Remuneration Systems
The MCH Group's remuneration systems are aligned to market and industry standards and promote the joint achievement of ambitious corporate objectives.
MCH Group has fundamentally revised and realigned its remuneration systems in recent years. New variable remuneration components have been implemented for the operational leadership team (Executive Board and Management Team), which reward the achievement of the group's financial targets in the past business year and over a three-year time horizon.
On the basis of the short-term variable remuneration model for the management, a uniform program for variable remuneration was drawn up last year for all employees in the MCH Group, which will be applied in the business year 2024. This does not apply to employees with a sales-related commission.
Remuneration System of the Board of Directors
In 2022, PricewaterhouseCoopers AG (PwC) carried out an in-depth analysis of the remuneration of the Board of Directors in order to determine its competitiveness in terms of structure and quantum. For this purpose, a peer group of 25 listed Swiss companies was selected that are comparable to MCH in terms of turnover and market capitalization. The analysis showed that the remuneration structure was not fully in line with market practice and that the remuneration level of the MCH Group's Board of Directors was significantly lower than those of the peer companies.
The Board of Directors has therefore decided to adjust the remuneration model for the business year 2023 and the following years. As of 01.01.2023, the payment of attendance fees was waived and the compensation for attending meetings was integrated into the basic fee. The Board of Directors also decided to increase the basic fee by 66.7 % by issuing shares with a vesting period of two years. This additional remuneration in the form of shares became effective in the business year 2023 pro rata from May to December and applies to the business years 2024 and 2025.
Due to the reduction in the size of the Board of Directors, the total amount of remuneration for the Board of Directors remains in line with previous business years. A further possible increase in the remuneration of the Board of Directors is being considered for the business year 2026 at the earliest, depending on the development of business results.
The compensation of the Board of Directors is thus composed as follows:
Basic fee
(gross amounts p.a.)
- Chairman of the Board of Directors: CHF 150,000
(CHF 90,000 in cash, CHF 60,000 in shares) - Vice Chairman of the Board of Directors: CHF 75,000
(CHF 45,000 in cash, CHF 30,000 in shares) - Member of the Board of Directors: CHF 50,000
(CHF 30,000 in cash, CHF 20,000 in shares)
The basic fee of the Board of Directors is paid quarterly, in the case of new members or leavers or pro rata.
Fee for additional functions
(gross amounts p.a.)
- Chair of a Committee: CHF 15,000 (in cash)
- Member of a Committee: CHF: 10,000 (in cash)
The fee for additional functions is paid quarterly, in the case of new members or leavers or pro rata.
Expenses
All members of the Board of Directors receive a lump-sum expense.
(net amounts p.a.)
- Chairman of the Board of Directors: CHF 5,000
- Vice Chairman of the Board of Directors: CHF 2,000
- Member of the Board of Directors: CHF 1,000
According to § 25 of the Articles of Association of MCH Group Ltd., lump-sum expenses are not deemed remuneration. They shall not be added to the amounts subject to approval by the Annual General Meeting and are not shown individually in the Remuneration Report.
Expenses incurred in connection with meetings or representation functions (travel, accommodation, etc.) are reimbursed in accordance with the effective expenditures.
Details on the remuneration of the Board of Directors 2023 are provided in the section “Remuneration Board of Directors”.
Online: Link
Download pdf: Page 140
Remuneration System for the Executive Board
In 2022, the MCH Group implemented a long-term variable remuneration component for the members of the Executive Board (and the management team), which is paid out in the form of shares. This long-term incentive program (LTI) rewards performance over a time horizon of three years.
In the business year 2023, the short-term variable remuneration component – the former bonus – was also redefined and implemented for the Executive Board (and the management team). This short-term incentive program (STI) rewards performance in the previous business year.
The compensation of the Executive Board is thus composed as follows:
Fixed Remuneration and Benefits
The fixed remuneration of the members of the Executive Board comprises the annual basic salary and benefits, including pension insurance and any 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.
Short-term Incentive (STI)
The new STI program implemented in the business year 2023 for the Executive Board (and the Management Team) rewards the performance of the company over a one-year time horizon. The redesigned STI program helps to improve the link between performance and Remuneration and to ensure the strategic alignment of the entire company.
The STI target component is defined as a percentage of the annual basic salary and is between 35 % and 50 % for the members of the Executive Board. The key performance indicators (KPIs) for determining the STI targets are the Group's operating cash flow (OCF) and EBITDA, each with a weighting of 50 %. An expected performance level is defined for each target. The payout factor can range from 0 % to maximum of 200 %.
Long-term Incentive (LTI)
The LTI program implemented in 2022 for the members of the Executive Board (and the Management Team) rewards for the performance of the Group over a three-year time horizon. The LTI strengthens the alignment with the interests of shareholders, promotes a success-oriented attitude and strengthens loyalty to the company.
In the LTI program, the individual allocation amount is determined as a CHF amount and converted into a certain number of performance share units (PSUs) on the basis of the average volume-weighted share price (VWAP) during the first ten trading days in the month preceding the allocation date. A PSU is a conditional right to a certain number of shares in the company in the future, which is subject to a three-year vesting period (period until payout). At the time of vesting, the final number of PSUs is converted into shares and paid out, subject to the condition that the predefined performance targets are achieved and the employment relationship is not terminated.
The key performance indicators (KPIs) for setting the LTI targets are the Group's operating income (weighting 33 1/3 %) and EBITDA (weighting 66 2/3 %). The basis for the targets are the budget (for the first year) and the annually updated mid-term plan (for the second and third year). The payout factor can range from 0 % to a maximum of 150 %. This means that each PSU can lead to an entitlement of 0 to 1.5 shares.
The LTI program is implemented with staggered vesting periods: For the 2022 allocations (period 2022–2024), one third of the PSUs is subject to a one-year vesting period, one third to a two-year vesting period and one third to a three-year vesting period; for the 2023 allocations (period 2023–2025), two thirds of the PSUs are subject to a two-year vesting period and one third to a three-year vesting period. From the 2024 allocation (period 2024–2026), the full three-year vesting period will apply to all PSU allocations.
Expenses
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.
According to § 41 of the Articles of Association of MCH Group Ltd., expenses are not deemed remuneration. They shall not be added to the amounts subject to approval by the Annual General Meeting and are not shown individually in the Remuneration Report.
The members of the Executive Board are also members of the Board of Directors of MCH Group companies. No extra remuneration is paid for the exercise of these mandates within the Group.
Details on the remuneration of the Executive Board 2023 are provided in the section “Remuneration Executive Board”:
Online: Link
Download pdf: Page 143
Harmonized model for variable remuneration
Up to and including the business year 2023, different bonus models were in force for employees at all levels in the various companies, divisions and/or countries of the MCH Group, with the payment of a bonus being dependent on financial results at group and/or division level and on individual performance.
In recent years, the conditions for the payment of a bonus, which are linked to the financial results at group and/or division level, have not been fulfilled. The payment of variable remuneration was limited to the individual performance assessment component, with employees waiving the bonus portion of this component in 2020 and 2021.
The STI target component is now defined as a percentage of the annual basic salary – between 5 % and 30 %, depending on the employee's hierarchical level, including middle management employees. The key performance indicators (KPIs) for the STI targets are the Group's operating cash flow (OCF) and the EBITDA of the Group or division/business unit and – for employees – the individual performance assessment. An expected performance level is defined for each financial target. The payout factor can range from 0 % to maximum of 200 %.
KPIs and weighting
Corporate Functions / Management
- Group OCF 50 %
- Group EBITDA 50 %
Corporate Functions / Employees
- Group OCF 25 %
- Group EBITDA 25 %
- Individual targets50 %
Business Functions / Management
- Group OCF 50 %
- Division EBITDA 25 %
- Business Unit EBITDA 25 %
Business Functions / Employees
- Group OCF 25 %
- Division EBITDA 12.5 %
- Business Unit EBITDA 12.5 %
- Individual targets 50 %
