30. Share-based payment agreement with cash settlement
In the 2013 financial year, UNIQA introduced a share-based remuneration programme for members of the Management Board of UNIQA Insurance Group AG and for the members of the Management Board of UNIQA Österreich Versicherungen AG and UNIQA International AG. In line with this programme, qualified members of the Management Board were granted virtual UNIQA shares between 2013 and 2016, which give them the right to a cash payment after the end of the benefit period, provided certain key performance targets are met, with maximum limits also agreed.
The selected key performance targets are aimed at ensuring a relative market-based performance measurement and absolute performance measurement in accordance with the individual corporate objectives of the UNIQA Group. These defined equally-weighted key performance targets include the total shareholder return (TSR) of the UNIQA ordinary share compared with the TSR of the shares in the companies on the DJ EURO STOXX TMI Insurance, the P&C Net Combined Ratio in UNIQA’s property and casualty business and the return on risk capital (the return on equity required).
The programme stipulates annual investments in UNIQA shares with a holding period also of four years in each case.
The cash settlement is calculated as follows for each tranche of shares: payment = A × B × C
A = number of virtual shares awarded for the performance period.
B = average price of the UNIQA ordinary share in the period of six months before the end of the performance period.
C = degree of target achievement at the end of the performance period. The maximum target achievement is 200 per cent.
The fair value on the date that share-based payment awards are granted is recognised as expense over the period in which the unconditional entitlement to the award is obtained. The fair value is based on expectations with respect to achievement of the defined key performance targets. Changes in valuation assumptions result in an adjustment of the recognised provision amounts affecting income. Obligations from share-based remuneration are stated under “Other provisions”.
As at 31 December 2018 a total of 1,103,954 virtual shares (2017: 1,071,669 shares) were relevant for the valuation. The fair value of share-based remuneration at the reporting date amounts to €6,690 thousand (2017: €5,731 thousand).