48 Share-based compensation plans

Transcription

1 48 Share-based compensation plans Group Equity Incentive Plans The Group Equity Incentive Plans (GEI) of the support the orientation of senior management, in particular the Board of Management, to substainably increase the value of the. Until 2010, the GEI include grants of stock appreciation rights (SAR) and restricted stock units (RSU). From the 2011 grant onwards, the Allianz Equity Incentive Plan (AEI) replaces the GEI plans. With the AEI Plan, only restricted stock units (RSU) are granted to the plan participants. Stock appreciation rights The SAR granted to a plan participant obligate the Allianz Group to pay in cash the excess of the market price of an Allianz SE share over the reference price on the exercise date for each right granted. The excess is capped at 150 % of the reference price. The reference price represents the of the closing prices of an Allianz SE share for the ten trading days following the Financial Press Conference of Allianz SE in the year of issue. SAR which were granted until 2008 vest after two years and expire after seven years. From the 2009 grant onwards, the SAR vest after four years and also expire after seven years. Upon vesting, the SAR may be exercised by the plan participant if the following market conditions are attained: 344

2 D Consolidated Financial Statements 219 Consolidated Balance Sheets 220 Consolidated Income Statements 221 Consolidated Statements of Comprehensive Income 222 Consolidated Statements of Changes in Equity 223 Consolidated Statements of Cash Flows 226 Notes to the Consolidated Financial Statements during their contractual term, the market price of the Allianz SE share has outperformed the Dow Jones Europe STOXX Price Index at least once for a period of five consecutive trading days; and the Allianz SE market price is in excess of the reference price by at least 20 % on the exercise date. In addition, upon death of a plan participant, a change of control or notice for operational reason, the SAR vest immediately and will be exercised by the company provided the above market conditions have been attained. Upon the expiration date, any unexercised SAR will be exercised automatically if the above market conditions have been attained. The SAR are forfeited if the plan participant ceases to be employed by the or if the exercise conditions are not attained by the expiration date. The fair value of the SAR at grant date is measured using a Cox-Ross-Rubinstein binomial tree option pricing model. Volatility was derived from observed historical market prices. In the absence of historical information regarding employee stock appreciation exercise patterns (especially all plans issued between 2006 and 2008 are significantly out of the money ), the expected life has been estimated to equal the term to maturity of the SAR. The following table provides the assumptions used in estimating the fair value of the SAR at grant date: Assumptions of SAR plans D 137 As of 31 December 2012, the recorded a provision of 83 mn (2011: 25 mn) in other liabilities for the unexercised SAR. Restricted stock units The RSU granted to a plan participant obligate the Allianz Group to pay in cash the market price of an Allianz SE share in the ten trading days preceding the vesting date or to issue one Allianz SE share, or other equivalent equity instrument, for each unit granted. The RSU vest after five years. The will exercise the RSU on the first stock exchange day after their vesting date. On the exercise date, the can choose the settlement method for each unit. In addition, upon death of a plan participant, a change of control or notice for operational reasons, the RSU vest immediately and will be exercised by the company. The RSU are virtual stocks without dividend payments. The fair value is calculated by subtracting the net present value of expected future dividend payments until maturity of the RSU from the prevailing share price as of the valuation date. The following table provides the assumptions used in calculating the fair value of the RSU at grant date: Assumptions of RSU plans D 138 % 2010 Average interest rate 1.4 Average dividend yield Expected volatility % 29.0 Risk-free interest rate % 2.7 Expected dividend rate % 5.6 Share price Expected life (years) 7 The SAR are accounted for as cash settled plans by the. Therefore, the accrues the fair value of the SAR as a compensation expense over the vesting period. Upon vesting, any changes in the fair value of the unexercised SAR are recognized as a compensation expense. During the year ended 31 December 2012, the Allianz Group recognized compensation expenses related to the unexercised SAR of 59 mn (2011: income of 10 mn; 2010: expenses of 5 mn). The RSU are accounted for as cash settled plans as the intends to settle in cash. Therefore, the accrues the fair value of the RSU as a compensation expense over the vesting period. During the year ended 31 December 2012, the recognized a compensation expense related to the non-vested RSU of 80 mn (2011: 29 mn; 2010: 58 mn). As of 31 December 2012, the recorded a provision of 141 mn (2011: 106 mn) in other liabilities for the non-vested RSU. 345

3 Allianz Equity Incentive Plan Since the 2011 grant year, the Allianz Equity Incentive Plan (AEI) has replaced the GEI plans. The AEI is granted in the form of restricted stock units (RSU) and is part of a new variable compensation component for the plan beneficiaries. The RSU granted to a plan participant obligate the Allianz Group to pay in cash the closing price of an Allianz SE share on the last day of the vesting period and the prior nine trading days or to convert one RSU into one Allianz SE share. The payout is capped at a 200 % share price growth above the grant price. The RSU are subject to a vesting period of four years and will be released on the last day of the vesting period. The Allianz Group can choose the settlement method for each unit. In addition, upon death of a plan participant, a change of control or notice for operational reason, the RSU vest immediately and will be exercised by the company. The RSU are virtual stocks without dividend payments and a capped payout. The fair value is calculated by subtracting the net present value of expected future dividend payments until maturity and the fair value of the cap from the prevailing share price as of the valuation date. The cap is valued as a European short call option, using prevailing market data as of the valuation date. The following table provides the assumptions used in calculating the fair value of the RSU at grant date: Assumptions of AEI plans D Share price Average dividend yield % Average interest rate % Expected volatility % The RSU 2013 are deemed to have been granted to participants as part of their 2012 remuneration. Consequently, the assumptions for RSU grants delivered in March 2013 are based on best estimation. The RSU are accounted for as cash settled plans as the intends to settle in cash. Therefore, the accrues the fair value of the RSU as a compensation expense over the service period of one year and afterwards over the vesting period. During the year ended 31 December 2012, the recognized a compensation expense related to the AEI plans of 79 mn (2011: 29 mn; 2010: 17 mn). As of 31 December 2012, the recorded a provision of 117 mn (2011: 42 mn) for these RSU in other liabilities. Share-based compensation plans of subsidiaries of the allianz Group PIMCO LLC Class B Unit Purchase Plan When acquiring Allianz Global Investors of America L.P. ( AllianzGI L.P.) during the year ended 31 December 2000, Allianz SE caused Pacific Investment Management Company LLC (PIMCO LLC), a subsidiary of AllianzGI L.P., to enter into a Class B Purchase Plan (the Class B Plan ) for the benefit of members of the management of PIMCO LLC. The plan participants of the Class B Plan have rights to a 15 % priority claim on the adjusted operating profits of PIMCO LLC. The Class B equity units issued under the Class B Plan vest over 3 to 5 years and are subject to repurchase by AllianzGI L.P. upon death, disability or termination of the participant prior to vesting. Starting 1 January 2005, AllianzGI L.P. has the right to repurchase, and the participants have the right to cause AllianzGI L.P. to repurchase, a portion of the vested Class B equity units each year. The call or put right is exercisable for the first time 6 months after the initial vesting of each grant. On the repurchase date, the repurchase price will be based upon the determined value of the Class B equity units being repurchased. As the Class B equity units are puttable by the plan participants, the Class B Plan is accounted for as a cash settled plan. Therefore, the accrues the fair value of the Class B equity units as a compensation expense over the vesting period. Upon vesting, any changes in the fair value of the Class B equity units are recognized as a compensation expense. During the year ended 31 December 2012, the recognized a compensation expense related to the Class B equity units of 62 mn (2011: 167 mn; 2010: 367 mn). In addition, the recognized an expense related to the priority claim on the adjusted operating profits of PIMCO LLC of 32 mn (2011: 47 mn; 2010: 74 mn). The called in total 11,800 Class B equity units during the year ended 31 December 2012, whereby 4,399 of these Class B equity units were converted into promissory notes. Additionally, plan participants put 96 Class B equity units during the year ended 31 December All of them were converted into promissory notes. The promissory notes are recorded in liabilities to banks and customers with a total amount of 190 mn. The payout of the promissory notes is planned for the first quarter of The total amount paid related to the call of the remaining Class B equity units was 262 mn. 346

4 D Consolidated Financial Statements 219 Consolidated Balance Sheets 220 Consolidated Income Statements 221 Consolidated Statements of Comprehensive Income 222 Consolidated Statements of Changes in Equity 223 Consolidated Statements of Cash Flows 226 Notes to the Consolidated Financial Statements The total recognized compensation expense for Class B equity units that are outstanding is recorded as a liability in other liabilities. As of 31 December 2012, the recorded a liability for the Class B equity units of 206 mn (2011: 614 mn). PIMCO LLC Class M-unit Plan In 2008, Allianz Global Investors of America L.P. ( AllianzGI L.P.) launched a new management share-based payment incentive plan for certain senior level executives and affiliates of PIMCO LLC. Participants in the plan are granted to acquire a new class of equity instruments (M-units), which vest in one-third increments on approximately the third, fourth and fifth anniversary of the option grant date. Upon vesting, will be automatically exercised in a cashless transaction. Participants may elect to defer the receipt of M-units through the M-unit Deferral Plan until termination of their service as a maximum. With the M-unit Plan, participants can directly participate in PIMCO s performance. Class M-units are non-voting common equity with limited information rights. They bear quarterly distributions equal to a pro-rata share of PIMCO s net distributable income. Deferred M-units have a right to receive a quarterly cash compensation equal to and in lieu of quarterly dividend payments. A maximum of 250,000 M-units are authorized for issuance under the M-unit Plan. The fair value of the underlying M- was measured using the Black-Scholes option pricing model. Volatility was derived in part by considering the historical and implied volatility of a selected group of peers. The expected life of one granted option was calculated based upon treating the three vesting tranches (one third in years 3, 4, and 5) as three separate awards. The following table provides the assumptions used in calculating the fair value of the M- at grant date: Assumptions of Class M-Unit plan D fair value of granted 1, , , Assumptions: Expected term (years) Expected volatility % Expected dividend yield % Risk free rate of return % The number and weighted of the M- outstanding and exercisable are as follows: Reconciliation of outstanding M- D Outstanding as of 1 January 156,285 11, ,451 8, ,889 6, Granted 71,916 14, ,050 14, ,010 11, Exercised (19,819) 6, (7,780) 7, Forfeited (4,291) 12, (4,436) 11, (6,448) 7, Outstanding as of 31 December 204,091 12, ,285 11, ,451 8, Exercisable as of 31 December The aggregate intrinsic value of share outstanding was 175 mn and 202 mn for the years ended 31 December 2012 and 2011, respectively. 347

5 As of 31 December 2012, the M- outstanding have an of between 6, and 14, and a weighted remaining contractual life of 2.91 years. The shares settled by delivery of PIMCO LLC shares are accounted for as equity-settled plans by PIMCO LLC. Therefore, PIMCO LLC measures the total compensation expense to be recognized for the equity-settled shares based upon their fair value as of the grant date. The total compensation expense is recognized over the vesting period. During the year ended 31 December 2012, the recorded a compensation expense of 78 mn (2011: 52 mn; 2010: 28 mn) related to these share. Allianz France share option plan Allianz France, formerly AGF, awarded on its former Holding (AGF S.A.) quoted shares to eligible AGF Group executives, managers of subsidiaries, as well as to some of the employees, whose performance justified grants. During the year ended 31 December 2007, Allianz acquired all of the remaining AGF shares from non-controlling interests in the context of the Tender Offer and Squeeze-out. Under the terms of an agreement (the Liquidity Agreement ) between Allianz SE, AGF and the beneficiaries of the AGF share option plans (AGF employees), Allianz has the right to purchase all AGF shares issued through the exercise of these AGF share option plans after the put period (where the beneficiaries have the right to sell to Allianz). The price payable by Allianz per AGF share is a cash consideration equal to the Allianz 20-day- share price prior to the date the right to buy or to sell is exercised, multiplied by a ratio representing the consideration proposed in the Tender Offer for each AGF share ( ) divided by the Allianz share price on 16 January 2007 ( ). This ratio is subject to adjustments in case of transactions impacting Allianz or AGF share capital or net equity. The cash settlement is based upon the initial offer proposed for each AGF share during the Tender Offer. As of 31 December 2007, all shares issued under these plans were fully vested and exercisable. During the year ended 31 December 2012, the recognized total compensation expenses related to the modified share option plans of 7 mn (2011: income of 4 mn; 2010: income of 0.4 mn). As of 31 December 2012, the recorded a provision for these plans of 9 mn (2011: 4 mn). Allianz SE share option plan of former RAS Group (modified RAS Group share option plan 2005) The former RAS Group awarded eligible members of senior management with share purchase on RAS ordinary shares. The fair value of the at grant date was measured using a trinomial option pricing model. Volatility was derived from observed historical market prices aligned with the expected life of the. The expected life was estimated to be equal to the term to maturity of the. On the effective date of the merger between Allianz SE and RAS, the RAS share option plan was modified. The outstanding share, which were granted in 2005, were replaced with Allianz SE share on the basis of 1 Allianz SE option for every RAS share outstanding. The outstanding RAS Group of 953,000 were replaced by 173,241 Allianz SE. The Allianz SE share have the same vesting period of 2 years; however, the former market conditions were replaced with a performance condition, which was already achieved on the date of the modification. Due to the change in settlement arising from the Liquidity Agreement, the accounts for the AGF share option plans as cash settled plans, as all AGF employees will receive cash for their AGF shares. Therefore, the Allianz Group recognizes any change in the fair value of the unexercised plans as a compensation expense. 348

6 D Consolidated Financial Statements 219 Consolidated Balance Sheets 220 Consolidated Income Statements 221 Consolidated Statements of Comprehensive Income 222 Consolidated Statements of Changes in Equity 223 Consolidated Statements of Cash Flows 226 Notes to the Consolidated Financial Statements The number and weighted of the outstanding and exercisable are as follows: Reconciliation of outstanding allianz SE D Outstanding as of 1 January 71, , , Granted Exercised Forfeited (71,833) (13,087) Outstanding as of 31 December 71, , Exercisable as of 31 December 71, , As all share option plans are completely vested, the Allianz Group recorded no compensation expenses for the years ended 31 December 2012, 2011 and The share option plan expired on 31 January As the share price of the Allianz SE share of on the date of expiry was below the weighted of 93.33, the share option plan is deemed to be forfeited. Employee stock purchase plans The offers Allianz SE shares in 19 countries to qualified employees at favorable conditions. The shares have a minimum holding period of 1 to 5 years. During the year ended 31 December 2012, the number of shares sold to employees under these plans was 627,118 (2011: 878,233; 2010: 623,412). During the year ended 31 December 2012, the recognized the difference between the issue price charged to the subsidiaries of the and the discounted price of the shares purchased by employees, of 6 mn (2011: 12 mn; 2010: 10 mn) as compensation expenses. Other share option and shareholding plans The has other local share-based compensation plans, including share option and employee share purchase plans, none of which, individually or in the aggregate, are material to the consolidated financial statements. During the year ended 31 December 2012, the total expense recorded for these plans was 2 mn (2011: 1 mn; 2010: 1 mn). 349