Global Corporate Governance Guidelines expense of the company and its strategy has delivered sustainable AllianzGI encourages the introduction investors; and value creation it was meant to achieve. of a clawback policy comprising both – Performance measurement over This secondary assessment can be compliance- and result-related clauses timescales sufficient to determine made against share-price and the inclusion of appropriate that value has in fact been added performance, total shareholder clawback provisions under the terms of for the company and its shareholders returns, return on capital employed, incentive plans. (for long-term awards we expect a return on equity or any other minimum performance period of performance metrics that best reflect AllianzGI pays close attention to three years, but we encourage long-term sustainable value creation. perquisites, including pension companies to consider a five-year arrangements, and will vote against if performance period or introduce an We understand that for short-term deemed excessive. We expect additional holding period). performance awards, such as annual executive pension arrangements to be bonus schemes, disclosure of targets in line with those offered to company AllianzGI expects large-cap companies under operational and financial KPIs employees, and will only support in Europe to integrate social, may be commercially sensitive and, additional pension schemes for environmental and governance metrics therefore, undesirable. However, we executive directors (in markets where into their remuneration policies based expect all companies to disclose such this is allowed by law) where, on on their respective materiality analysis. targets retrospectively, as part of the retirement, an executive does not also AllianzGI generally votes against annual report and/or results benefit from generous severance remuneration policies of those presentation for the year for which the payments and/or compensation under European large-cap companies that bonus was paid. Any non-disclosure of a “non-compete clause”. AllianzGI does have not included ESG KPIs in their bonus targets should be explained and not approve of the inclusion of variable remuneration policies. For companies justified by the company. pay in the pension calculation or in other regions and smaller crediting additional years of service to companies AllianzGI encourages AllianzGI does not support executive directors as a benefit. the integration of ESG factors in retrospective amendments to the remuneration policies where material terms of incentive schemes without a We will not support transaction and appropriate. prior shareholder approval. We will bonuses and retrospective ex-gratia vote against incentive plans that may payments, and will not approve When it comes to performance-based be materially altered (eg, cancellation financial assistance to directors, share incentive schemes, we currently and re-issue, re-testing, re-pricing officers or related persons without observe two main approaches: or backdating of options) without clear explanation and robust – F irst and most common approach is shareholder approval, allow justification from the company. We will for companies to make annual share management significant discretion only approve a one-off special awards to executives at a level set in granting certain awards, or are payment/award where the company under the policy, and measure otherwise inconsistent with the can demonstrate truly exceptional performance against pre- interests of shareholders. In light of circumstances and significant determined KPIs and targets at the current economic conditions, in additional value creation. end of the performance period; particular high inflation rates in many – S econd approach is to determine countries, AllianzGI will carefully AllianzGI believes that severance the size of the long-term award on evaluate generous pay packages payments to executives should be set the basis of an annual performance taking into account pay increases of at a reasonable level. Ideally, assessment and apply a deferral the wider workforce and consider severance pay should not exceed one period to ensure alignment between whether companies received direct year’s fixed salary and benefits or executives and shareholders over an state aid, underwent significant minimum legal requirements in the extended period of time. layoffs and/or restructuring or cut markets where these are higher than dividends. We generally vote against 12 months’ fixed pay. Where We have seen both approaches used if we consider pay packages overly appropriate, payments to former effectively to the benefit of the generous taking these aspects into executives should be subject to company and shareholders. However, account. performance targets. All incentive where the initial performance awards should be time pro-rated and assessment covers a period of one AllianzGI may not support equity tested for performance, including in year only, we expect application of award plans that are too dilutive (eg, the event of an early termination due objective and transparent >10% of the issued share capital in 10 to the change in control. Termination performance measures to determine years for executive and all-employee payments following a change in the size of the award, as well as a plans) and expensive to existing control should only be available in the secondary assessment on vesting to shareholders. event of a loss of job or substantial ensure that the management’s diminution of duties, and should be 17