Remuneration System

The fixed remuneration of the members of the Executive Board comprises the annual basic salary and benefits, including pension insurance and other payments, such as family allowances, long-service awards and other allowances.

The annual basic salary is determined by the Board of Directors on the basis of the scope of the role, the skills required to perform the role, the external market value for the role and the skills and experience of the individual in the role.

Benefits consist mainly of retirement, insurance, and healthcare plans that are designed to provide a reasonable level of protection for the employees and their dependents in respect of the risk of retirement, disability, death, and illness. The members of the Executive Board participate in the occupation pension plan offered to all employees in Switzerland.

In the business year 2022, several members of the Executive Board in its 2020 composition were entitled to a retention payment that had been approved by the Annual General Meeting. Such retention payments are no longer foreseen in future.

The STI is a short-term variable remuneration component designed to reward company and business unit performance over a time horizon of one year. The redesigned STI program strengthens the link between performance and remuneration and the strategic alignment throughout the company. The STI is paid out in cash in the spring of the following year.

The performance indicators and targets are set annually by the Board of Directors upon recommendation by the GNCC.

For the business year 2022, there was no uniform STI plan for the members of the Executive Board. The STI entitlement was based on the previous regulations (whereby only individual performance was taken into account) or on individually determined performance indicators and targets.

For the business year 2023, the new STI plan will apply to the Executive Board. The STI payout will be determined based on an STI target value, which is defined as a percentage of the annual basic salary and may be set between 30 % and 70 % for the members of the Executive Board. The Key Performance Indicators (KPI) are a financial and strategic target at Group level, each weighted at 50 % of the total STI. For each KPI, an expected performance level which provides for a 100 % payout is determined, as well as a minimum level of performance (threshold), below which there is no payout, and a maximum level of performance, for which the payout is capped at 200 %.

The KPIs and the expected performance levels are set annually by the Board of Directors on recommendation by the GNCC. For the business year 2023, the financial target at Group level will be the operating cash flow (OCF), in line with the spriority of the company.

The LTI introduced in 2022 for the members of the Executive Board and the Management Team rewards for the performance of the Group over a time period of three years. The LTI strengthens the alignment with shareholders' interests, promotes a performance-oriented attitude and reinforces the loyalty to the company.

The LTI program is awarded in the form of Performance Share Units (PSU). The individual grant amount is determined as a CHF amount and converted into a certain number of PSU on the basis of the averaged ten-day share price in the month prior to the grant date. A PSU is a conditional right to receive a certain number of shares of the company in the future, subject to a three-year vesting period, and dependent upon continuous employment of the participant with the company and the achievement of the following performance conditions:

For the 2022 grant (LTI 2022-2024), the vesting period is staged over three years, i.e., one-third of the PSU 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 (LTI 2023-2025), two-thirds of the PSU are 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 PSU.

At vesting, the final number of PSU determined will be converted into a number of shares and paid out under the condition that the predefined performance conditions have been met and subject to continuous employment of the participant with the company. 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.

In case of termination of employment, the PSUs are forfeited without any compensation, except for good leaver cases (retirement, disability, death or termination by the company for reasons that are not related to performance), where the PSU are subject to a pro rata vesting at the regular vesting date. In case of a change of control, the Board retains sole discretion.

The members of the Executive Board receive an expenses allowance which varies according to their function and a lump-sum vehicle allowance. These expenses allowances have been approved by the cantonal tax authorities. 

The Chairman, Vice-Chairman and members of the Board of Directors receive a fixed basic fee. Additional fees are paid for chairmanship and the membership in a committee.

The members of the Board of Directors and the committees are entitled to an attendance fee of CHF 1 000 per meeting or per meeting day (in case of several meetings on the same day). In the business year 2022, the Board of Directors has adjusted this regulation to the effect that meetings of less than 90 minutes duration are remunerated with CHF 500.

All members of the Board of Directors receive a lump-sum expenses allowance. Expenses incurred in connection with meetings or representation functions (travel, accommodation, etc.) are reimbursed in accordance with the effective expenditures.