32. Share-based payment agreement with cash settlement
A share-based remuneration programme has been in place for the members of the Management Boards of UNIQA Insurance Group AG and UNIQA Österreich Versicherungen AG since the 2013 financial year. As part of this programme, UNIQA virtual shares are granted conditionally for each financial year on the basis of allocation values defined in the service contract, based on the average price of UNIQA ordinary shares in the period of six months prior to the start of the performance period. Cash payments subject to agreed limits are provided for at the end of a performance period of four years for the individual annual tranches or depending on certain key performance targets.
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 measurement 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 2022 a total of 1,167,795 virtual shares (2021: 1,189,267 shares) were relevant for the measurement. The fair value of share-based remuneration (excluding non-wage labour costs) at the reporting date amounts to € 4,420 thousand (2021: € 5,463 thousand).