Supervisory Board committees
As noted above, in 2012 the Supervisory Board was supported by its four committees: the Audit Committee, the Risk Committee, the Remuneration Committee and the Nomination Committee. These committees prepare their delegated subjects ahead of the decision-making in the plenary meetings of the Board. The members of the committees are members of the Supervisory Board and are listed in section 3.1.1. Each committee reports its findings to the plenary Supervisory Board through its chairman. The committees also provide written reports on the items discussed.
The Audit Committee met five times in 2012. All meetings were attended by the CFRO (and some also by the chairman of the Executive Board) as well as the directors of Audit, Finance, Control & Tax, Integrity and Actuarial & Risk Management. The external auditor was present for part or all of four meetings.
The Audit Committee naturally devoted significant attention to the periodic financial reports, auditor’s reports, actuarial analyses, control framework and internal audit reports. It also paid considerable attention to the strong declines in interest rates and its impact on the results. In this connection, the Audit Committee urged a clarification of the effects of the measurement methods used by Delta Lloyd compared with the traditional, more customary methods in the market.
Other subjects raised in the Audit Committee included the development of the operational result including LTIR, the external provision of financial information (including guidance for the investment market), capital position, dividend proposals, reduction of the exposure to various countries (not just the GIIPS countries), the implementation of a new mortality table, fraud risks and product margins. Naturally, the sale of Delta Lloyd Germany, the developments in the Dutch partial disability insurance market (WGA-ER) and the discontinuation of loss-making acceptances in international marine insurance were discussed intensively and critically by the Audit Committee.
The Audit Committee is also monitoring the progress of preparations for compliance with new regulatory requirements, such as Solvency II.
The Audit Committee held a meeting with the external auditor in the absence of the Executive Board. As usual, the topic of discussion was the company’s performance.
This committee met five times in 2012 to discuss specific risk management issues, including the Risk Management Framework, the Group Risk Appetite Statement, the Financial Risk Report, the Own Risk and Solvency Assessment report, the outcomes of internal controls and analyses made by DNB.
The most topical risks facing Delta Lloyd are discussed using the ORSA report. Special attention was devoted to the risks attached to interest rate movements, the debt crisis and the mortgage and property markets. This led to a reduction in risk limits in some areas. The economic capital ratio was monitored closely. The package of measures to reduce risk further (see section 2.3.) was discussed intensively. At the request of the Risk Committee, there was extensive discussion of the capital position, partly with a view to the introduction of Solvency II. The Risk Committee also discussed the allocation of capital, the associated growth opportunities of the different business lines and the need for proper pricing of individual products with the Executive Board. Non-financial risks, such as operational risks, IT risks (including cyber-crime) and integrity policy, were also reviewed.
The Remuneration Committee met four times in 2012. Its standard duties include assessing the achievement of the Executive Board’s performance targets and setting targets for short-term and long-term incentives. The Remuneration Committee also discussed the evaluation of the remuneration policy at various management levels and concluded that bonuses being paid were not excessive.
Assisted by external advisors, the Remuneration Committee follows remuneration policy trends and developments and regularly assesses whether the current remuneration policy still corresponds with the latest market practices and corporate governance provisions. The three-yearly evaluation of the Supervisory Board’s remuneration took place in 2012, on the basis of a benchmark survey by an independent specialist agency. The conclusion was that remuneration is in line with market standards.
In February 2013, on the advice of the Remuneration Committee, the Supervisory Board decided to cap the variable payment to the Executive Board at 50%, due to the financial performance of Delta Lloyd Group. The Executive Board has decided to cut variable payment to management and directors with at least 50%.
For more information on the Committee’s work, please see the Remuneration Report, which is posted on www.deltalloydgroep.com simultaneously with the publication of this annual report.
The Nomination Committee met five times in 2012. Its standard duties include the evaluation process of the Supervisory Board, the assessment of the Executive Board, the preparation of appointments and corporate governance monitoring.
The review of the management layer directly below the Executive Board is also discussed annually. In this connection, specific attention is paid to eligible candidates for key future vacancies, including the succession of Executive Board members. The Supervisory Board is delighted to note that almost all Board and senior executive positions can be filled with internal candidates.
As stated in section 2.2., the Supervisory Board held individual interviews with the top 15 executives reporting to the Executive Board. The report on these interviews was first discussed by the Nomination Committee.
The Nomination Committee also discussed the membership of the committees following the reduction in size of the Supervisory Board (see section 2.3.).