TOTAL TARGET COMPENSATION
The Board of Directors, upon the recommendation of its Compensation & Governance Committee, decided to maintain unchanged in 2013 the total cash compensation target of the Chairman & Chief Executive Offi cer, Mr. Henri de Castries, at €3.3 million (amount unchanged since 2008), and of the Deputy Chief Executive Offi cer, Mr. Denis Duverne at €2.2 million (amount unchanged since 2010).
The total target compensation is composed of a fi xed annual compensation and a target variable compensation.
The fi xed annual compensation of the Chairman & Chief Executive Offi cer, unchanged since 2010, was €950,000 in 2013.
The variable component of his compensation, unchanged since 2010, was €2,350,000 in 2013, i.e. 247% of his fi xed annual compensation. In order to align the structure of Mr. de Castries’ compensation more closely with international best practices, his target variable compensation percentage compared to his fi xed salary has substantially decreased since 2006 when it represented 500% of his fi xed salary.
The fi xed annual compensation of the Deputy Chief Executive Offi cer, unchanged since 2010, was €750,000 in 2013. The variable component of his compensation, unchanged since 2010, was €1,450,000 in 2013, i.e. 193% of his fi xed annual compensation.
ANNUAL VARIABLE COMPENSATION AND PERFORMANCE CONDITIONS
The variable annual compensation is entirely submitted to performance conditions and no minimum payment is guaranteed.
The determination of the variable compensation to be paid to the Chairman & Chief Executive Offi cer was based, in 2013, on the following two metrics:
■Group performance for 50%. This metric is measured based on underlying earnings per share, return on equity (operating Solvency II return) and customer scope index. The relative weight of these three indicators is, respectively, 65%, 20% and 15%; and
■individual performance for 50%, which is evaluated on the basis of objectives specifi cally related to strategic initiatives set and reviewed each year.
Each of these two metrics is evaluated separately so that Mr. de Castries’ overall variable payout refl ects performance against two distinct components that are not fungible.
The increase, as from the 2013 fi scal year, of the percentage linked to individual performance from 40% to 50% refl ects the Board’s desire to place more weight on Mr. de Castries’ individual performance on the execution of major strategic initiatives critical to the Group’s long-term success.
Henri de Castries
2013
Weighting Achievement rate
Group performance 50% 107%
Individual performance 50% 110%
Global performance 109%
The fi nancial and operating criteria selected to measure the Group performance rely on the budget and on predefi ned performance indicators for non-fi nancial measures like customer satisfaction. They are directly linked to the strategic orientations of the Group in particular with respect to growth, profi tability, capital management, brand strategy, operational effi ciency and productivity.
The individual performance of the Chairman & Chief Executive Offi cer is assessed on the basis of various indicators and qualitative objectives set by the Board of Directors through a written target letter established at the beginning of each calendar year before the performance measurement period. It includes
detailed objectives with regards to the Group’s progress in achieving its “Ambition AXA” strategic plan (which covers the 2011-2015 period) as well as other performance indicators and objectives designed to assess the level of achievement of global strategic initiatives and/or relating to certain geographic areas, and the evolution of certain investments contributing to the transformation of the Group’s operations (for example: the digitalization of the Group’s activities, the strengthening of the brand, the close monitoring of important local transformational plans, the active contribution to the work of the industry representative organizations, the involvement in regulatory
discussions, the transformation of the corporate culture and leadership practices within the Group, the development of the executive leaders and the quality of the succession and talent development plans, etc.). The Board’s assessment of Mr. de Castries’ individual achievement against these criteria is based on quantitative and qualitative performance indicators.
The total effective variable compensation of the Chairman & Chief Executive Offi cer may not exceed 150% of his variable target compensation, i.e. 371% of his fi xed annual compensation.
The variable compensation amounts actually paid to Mr. Henri de Castries since he was appointed Chairman of the Management Board in May 2000 are set forth below and demonstrate how demanding his performance objectives have been as well as the impact of the Board’s performance assessments on his variable compensation payouts:
Executive compensation and director's fees Target Actual % Target
Variable compensation for the year 2000 paid in 2001 €1,750,000 €1,381,373 79%
Variable compensation for the year 2001 paid in 2002 €1,750,000 €719,967 41%
Variable compensation for the year 2002 paid in 2003 €2,000,000 €1,419,277 71%
Variable compensation for the year 2003 paid in 2004 €2,000,000 €1,824,277 91%
Variable compensation for the year 2004 paid in 2005 €2,000,000 €2,304,277 115%
Variable compensation for the year 2005 paid in 2006 €2,000,000 €2,671,626 134%
Variable compensation for the year 2006 paid in 2007 €2,500,000 €3,045,987 122%
Variable compensation for the year 2007 paid in 2008 €2,500,000 €2,644,366 106%
Variable compensation for the year 2008 paid in 2009 €2,700,000 €1,846,304 68%
Variable compensation for the year 2009 paid in 2010 €2,700,000 €2,599,327 96%
Variable compensation for the year 2010 paid in 2011 €2,466,667 €2,061,087 84%
Variable compensation for the year 2011 paid in 2012 €2,350,000 €2,034,171 87%
Variable compensation for the year 2012 paid in 2013 €2,350,000 €2,270,153 (a) 97%
Variable compensation for the year 2013 paid in 2014 €2,350,000 €2,549,750 (a) (b) 109%
(a) This amount includes the part of the variable compensation with respect to 2012 and 2013 which has been deferred in accordance with the mechanism described on
page 118. The total amount paid will depend on performance conditions and may then vary.
(b) Amount before deduction of 70% of directors' fees.
For the other members of the Management Committee, the variable compensation is also determined on the basis of an individually predefi ned target amount and was based, in 2013, on three metrics:
■Group performance, as measured by the underlying earnings per share, return on equity, and customer satisfaction index; ■performance of their business unit or functional area of
responsibility, measured against objectives set at the beginning of the year;
■their individual performance, evaluated on the basis of predetermined objectives deriving from strategic initiatives. The variable compensation of Mr. Denis Duverne, who is a member of the Management Committee and Deputy Chief Executive Offi cer, is based 30% on the Group performance, 20% on his functional area of responsibility and 50% on his individual performance.
Each of these three metrics is evaluated separately so that Mr. Duverne’s overall variable payout refl ects performance against three distinct components that are not fungible.