
188
Volker Bremkamp
1 267
Paul Embrechts
945
Rudolf Kellenberger
1 286
Carsten Maschmeyer
1 620 730
Henry Peter
2 025
Peter Quadri
1 725
Franziska Tschudi
945
Total Board of Directors
1 664 873


SLH shares
31.12.2009
Bruno Pfister
9 068
Ivo Furrer
0
Klaus G. Leyh
53
Charles Relecom
0
Thomas Buess
1 000
Patrick Frost
2 013
Manfred Behrens
698
Total Corporate Executive Board
12 832


The number of future subscription rights to Swiss Life Holding shares allocated in the context of the above-mentioned 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:

31.12.2009
Board of Directors
none
Corporate Executive Board
none


EXPENDITURE FOR OCCUPATIONAL PROVISIONS — Details on the company’s benefit expenditure can be found in the Consolidated Financial Statements (Notes 23 and 30) and the Notes to the Swiss Life Holding Financial Statements. For reasons of transparency, information on the following benefits is provided here:

As Chairman of the Board of Directors, Bruno Gehrig was affiliated to the employee benefits institutions of Swiss Life for the purpose of occupational provisions and obtains the corresponding pension benefits under the pension fund regulations. The regular employer contribution assumed on a pro-rata basis for Bruno Gehrig amounted to CHF 43 678.

Rolf Dörig, in his former role as Delegate of the Board of Directors and current position as Chairman of the Board, was and remains insured for occupational provisions with the employee benefits institutions of Swiss Life. A regular annual employer contribution of CHF 195656 was assumed on his behalf in the period under review.

No such affiliation exists for other members of the Board of Directors; no contributions have been made on their behalf.

For Group CEO Bruno Pfister, a regular annual employer contribution of CHF 175 801 was assumed in the period under review.

Expenditure for occupational provisions on behalf of the remaining members of the Corporate Executive Board totalled CHF 630 099.

HIGHEST TOTAL COMPENSATION, BOARD OF DIRECTORS — Rolf Dörig succeeded Bruno Gehrig as Chairman of the Board of Directors of Swiss Life Holding following the Annual General Meeting of 7 May 2009.

In 2008 Rolf Dörig held the position of Group CEO of Swiss Life until the Annual General Meeting of 8 May 2008; after his election at the Annual General Meeting of May 2009, he assumed the function of Delegate of the Board. His compensation for 2008 is disclosed in its entirety under the compensation to the Corporate Executive Board.

For the 2009 financial year, the members of the Board of Directors have not been granted variable compensation in shares. The shares allotted in 2009 form part of the basic compensation, 80% of which is granted in cash and 20% in shares.

The highest total compensation for a member of the Board of Directors of Swiss Life Holding in the period under review was received by Rolf Dörig as Delegate of the Board of Directors and, following the Annual General Meeting of 7 May 2009, Chairman of the Board. The compensation granted in the form of cash, shares and contributions to occupational provisions in the period under review was as follows:

In CHF
Compensation in cash 1
1 121 132
Shares 2
117 5581 093 SLH shares at CHF 107.5553
Share options
none
Total compensation 2009 3
in cash and shares
1 238 690
including annual contribution to occupational provisions of CHF 195 656
1 434 346
Total compensation 2008 4
in cash and shares
1 621 806
including annual contribution to occupational provisions of CHF 195 656
1 817 462
1 Including company car and premium contribution for the position of Delegate of the Board of Directors.
2 Part of basic compensation. The allocation and valuation was effected on 18.12.2009 at an economic value of CHF 107.5553, which is equal to the tax value, taking into account a blocking period of three years. The share price at the time of allocation was CHF 128.10. For the 2009 financial year, no variable compensation in shares has been granted to the members of the Board of Directors.
3 Compensation received as Delegate of the Board of Directors and, following the Annual General Meeting of 7 May 2009, as Chairman of the Board of Directors of Swiss Life Holding.
4 Compensation received as Group CEO until 8 May 2008 and subsequently as Delegate of the Board of Directors. Rolf Dörig did not receive any cash bonus or variable compensation for the 2008 financial year.


HIGHEST TOTAL COMPENSATION, CORPORATE EXECUTIVE BOARD — As Group CEO, Bruno Pfister received the highest total compensation for a member of the Corporate Executive Board in the period under review.

The compensation granted in 2009 in the form of cash, shares and contributions to occupational provisions was as follows:

In CHF
Compensation in cash 1
2 178 553
Shares 2
none
Share options
none
Total compensation 2009 3
in cash and shares
2 178 553
including annual contribution to occupational provisions of CHF 175 801
2 354 354
Total compensation 2008 3, 4
in cash and shares 5
1 053 193
including annual contribution to occupational provisions of CHF 156 648
1 209 841
including additional contribution to occcupational provisons of CHF 598 500 6
1 808 341
1 Including cash bonus of 925 000 for the 2009 financial year, determined at the beginning of 2010, and other compensation in cash (child allowances, company car, premium contribution).
2 For the 2009 financial year, no variable compensation in shares has been granted to the members of the Corporate Executive Board.
3 Without mathematical value of PSUs allocated.
4 Bruno Pfister served on the Corporate Executive Board in 2008 as CEO International until 8 May 2008 and, from 9 May 2008, as Group CEO.
5 For the 2008 financial year, the members of the Corporate Executive Board did not receive a cash bonus or variable compensation in shares.
6 Subsequent contribution in accordance with the pension fund regulations due to increase in salary.


In addition to compensation in the form of cash, shares and contributions to occupational provisions, Bruno Pfister was allocated 6500 future subscription rights in the form of Performance Share Units (PSUs) as part of the three-year equity compensation programme. These entitle him to Swiss Life Holding shares as at 1 April 2012, 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 zero. On the allocation date of 1 April 2009, the fair value of one PSU was CHF 51.22.

Taking into account the mathematical value of the PSUs allocated, which came to CHF 332 930, Bruno Pfister’s total compensation for 2009 amounted to CHF 2 687 284.

In 2008 Bruno Pfister was allocated 5924 future subscription rights in the form of Performance Share Units (PSUs). 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 in 2008, which came to CHF 1 062 173, Bruno Pfister’s total compensation for 2008 amounted to CHF 2 870 514.