Remuneration of the Executive Board
The Board of Directors lays down the remuneration model for the members of the Executive Board. The current remuneration model has been in force since 03.02.2014. A new remuneration model is being drawn up in the 2022 financial year and will be introduced subject to the approval of the decision-making bodies. The members of the Executive Board have waived variable remuneration in 2020 and 2021. Three members of the Executive Board are entitled to a retention bonus at the end of 2022.
With the introduction of the remuneration model that came into force in 2014, the variable remuneration was brought more into line with the effectively achieved results and documented in a regulation governing the variable remuneration of the Executive Board. The fixed remuneration and the lump-sum expenses allowances have been reviewed periodically over the past few years; the latter have been approved by the cantonal tax office.
The members of the Executive Board are waiving their variable remuneration for the years 2020 and 2021. Three members of the Executive Board are eligible to a retention payment if they meet certain conditions at the end of 2022. This is considered as additional fixed remuneration for 2022. See also under “a) Fixed (non-profit-related) remuneration”.
In the 2022 financial year, the model for variable remuneration is being reviewed. The annual bonus – the Short-term Incentive (STI) scheme – is still being revised. It is also planned to introduce a long-term remuneration component – the Long-term Incentive (LTI) scheme – for Executive Board members (and other management personnel in key positions) to strengthen the alignment with the interests of the shareholders, to promote a performance-oriented attitude and reinforce the loyalty to the company. This LTI scheme will be linked to clearly defined performance conditions for the three year plan period and, if these are fulfilled, will be paid out in the form of shares in MCH Group Ltd. The introduction of the LTI program requires the approval of the Annual General Meeting on 27.04.2022. See also under “b) Variable (profit-related) remuneration”.
The remuneration for members of the Executive Board includes the following components:
a) Fixed (non-profit-related) remuneration
The non-profit-related remuneration of members of the Executive Board is determined by the Board of Directors on the basis of their education, competences and functions. This component of the remuneration includes any family allowances, awards for service anniversaries and other payments (e.g. pension fund buy-ins, allowances, etc.).
The maximum amount for the fixed remuneration in 2021, approved by the Annual General Meeting on 24.04.2020, amounts to CHF 2,800,000 (including basic salary, payments for service anniversaries, family allowances, pension fund buy-ins and other allowances).
A maximum amount of CHF 3,400,000 for the fixed remuneration in 2023 will be submitted to the Annual General Meeting 2022 for approval.
On 28.04.2021, the Annual General Meeting approved a supplement of maximum CHF 520,000 to fixed remuneration for three members of the Executive Board as a possible retention payment for the 2021 and 2022 financial years. The payment is subject to the condition that the beneficiary is still in permanent employment at MCH Group on 3.12.2022. Subject to this condition, the payment will be made in December 2022 and will be part of the non-profit-related remuneration for 2022.
b) Variable (profit-related) remuneration
The members of the Executive Board have waived variable remuneration in 2020 and 2021.
In the variable remuneration model still valid, the group result is the sole component by which the variable remuneration of the CEO is measured. For the other members of the Executive Board, the variable remuneration takes into consideration the group profit, the division result and the individual performance, with different weightings. The group profit component is only paid out if the group profit is greater than CHF 10.0 million.
The weight of the individual component depends on the individual member’s area of responsibility. The variable remuneration is paid out in cash.
This model of variable remuneration is being reviewed in the 2022 financial year (see explanations regarding the LTI and STI above).
The LTI program to be introduced in 2022 is a Performance Share Units (PSU) plan. The individual grant amount is determined as a CHF amount and converted into a certain number of PSU on the basis of the current share price. A PSU is not yet a share, but a conditional right to receive a certain number of shares of the company in the future. The PSUs are subject to a three-year vesting period, after which they are converted into shares and paid out under the condition that the predefined performance conditions have been met and subject to continuous employment of the participant. The two performance conditions are revenue growth and EBITDA growth. The vesting level can range from 0 %, if the performance conditions are not met, to 150 % (cap) if both performance conditions are exceeded. This means that each PSU can provide for 0 to 1.5 shares.
A special rule applies for the PSUs granted in 2022 (LTI 2022-2024) and in 2023 (LTI 2023-2025). For the 2022 grant, one-third of the PSUs is subject to a one-year vesting period, another third to a two-year vesting period and the last third to a three-year vesting period. For the 2023 grant, two-third of the PSUs is subject to a two-year vesting period and one-third to a three-year vesting period. From the grant in 2024 (LTI 2024-2026) onward, the regular three-year vesting period will apply for all PSUs.
The LTI amounts will be submitted to the Annual General Meeting prospectively for the following financial year (analogous to fixed remuneration). As the LTI plan will be introduced in 2022, the grant amounts 2022 (LTI 2022-2024) and 2023 (LTI 2023-2025) will be proposed to the General Meeting for approval.
c) Expenses
The members of the Executive Board receive an expenses allowance which varies according to their function and a lump-sum vehicle allowance. In 2021, the overall amount is CHF 164,000 (previous year CHF 151,000). These expenses allowances have been approved by the cantonal tax authorities.
d) Shares, options
The MCH Group has not had any share or option schemes for the Executive Board to date. See under “b) Variable (profit-related) remuneration” regarding the planned introduction of an LTI.
Details of shares in MCH Group Ltd. that are held by members of the Executive Board may be found in the “Corporate Governance” section of the Annual Report under “Executive Board”.
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e) Sign-on bonuses
No sign-on bonuses are paid to members of the Executive Board.
f) Loans, credit
As in the previous year, no loans or credit were granted to the Executive Board in the reporting year.
g) Suretyships
As in the previous year, no suretyships (sureties, guarantees) were awarded to members of the Executive Board in the reporting year.
Remuneration 2021
The maximum amount for the fixed remuneration in 2021, approved by the Annual General Meeting on 24.04.2020, amounts to CHF 2,800,000.
No profit-related remuneration of the Executive Board for the year 2021 will be submitted to the General Meeting 2022 for approval, since this amounts to CHF 0 gross.
In the 2021 financial year, it was not necessary to make use of the additional amount of CHF 1,000,000 for which provision is made in the Articles of Association for the remuneration of Executive Board members who are appointed after the General Meeting's vote on the remuneration of the Executive Board.
For consultancy work by former Executive Board members, the MCH Group paid fees totaling CHF 30,529.– in 2021 (without VAT).
Remuneration 2020
No profit-related remuneration of the Executive Board for the year 2020 was submitted to the General Meeting on 28.04.2021 for approval, as it amounts to CHF 0 gross.
In the 2020 financial year, it was not necessary to make use of the additional amount of CHF 1,000,000 for which provision is made in the Articles of Association for the remuneration of Executive Board members who are appointed after the General Meeting's vote on the remuneration of the Executive Board.
For consultancy work by former Executive Board members, the MCH Group paid fees totalling CHF 21,500 in 2020 (without VAT).
