Remuneration

Directors (other than Member of the Management Control Committee)

The Directors are divided into executive Directors (with management powers) and non-executive Directors; at Cattolica, only the Chief Executive Officer is categorised as executive. The remuneration of the Directors complies with the provisions of the Company’s Articles of Association.

The Articles of Association of the Company provide that, inter alia:

• members of the Board of Directors shall be entitled to reimbursement of expenses - which may also be predetermined by the Board of Directors in a fixed contractual amount - as well as overall remuneration determined by the Shareholders' Meeting, for both members of the Board of Directors and for participation in the Board Committees and for the special mandates determined by the Board of Directors, with the exception of the Chief Executive Officer, whose remuneration is remitted to the Board of Directors; the Board of Directors is also authorised to allocate the total amount determined by the Shareholders’ Meeting;
• the Shareholders' Meeting establishes specific compensation for the members of the Management Control Committee, which is determined at a fixed rate and at the same per capita rate, but with a higher rate for the Chairman of the Management Control Committee;
• the Directors are also entitled to an attendance allowance, the amount of which is determined by the Shareholders' Meeting, in accordance with the terms of Article 12 of the Articles of Association, for each meeting of the Board of Directors, the Management Control Committee and any other Committee established by the Board of Directors.

This remuneration, which - without prejudice to what is specified below - constitutes the overall remuneration of nonexecutive Directors, takes into account the effort made, including in terms of the time required to prepare for Board meetings, the study of supporting documentation for meetings and legislative and regulatory updates, as well as the responsibilities assumed with the position, and is not expressly linked to the future economic results of the Company and/or the achievement of specific targets previously indicated by the Board or by the delegated bodies respectively.

No variable remuneration or non-monetary benefits in any form are provided for non-executive Directors.

They are provided with civil liability insurance cover (the Directors’ and Officers’ Liability or D&O policy: please see the Shareholders’ Meeting resolution of 27 April 2002).

No indemnity is provided for non-executive Directors in the event of early termination of their office.

Finally, it will be recalled that the Shareholders’ Meeting of 14 May 2021 approved the proposal for an overall review of Directors’ fees from 2021, which was drawn up with reference to best market practices and also taking into account 15 the size of Società Cattolica and its subsidiaries and the instructions contained in the Remedial Plan prepared by the Company in response to the findings of the Supervisory Authority.  

The Chief Exetutive Officer

It will be recalled that, on 4 August 2020, the Board of Directors of Cattolica Assicurazioni unanimously resolved to appoint Carlo Ferraresi as Chief Executive Officer of the Company, while continuing to act as General Manager.

As Chief Executive Officer, Mr Ferraresi is entitled to the same components of the fee structure as the Company's Directors.

Details of the fees paid in 2021 on the basis of the remuneration structures set out above are provided in Section II of this report.

The current Chief Executive Officer also acts as General Manager and is a beneficiary of the variable remuneration systems within the scope of this separate, albeit complementary, relationship. 

Memebers of the Management Control Committee

The emoluments for the members of the Management Control Committee are determined by the Shareholders' Meeting as a fixed amount as well as a per capita amount, but with a specific additional amount for the position of Chairman of the Committee. The Articles of Association also provide for the payment of an attendance allowance for each meeting of the Board of Directors, the Management Control Committee and any other Committee established by the Board of Directors attended by members. No provision is made for variable or performance-related remuneration or for forms of remuneration based on financial instruments. As is the case for the Directors, civil liability insurance cover is provided.  

The components of the Remuneration

The remuneration of Key Staff (including the Chief Executive Officer and General Manager) includes a fixed component and a variable component, intended to orient the performance of resources towards the Company's targets.

The two components (the pay mix) are appropriately balanced to reward performance and merit, according to the Company's strategic objectives and risk management policy.  

The MBO Plan

The variable component is structured as an annual monetary incentive system based on the MbO (Management by Objectives) model, with percentages differentiated according to the responsibilities assigned and the tasks performed.

In line with market best practices, the MbO system is based on performance indicators, including: ­

• Achievement of asset stability gates:
  • The Solvency II Ratio soft limit of the Company to which the person belongs, measured quarterly when the financial documents are presented, calculated net of new capital increases other than those already approved, including if they have not yet been carried out, and after taking distributed profit into account. If there is a breach of this limit, the gate will still be considered exceeded if this breach occurs no more than once in each year of the vesting period and provided that it is recovered within the following quarter and is in any case achieved at the end of the year in question.
  • The minimum level of the Regulatory Solvency Ratio of the Generali Group, set at 130%. The achievement of both gates is the minimum necessary condition for the activation of the Plan and the consequent verification of the level of achievement of the performance objectives. Failure to achieve even one of the gates results in non-payment of the monetary incentive, even if the performance is positive. ­
• Collective objectives (overall weight 40%):
  • The operating profit of Cattolica and its subsidiaries (aggregate data). Two gates are applied to operating profit:
    • General expenses of Cattolica and its subsidiaries (aggregate figure)
    • Net result of Generali Country Italy
  • Failure to achieve the defined target, even for one of the gates indicated above, results in failure to achieve the objective, even if the performance is positive.
  • The RORAC of the company to which it belongs is provided annually; ­
• Individual objectives (overall weight 60%):
  • Individual performance, risk management, efficiency and project development objectives, depending on the role held in the company by the assignee and in any case predetermined and measurable, as defined in the MbO sheet. The weighting of these objectives is individually defined for each beneficiary. 

It is understood that if, following any extraordinary transactions, it is not possible to make a precise calculation of the objectives assigned or the gates (at the end of the vesting period or on the payout date), the Company may make – in any case within the limits permitted by the legislation applicable from time to time and in accordance with the remuneration policy – the corrections necessary to keep the economic content, substance and incentivising purposes of the Plan as unchanged as possible. Purely by way of example, the most recent available data may be used to calculate the gates and the objectives, or the time period of the relevant assessment may be altered, or (for example in the case of mergers) the reference data for the entity resulting from the transaction may be used, etc.

Furthermore, the Company, in line with the remuneration policies in force at the Generali Group, reserves the right to:

• reduce the payment of the bonus if the General Group's Regulatory Solvency Ratio is lower than the soft limit provided for in the Risk Appetite Framework, i.e. 150%, but in any case higher than 130%;
• reduce or cancel the payment of the bonus in the event of particularly negative results at Group (Cattolica or Generali)/Country Italy/Company level.

Also with regard to the provisions of EU Regulations 2019/2088 and 2020/852 on sustainability reporting in the financial services sector, it is confirmed that certain indicators relating to sustainability and corporate social responsibility may be progressively and gradually included in the identification of individual targets of the MbO system.

Under the process, for each role covered by the system, a data sheet is provided in which a KPI is assigned for each type of target, the unit of measurement of this indicator, the weight of the indicator, the target value, and – where necessary – the respective thresholds and the valuation curve. The percentage that can actually be paid out will depend not only on passing through the previously defined gates, but also on the level of actual achievement of the targets.

In addition, as mentioned above and in compliance with the relevant legislation, ex-post malus and clawback corrective actions apply to amounts paid out or payable by way of variable compensation. The annual incentive system adopted provides for:

• the passing through of the gates, as defined above, as basic conditions for payment of the bonus;
• that the overall performance level used for the payment of the bonus is based on the scenarios specified below which apply both to the measurement of the percentage of achievement of each individual target and to the calculation of overall performance, it being understood that below the minimum threshold no value will be counted either on the individual indicators or at the overall level, and that the maximum performance percentage to be calculated will be 130% of the target values assigned both at the individual indicator level and at the overall level.

The performance scenarios may therefore be:

1. an insufficient performance below the threshold level (no value will therefore be counted);
2. a threshold performance (minimum acceptable – for most indicators equal to 90% of the target level);
3. a target performance equal to the full achievement of the targets;
4. an overperformance that exceeds the targets set.

The payout curve, calculated on the basis of overall performance and the RAL at 31 December of the year preceding the vesting period, given by the sum of the percentage of the individual indicators appropriately weighted (as defined above), is determined as follows;

1. insufficient overall performance and therefore a bonus level of zero;
2. an overall performance threshold of 80% with a bonus level of 50% of the target value;
3. an overall performance target of 100%, equal to full achievement of the objectives, with a bonus level of 100% of the target value;
4. an overall performance of 130% that exceeds the targets set (overperformance) with a bonus level of up to 150% of the target value. 

The New LTI  2022 – 2024 Plan

Following the successful conclusion of the takeover offer by Assicurazioni Generali and the consequent entry of Cattolica into the Generali Group, the deferred variable remuneration will entail the participation of Cattolica's staff (as indicated below) in the new multi-year incentive plan (the Long Term Incentive Plan or LTI), submitted for approval to the Assicurazioni Generali Shareholders’ Meeting. 

Deferred variable remuneration plays a particularly significant role in strengthening the link with the creation of longterm sustainable value for shareholders. It has an impact proportionate to the level of direct influence on the Group's results that each party may potentially produce and consists of multi-annual plans (the Long Term Incentive Plan or LTI) approved from time to time by the competent bodies.

These LTI plans are normally structured according to a rolling system, with the launch of a new plan with a total performance period of three years for all the eligible beneficiaries, without prejudice to the other possibility of the Company assessing, particularly in the case of fixed-term relationships or assignments, the participation of specific beneficiaries in a single plan for the entire reference period that summarises and concentrates within itself the potential incentives that would result from the various plans launched in the same reference period, and therefore without prejudice to overall compliance with the annualised pay-mix (target and maximum) provided for in the remuneration policy.

The Plan provides for the allocation of shares at the end of a three-year performance period, subject to verification of the achievement of a minimum level of the Regulatory Solvency Ratio and in relation to the achievement of Group performance conditions, as described below and in the relevant Information Document. 

Beneficiaries

The scope of the beneficiaries of the Long Term Incentive (LTI) Plan, in accordance with the Generali Group’s remuneration policies, includes: key staff8 , talents and other key Group roles, selectively identified on the basis of their role, performance and growth potential, for attraction and retention purposes.

In order to ensure maximum coherence, fairness and homogeneity in the identification of beneficiaries, the first requirement to be verified is the achievement of high standards of performance that remain constant over time and the possession of high growth potential, which, together with strong managerial skills, can allow the individuals identified to achieve challenging career objectives and leadership positions within the Group. Other relevant criteria for identifying these beneficiaries include, but are not limited to, the possession of sound technical expertise, respect for and promotion of the Group’s values and the aspiration to develop by working in short-term strategic roles at international level.

For more information, please refer to the 2021 Report on the remuneration policy and compesation paid.