Note 11 Executive Committee compensation

The table below provides an overview of the total compensation of members of the Executive Committee in 2012, comprising cash compensation and an estimate of the value (at grant date) of shares conditionally awarded under the 2012 one-time Acquisition Integration Execution Plan (AIEP) that vest at the beginning of 2014 and the three-year Long-term Incentive plan (LTI Plan) that vest in 2015. Cash compensation includes the base salary, accrued short-term variable compensation for 2012, 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).

Download XLS (23 kB)

Name

Base
salary

Short-term
variable
compen- sation(1)

Pension
benefits

Other
benefits(2)

Estimated value of share-based awards granted under the LTI Plan in 2012(3)

2012
Subtotal

Estimated value of share-based awards granted under the one-time AIEP in 2012(3)

2012
Total

 

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(1)

The table above shows accruals related to the short-term variable compensation for the year 2012 for all Executive Committee members, except for Peter Leupp, who received in July 2012 a pro-rata short-term variable compensation payment covering the period of his service as an EC member. For all other Executive Committee members, the short-term variable compensation will be paid in 2013, after the publication of the financial results. In March 2012, the current and former Executive Committee members received the 2011 short-term variable compensation payments totaling CHF 12,102,149. Short-term variable compensation is linked to the objectives defined in the ABB Group’s scorecard. Upon full achievement of these objectives, 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 payout that is up to 50 percent higher (representing up to 225 percent of the base salary for the CEO and 150 percent of the base salary for other members of the Executive Committee), if the objectives are exceeded. For 2012, the Board exercised its discretion and awarded a 10 percent higher payout, reflecting the Company’s performance against the objectives.

(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. earnings per share) and may therefore vary in value from the above numbers at the date of vesting, January 3, 2014 (AIEP) and May 31, 2015 (LTI Plan). The above amounts have been calculated using the market value of the ABB share on the day of grant and, in the case of the AIEP and the performance component of the LTI Plan, the Monte Carlo simulation model.

(4)

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 January to December 2012. All AED payments were converted into Swiss francs at a rate of 0.2491288 per AED.

(5)

The above compensation figures for Peter Leupp include contractual payments for the period March 1, 2012 to July 31, 2012, but exclude payments to him, after his retirement from the Executive Committee, in his capacity as director of ABB in China and of ABB Limited, India.

Joe Hogan

2,010,011

3,316,500

284,870

431,284

4,115,136

10,157,801

10,157,801

Michel Demaré

1,200,007

1,320,000

271,450

377,968

3,169,425

3,169,425

Gary Steel

805,002

885,500

286,938

172,054

851,003

3,000,497

896,656

3,897,153

Ulrich Spiesshofer

865,673

962,500

235,680

164,948

1,363,655

3,592,456

974,623

4,567,079

Diane de Saint Victor

791,993

880,000

273,583

138,762

899,193

2,983,531

891,085

3,874,616

Bernhard Jucker

950,004

1,045,000

280,372

179,220

1,067,784

3,522,380

1,058,174

4,580,554

Veli-Matti Reinikkala

770,006

847,000

263,892

145,236

865,483

2,891,617

857,673

3,749,290

Brice Koch

816,669

913,000

234,425

212,479

1,099,345

3,275,918

924,511

4,200,429

Tarak Mehta

718,837

803,000

222,181

369,734

820,512

2,934,264

813,119

3,747,383

Frank Duggan(4)

641,963

697,279

313,377

405,734

820,512

2,878,865

835,403

3,714,268

Greg Scheu
(joined on May 1, 2012)

450,002

495,000

161,816

42,727

713,574

1,863,119

751,851

2,614,970

Prith Banerjee
(joined ABB on May 7, 2012)

456,523

500,914

137,742

401,148

740,017

2,236,344

389,860

2,626,204

Total Executive Committee members as of Dec. 31, 2012

10,476,690

12,665,693

2,966,326

3,041,294

13,356,214

42,506,217

8,392,955

50,899,172

 

 

 

 

 

 

 

 

 

Peter Leupp (retired from the EC on March 1, 2012)(5)

496,694

291,960

167,900

206,794

1,163,348

1,163,348

Total former Executive Committee members as of Dec. 31, 2012

496,694

291,960

167,900

206,794

1,163,348

1,163,348

 

 

 

 

 

 

 

 

 

Total

10,973,384

12,957,653

3,134,226

3,248,088

13,356,214

43,669,565

8,392,955

52,062,520

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, the 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).

Download XLS (23 kB)

Name

Base
salary

Short-term
variable
compen-
sation(1)

Pension
benefits

Other
benefits(2)

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

2011
Total

 

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(CHF)

(1)

To reflect widespread market practice, in 2011, the basis of presentation of the short-term variable compensation changed from a cash basis to an accruals basis. Payment is made in the following year, after publication of the financial results. 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 Executive Committee members as of December 31, 2011

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 as of December 31, 2011

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

LTI Plan awards granted to members of the Executive Committee during 2012 are summarized in the table below. The vesting date of the respective award is listed in the footnotes to the table.

Download XLS (19 kB)

Name

Reference number of shares underthe performance component of the 2012 launch of LTI Plan(1),(4)

Total estimated value of awards granted under the performance component of the LTI
Plan in 2012(2)

Number of retention shares granted under the 2012 launch of LTI Plan(1),(3)

Total estimated value of share-based awards granted under the retention component of the LTI
Plan in 2012(2)

Total number of shares granted under the 2012 launch
of LTI Plan(1),(3)

Total estimated value of share-based awards granted under the LTI
Plan in 2012(2)

 

 

(CHF)

 

(CHF)

 

(CHF)

(1)

Vesting date May 31, 2015.

(2)

The shares of the performance component are valued using the market value of the ABB share on the grant date and the Monte Carlo simulation model. The estimated value applied to the shares of the retention component, represents the market value of the ABB share on the grant date of the award.

(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 component under the plan, if any, will be fully settled in cash. The plan foresees a maximum payout of 200% of the number of reference shares, based on the weighted cumulative EPS performance against predefined objectives.

Joe Hogan

123,541

1,860,269

148,249

2,254,867

271,790

4,115,136

Michel Demaré

Gary Steel

20,781

312,919

35,377

538,084

56,158

851,003

Ulrich Spiesshofer

22,588

340,128

67,293

1,023,527

89,881

1,363,655

Diane de Saint Victor

20,652

310,976

38,673

588,217

59,325

899,193

Bernhard Jucker

24,524

369,280

45,924

698,504

70,448

1,067,784

Veli-Matti Reinikkala

19,878

299,321

37,223

566,162

57,101

865,483

Brice Koch

21,426

322,631

51,066

776,714

72,492

1,099,345

Tarak Mehta

18,845

283,767

35,289

536,745

54,134

820,512

Frank Duggan

18,845

283,767

35,289

536,745

54,134

820,512

Greg Scheu
(joined on May 1, 2012)

17,425

262,384

29,664

451,190

47,089

713,574

Prith Banerjee
(joined ABB on May 7, 2012)

18,071

272,112

30,763

467,905

48,834

740,017

Total Executive Committee members as of December 31, 2012

326,576

4,917,554

554,810

8,438,660

881,386

13,356,214

In addition to the above awards, 7 members of the Executive Committee participated in the ninth launch of ESAP which will allow them to save over a twelve-month period and, in November 2013, 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 570 ABB shares and the other Executive Committee members who participated in ESAP are each entitled to acquire up to 580 ABB shares at an exercise price of CHF 17.08 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 2012.

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, granted under the LTI Plan, is listed in the footnotes to the table.

Download XLS (19 kB)

Name

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

Total estimated value of sharebased awards granted under the performance component of the LTI Plan in 2011(2)

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

Total estimated value of share-based awards granted under the retention component of the LTI Plan in 2011(2)

Total number of shares granted under the 2011 launch of LTI Plan(1),(3)

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

 

 

(CHF)

 

(CHF)

 

(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

530,470

99,371

2,341,180

159,897

2,871,650

Michel Demaré

26,967

236,348

40,450

953,001

67,417

1,189,349

Gary Steel

15,196

133,183

23,517

554,060

38,713

687,243

Ulrich Spiesshofer

15,460

135,497

31,104

732,810

46,564

868,307

Diane de Saint Victor

14,194

124,401

26,359

621,018

40,553

745,419

Bernhard Jucker

17,933

157,171

27,753

653,860

45,686

811,031

Peter Leupp

Veli-Matti Reinikkala

11,965

104,866

18,517

436,260

30,482

541,126

Brice Koch

14,158

124,086

27,388

645,261

41,546

769,347

Tarak Mehta

12,516

109,695

24,211

570,410

36,727

680,105

Frank Duggan

13,780

120,773

21,326

502,440

35,106

623,213

Total Executive Committee members as of December 31, 2012

202,695

1,776,490

339,996

8,010,300

542,691

9,786,790

Share-based awards granted to members of the Executive Committee under the one-time AIEP during 2012 are summarized in the table below. The vesting date of the award is listed in the footnotes to the table.

Download XLS (18 kB)

Name

Number of conditionally granted shares under the one-time 2012 launch of AIEP(1),(3)

Total estimated value of share-based awards granted under the one-time AIEP in 2012(2)

 

(CHF)

 

(1)

Vesting date January 3, 2014.

(2)

The shares are valued using the market value of the ABB share on the grant date and the Monte Carlo simulation model.

(3)

The AIEP foresees to deliver 30 percent of the value of the vested shares in cash, but participants have the possibility to elect, prior to vesting, to receive 100 percent of the vested award in shares. The plan foresees a maximum payout of 768,286 shares, subject to the fulfillment of the plan objectives and the assessment by the CEO of the individual’s performance.

Joe Hogan

Michel Demaré

Gary Steel

66,795

896,656

Ulrich Spiesshofer

72,603

974,623

Diane de Saint Victor

66,380

891,085

Bernhard Jucker

78,827

1,058,174

Veli-Matti Reinikkala

63,891

857,673

Brice Koch

68,870

924,511

Tarak Mehta

60,572

813,119

Frank Duggan

62,232

835,403

Greg Scheu (joined on May 1, 2012)

56,008

751,851

Prith Banerjee (joined ABB on May 7, 2012)

29,042

389,860

Total Executive Committee members as of December 31, 2012

625,220

8,392,955

No parties related to any of the Executive Committee members 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 2012.