European insurers up CEO pay 17% in 2021; Zurich's Greco leads on €12m

CEOs of European insurers took an aggregate 17% pay raise in 2021 to an average of €4.1 million, nearly recouping COVID-driven pay dips in 2020, chiefly as variable pay elements rose on a post-pandemic rebound.

Zurich Insurance Group CEO Mario Greco (pictured) leads the field far and away with a massive €12.1 million paycheck, some €5 million over his next best-earning rival.

That leaves Greco’s pay looking “high” next to the field as well as “high” relative to share price performance, equity analysts at Deutsche Bank’s brokerage wrote in their recently released study of executive pay in the industry.

Zurich offers the industry's single greatest opportunity for variable pay at 650% of base salary, “well above large cap peers” where the average range runs 400-600%.

Unsurprisingly, the biggest insurers are offering the top compensation as they seek leaders capable of steering the largest machines. But Zurich, SCOR and M&G still paid above that adjusted peer average, the report claimed. Zurich, Allianz and Prudential are called out for having paid excessively vis-a-vis total 3Y shareholder return.

The take for Allianz CEO Oliver Bäte is called “broadly aligned with that of peers” after the knock-down in bonuses following the Structured Alpha scandal in the US.

Cleared of scandal, Allianz CEO Oliver Bäte could have been on track to rival Greco for the European industry’s top-spot.

“Following a significant uplift in both base salary and total remuneration cap, back in 2021, Mr Bäte's total maximum opportunity of €11.75 million remains among the highest across the sector - broadly aligned with the likes of Zurich, Generali and Prudential,” analysts noted.

Generali CEO Philippe Donnet also has capacity to take home sums neighbourhood €12 million, but ended on a sum “broadly in line with most of its large cap peers” both on absolute measures and vis-a-vis share price performance.

SCOR, listed as a general overpayer, may now be more appropriately positioned amongst peers after the transition from Denis Kessler to Laurent Rousseau, Deutsche Bank believes, with caveat for a short stack of data. Incentives, unfortunately, remain tipped towards a low bar tied to solvency.

Munich Re CEO Joachim Wenning has the least to gain from incentives. Total remuneration “feels broadly fair,” but is based on the industry's highest base pay and lowest max contribution from incentives at a below-average 256% of base.

SCOR and Sampo take some heat for setting the bar low, including a solvency requirement at SCOR 40% below estimate and a return rate at Sampo between 1/4 and 1/3 of Deutsche Bank's estimate. In turn, Aviva, Phoenix and M&G take praise for more ambitious targets tied to cash and capital generation.

The average achievement rate on short-term incentive targets rose by 20 percentage points to an estimated 70% in 2021 on the rebound while achievement on long-term plan targets rose a more modest 4 pps to an aggregate 55%. Zurich, Admiral, SCOR and DirectLine stood-out for achievement of over 80%.

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