Note 11 Executive Committee compensation

The table below provides an overview of the total compensation of members of the Executive Committee in 2011, comprising cash compensation and an estimate of the value of shares conditionally awarded under a three-year incentive plan that runs until 2014. Cash compensation includes the base salary, accrued short-term variable compensation for 2011, pension benefits, as well as other benefits comprising mainly social security and health insurance contributions. The compensation is shown gross (i.e. before deduction of employee’s social insurance and pension contributions).

(XLS:)

Name

Base
salary

Short-term
variable
compen-
sation(1)

Pension
benefits

Other
benefits(2)

Estimated
value
of share-
based
awards
granted in
2011(3)

Total
2011

 

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(1)

To reflect widespread market practice, the basis of presentation of the short-term variable compensation has changed from a cash basis to an accruals basis. Payment is made in the following year, after publication of the financial results. Comparative figures for 2010 in the Notes to the financial statements have been adjusted to reflect the current year’s presentation.
On July 1, 2011, Veli-Matti Reinikkala relocated from the U.S. to Switzerland. According to the Group’s policy, he received in 2011 a pro-rata short-term variable compensation payout of CHF 244,581 for his service in the U.S. for the period January 1, 2011, to June 30, 2011. The final payout amount for Veli-Matti Reinikkala, which is based on the 2011 results, has been reduced by this pro-rata short-term variable compensation payment already received.
In March 2011, the current and former Executive Committee members received the 2010 short-term variable compensation payments in the amount of CHF 11,951,967. This number does not include any short-term variable compensation amount for Frank Duggan, who joined the Executive Committee on March 1, 2011.
Short-term variable compensation is linked to the targets defined in the ABB Group’s scorecard. Upon full achievement of these targets, the short-term variable compensation of the CEO corresponds to 150 percent of his base salary, while for all other Executive Committee members it represents 100 percent of their respective base salary. The Board has the discretion to approve a higher payout than 100 percent, if the targets are exceeded. For 2011, the Board exercised its discretion and awarded a 12 percent higher payout, reflecting the company’s performance against the targets.

(2)

Other benefits comprise payments related to social security, health insurance, children’s education, transportation, tax advice and certain other items.

(3)

The estimated value of the share-based awards is subject to performance and other parameters (e.g. the share price development) and may therefore vary in value from the above numbers at the date of vesting, March 15, 2014. The above amounts have been calculated using the market value of the ABB share on the day of grant adjusted, in the case of the performance component, according to the parameters considered in the Monte Carlo simulation model.

(4)

Veli-Matti Reinikkala received 50 percent of his base salary in USD and 50 percent in EUR at a fixed USD/EUR exchange rate for the period January to June 2011. All USD payments were converted into Swiss francs at a rate of 0.94115 per USD. As of July 2011, Veli-Matti Reinikkala relocated to Switzerland and since then receives his compensation in Swiss francs.

(5)

Frank Duggan received 20 percent of his base salary in AED and 80 percent in EUR at a fixed AED/EUR exchange rate for the period March to December 2011. All AED payments were converted into Swiss francs at a rate of 0.2562417 per AED.

(6)

The above compensation figures related to Tom Sjökvist and Anders Jonsson represent contractual payments for the period January to December 2011.

Joe Hogan

1,991,676

3,376,800

280,384

849,768

2,871,650

9,370,278

Michel Demaré

1,200,006

1,344,000

267,014

323,361

1,189,349

4,323,730

Gary Steel

799,168

901,600

282,501

173,691

687,243

2,844,203

Ulrich Spiesshofer

812,502

917,280

229,895

171,064

868,307

2,999,048

Diane de Saint Victor

748,258

842,128

267,566

300,585

745,419

2,903,956

Bernhard Jucker

945,002

1,064,000

275,936

220,816

811,031

3,316,785

Peter Leupp

770,005

862,400

285,712

164,442

2,082,559

Veli-Matti Reinikkala(4)

701,230

551,861

267,987

320,362

541,126

2,382,566

Brice Koch

741,676

840,000

227,416

224,330

769,347

2,802,769

Tarak Mehta

660,835

742,560

215,716

244,075

680,105

2,543,291

Frank Duggan (joined on March 1, 2011)(5)

597,598

595,962

256,020

140,636

623,213

2,213,429

Total current Executive Committee members

9,967,956

12,038,591

2,856,147

3,133,130

9,786,790

37,782,614

 

 

 

 

 

 

 

Tom Sjökvist (retired from the EC on September 30, 2010)(6)

188,851

47,971

617,040

853,862

Anders Jonsson (retired from the EC on July 31, 2010)(6)

857,284

857,284

Total former Executive Committee members

188,851

47,971

1,474,324

1,711,146

 

 

 

 

 

 

 

Total

10,156,807

12,038,591

2,904,118

4,607,454

9,786,790

39,493,760

The table below provides an overview of the total compensation of members of the Executive Committee in 2010, comprising cash compensation and an estimate of the value of shares conditionally awarded under a three-year incentive plan that runs until 2013. Cash compensation includes the base salary, the accrued short-term variable compensation for 2010, pension benefits, as well as other benefits comprising mainly social security and health insurance contributions. The compensation is shown gross (i.e., before deduction of employee’s social insurance and pension contributions).

(XLS:)

Name

Base
salary

Short-term
variable
compen-
sation(1)

Pension
benefits

Other
benefits(2)

Estimated
value
of share-
based
awards
granted in
2010(3)

Total
2010

 

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(1)

To reflect wide-spread market practice, the basis of presentation of the short-term variable compensation has changed from a cash basis to an accruals basis. Payment is made in the following year, after publication of the financial results.
In March 2010 the Executive Committee members received the 2009 short term variable compensation payments in the amount of CHF 11,942,640. This number does not include any short-term variable compensation amount for Brice Koch and Tarak Mehta, who joined the Executive Committee on January 1, 2010 and October 1, 2010.
Short-term variable compensation is linked to the ABB Group’s scorecard and defined targets therein. Upon full achievement of the defined targets, the short-term variable compensation of the CEO corresponds to 150 percent of his base salary while for all other Executive Committee members it represents 100 percent of their respective base salary. The Board has the discretion to approve a higher payout than 100 percent, if the targets are exceeded.

(2)

Other benefits comprise payments related to social security, health insurance, children’s education, transportation, tax advice and one-off items.

(3)

The estimated value of the share based awards are subject to performance and other parameters (e.g. the share price development) and may therefore vary in value from the above numbers at the date of vesting, March 15, 2013. The above amounts have been calculated using the market value of the ABB share on the day of grant adjusted, in the case of the performance component, according to the parameters considered in the Monte Carlo simulation model.

(4)

Veli-Matti Reinikkala received 50 percent of his base salary in USD and 50 percent in EUR at a fixed USD/EUR exchange rate. All USD payments were converted into Swiss francs using a rate of 0.94 per USD.

(5)

Prior to joining the Executive Committee, Tarak Mehta participated in the Company’s long-term incentive plan and consequently, in 2010, received a share-based award in the amount of CHF 290,726 which was unrelated to his subsequent appointment to the Executive Committee.

(6)

Tom Sjoekvist received CHF 85,426 cash compensation for foregone pension benefits as a result of him continuing to work for the Company after the age of 60, included in other benefits above.

(7)

The above compensation figures related to Tom Sjoekvist and Anders Jonsson represent contractual payments for the period January to December 2010.

Joe Hogan

1,900,003

3,135,000

270,325

407,461

2,012,883

7,725,672

Michel Demaré

1,200,006

1,320,000

257,251

749,790

952,800

4,479,847

Gary Steel

770,005

847,000

272,136

499,581

527,565

2,916,287

Ulrich Spiesshofer

780,001

858,000

220,234

339,459

534,405

2,732,099

Diane de Saint Victor

730,003

803,000

257,634

356,857

500,160

2,647,654

Bernhard Jucker

919,999

1,012,000

266,002

393,193

630,324

3,221,518

Peter Leupp

770,005

847,000

276,280

333,196

527,565

2,754,046

Veli-Matti Reinikkala(4)

647,903

652,217

207,512

169,151

457,458

2,134,241

Brice Koch (joined on January 1, 2010)

700,000

770,000

217,434

204,114

479,598

2,371,146

Tarak Mehta(5) (joined on October 1, 2010)

162,500

178,750

51,758

53,712

446,720

Total current Executive Committee members

8,580,425

10,422,967

2,296,566

3,506,514

6,622,758

31,429,230

 

 

 

 

 

 

 

Tom Sjökvist (retired from the EC on September 30, 2010)(6),(7)

770,005

847,000

282,498

397,205

2,296,708

Anders Jonsson (retired from the EC on July 31, 2010)(7)

619,998

682,000

263,559

375,349

1,940,906

Total former Executive Committee members

1,390,003

1,529,000

546,057

772,554

4,237,614

 

 

 

 

 

 

 

Total

9,970,428

11,951,967

2,842,623

4,279,068

6,622,758

35,666,844

Share-based awards granted to members of the Executive Committee during 2011 are summarized in the table below. The vesting date of the respective award, principally granted under the long-term incentive plan (LTI Plan), is listed in the footnotes to the table.

(XLS:)

Name

Maximum number
of conditionally
granted shares
under the
performance
component
of the 2011 launch
of LTI Plan(1),(4)

Number of
retention shares
granted under the
2011 launch
of LTI Plan(1),(3)

Total estimated
value of share-
based awards
granted in 2011(2)

 

 

 

(CHF)

(1)

Vesting date March 15, 2014.

(2)

The estimated value applied to the shares of the retention component, represents the market value of an ABB share on the grant date of the award. The estimated value applied to the shares of the performance component, represents the market value of an ABB share on the grant date, adjusted according to the parameters considered in the Monte Carlo simulation model.

(3)

The LTI Plan foresees to deliver 30 percent of the value of the vested retention shares in cash, but participants have the possibility to elect upon vesting to receive 100 percent of the vested award in shares.

(4)

The vested performance shares under the plan will be fully settled in cash.

Joe Hogan

60,526

99,371

2,871,650

Michel Demaré

26,967

40,450

1,189,349

Gary Steel

15,196

23,517

687,243

Ulrich Spiesshofer

15,460

31,104

868,307

Diane de Saint Victor

14,194

26,359

745,419

Bernhard Jucker

17,933

27,753

811,031

Peter Leupp

Veli-Matti Reinikkala

11,965

18,517

541,126

Brice Koch

14,158

27,388

769,347

Tarak Mehta

12,516

24,211

680,105

Frank Duggan

13,780

21,326

623,213

Total current Executive Committee members

202,695

339,996

9,786,790

In addition to the above awards, 7 members of the Executive Committee participated in the eighth launch of ESAP which will allow them to save over a twelve-month period and, in November 2012, use their savings to acquire ABB shares under the ESAP. The maximum number of shares the Executive Committee members are entitled to acquire depends on their savings’ amount and currency. One of the Executive Committee members is entitled to acquire up to a maximum of 700 ABB shares and the other Executive Committee members who participated in ESAP are each entitled to acquire up to 620 ABB shares at an exercise price of CHF 15.98 per share.

No parties related to any member of the Executive Committee received any fees or remunerations for services rendered to ABB, other than on an arm’s length basis. A related party includes a spouse, children below the age of eighteen, legal or natural persons acting as fiduciary and legal entities controlled by a member of the Executive Committee.

No loans or guarantees were granted to members of the Executive Committee in 2011.

Share-based awards granted to members of the Executive Committee during 2010 were as follows:

(XLS:)

Name

Maximum number
of conditionally
granted shares
under the
performance
component
of the 2010 launch
of LTI Plan(1),(4)

Number of
retention shares
granted under the
2010 launch
of LTI Plan(1),(3)

Total estimated
value of share-
based awards
granted in 2010(2)

 

 

 

(CHF)

(1)

Vesting date March 15, 2013.

(2)

The estimated value applied to 100 percent of the shares of the retention component, represents the market value of the share at grant date of the respective award. The estimated value applied to 100 percent of the shares of the performance component, represents the market value of the share as per grant date, adjusted according to the parameters considered in the Monte Carlo simulation model.

(3)

The LTI Plan foresees to deliver 30 percent of the value of the vested retention shares in cash, but participants have the possibility to elect upon vesting to receive 100 percent of the vested award in shares.

(4)

The vested performance shares under the plan will be fully settled in cash.

(5)

Prior to joining the Executive Committee, Tarak Mehta participated in the Company’s long-term incentive plan and consequently, in 2010, received a share-based award in the amount of CHF 290,726 which was unrelated to his subsequent appointment to the Executive Committee.

Joe Hogan

58,854

87,841

2,012,883

Michel Demaré

27,740

41,609

952,800

Gary Steel

14,952

23,140

527,565

Ulrich Spiesshofer

15,146

23,440

534,405

Diane de Saint Victor

14,175

21,938

500,160

Bernhard Jucker

17,865

27,647

630,324

Peter Leupp

14,952

23,140

527,565

Veli-Matti Reinikkala

12,965

20,065

457,458

Brice Koch

13,593

21,036

479,598

Tarak Mehta(5)

Total current Executive Committee members

190,242

289,856

6,622,758

Financial review

© Copyright 2012 ABB.