Compensation Report

5. Additional information on compensation, guarantees, loans and credits for the business year 2021

5.1 Compensation to the Board of ­Directors in the business year 2021

In 2021, the members of the Board of Directors received total compensation of CHF 1.4 million (previous year: CHF 1.6 million) in the form of fixed compensation of CHF 0.7 million (previous year: CHF 0.7 million), share-based compensation of CHF 0.6 million (previous year: CHF 0.8 million) and national insurance contributions of CHF 0.1 million (previous year: CHF 0.1 million).

In 2021, the total compensation paid to the Board of Directors was 10.9% lower than during the previous year as a result of the following factors:

• New compensation structure introduced from the 2021/2022 term of office (see 3. Architecture of compensation of the Board of Directors);
• Reduction in the Board of Directors by two members.

Compensation for the members of the Board of Directors

The 2021 Annual General Meeting approved a maximum budget of CHF 1.6 million for the Board of Directors during the period of office from the 2021 Annual General Meeting to the 2022 Annual General Meeting. The compensation effectively paid during the period under consideration in this Compensation Report (1 January to 31 December 2021) is within this budget approved by the shareholders. The final reporting for the entire period from the 2021 Annual General Meeting to the 2022 Annual General Meeting is included in the 2022 Compensation Report.

At the Annual General Meeting on 2 April 2020, the shareholders approved a maximum total compensation figure of CHF 1.8 million for the Board of Directors during the period of office from the 2020 Annual General Meeting to the 2021 Annual General Meeting. The compensation effectively paid to the members of the Board of Directors over this period was CHF 1.4 million and therefore fell within this approved budget.

5.2 Compensation of the Group Executive Committee in the business year 2021

For 2021, the members of the Group Executive Committee received total compensation of CHF 5.1 million (previous year: CHF 3.9 million) in the form of fixed compensation of CHF 1.9 million (previous year: CHF 1.7 million), variable compensation of CHF 2.1 million (previous year: CHF 1.4 million), other benefits including the value of the discount on the shares of CHF 0.4 million (previous year: CHF 0.3 million) in addition to national insurance and pension contributions of CHF 0.8 million (previous year: CHF 0.5 million).

In 2021, the total compensation paid to the Group Executive Committee increased by 32.2% compared to the previous year as a result of the following factors:

• Regular basic salaries in 2021, compared with voluntary waiving of 10% of the fixed basic salary by all members of the Group Executive Committee from April until September 2020;
• Individual increase in the annual base salaries in order to adjust to the market median. The total increase equates to 3.5% of the total fixed cash compensation for the members of the Group Executive Committee;
• Individual increase in the individual profit-sharing amounts in order to adjust to the responsibilities forming part of the position. The total increase equates to 2.4% of the profit-sharing amounts of all members of the Group Executive Committee;
• Higher STI amounts for 2021 compared with the previous year, due to a higher Group net profit in 2021;
• Extension of grant of long-term share-based incentive plan (LTI) to all members of the Group Executive Committee in 2021.

In 2021, the Group achieved a net profit of EUR 60.3 million. Consequently, in 2021, the variable cash compensation amounted to  2.2% of the net profit for the members of the Group Executive Committee (previous year: 2.1%).

The variable cash for the CEO amounted to  82.5% of the fixed compensation and, for the other members of the Group Executive Committee, a maximum of  75.0% of their fixed compensation.

The PSU allocations made in 2019 as part of the LTI plan (LTI 2019–2021) can be transferred during the 1^st quarter of 2022. 50% of the performance condition is based on the relative total shareholder return (rTSR) and the remaining 50% is based on the increase in earnings per share (EPS growth). For payment, the two performance conditions were achieved (rTSR of 150% and EPS growth of 150%), resulting in a combined performance factor of 150%. Accordingly, 16,931 PSUs were converted into 16,931 Zehnder shares.

The highest compensation for a member of the Group Executive Committee was paid to CEO Matthias Huenerwadel in the reporting year and in the previous year.

In 2021, the Annual General Meeting authorised a maximum budget for compensation of the Group Executive Committee of CHF 5.6 million for the fiscal year 2021. The total compensation amount of CHF 5.1 million paid to the Group Executive Committee for the fiscal year 2021 as disclosed in the following table is below this upper limit.

Compensation for the members of the Group Executive Committee

5.3 Guarantees, loans, credits, etc.

No Zehnder Group company has provided any guarantees, waivers of claims outstanding, credits or loans to present or former members of the Board of Directors, to present or former members of the Group Executive Committee, or to persons closely associated with these individuals. No loans to current or former members of the Board of Directors or Group Executive Committee or related parties existed at the end of the reporting year.

5.4 Compensation to former members of the Board of Directors and of the Group Executive Committee, and to persons closely associated with them, in the business year 2021

No compensation was paid to former members of the Board of Directors or of the Group Executive Committee in the reporting year.

No compensation was paid to persons closely associated with members of the Board of Directors or the Group Executive Committee.