Compensation Report
3. Architecture of compensation of the Board of Directors
In order to guarantee their independence in their supervisory position for the Group Executive Committee, the members of the Board of Directors receive a fixed compensation only, consisting of a fixed annual retainer, fixed cash compensation for their membership of committees of the Board of Directors and an expense lump sum.
In order to strengthen the alignment to long-term shareholder interests, payment of the fixed annual retainer for the Board of Directors is made half in cash and half in form of registered shares A of Zehnder Group. The number of shares awarded is determined based on the average volume-weighted share price during the period 1 December and 31 December of that year. The shares are subject to a restriction period of three years during which they cannot be sold, transferred or pledged. The restriction period also applies in the case of termination of the mandate, except in case of death or change of control, where the restriction immediately lapses.
The cash compensation is paid out on a monthly basis and the registered shares A are allocated in January for the current compensation period corresponding to the term of office from the Annual General Meeting of the previous year to the Annual General Meeting of the reporting year.
Additional compensation to members of the Board of Directors for advisory services to the company or for activities in companies that are controlled directly or indirectly by the company is permitted. This compensation is reflected in the total amount of compensation paid to the Board of Directors, which must be approved by the Annual General Meeting.
The compensation of the Board of Directors is reviewed every two to three years. The benchmark analysis performed by Willis Towers Watson in 2020 was used to determine the adjustments to the compensation model in the context of the expanded responsibilities within the Board of Directors. Since the term of office 2021/2022, shares have been allocated at market value based on common market practice. The discount of 30% on the share price applicable until the Annual General Meeting 2021 was removed and the reference period for calculation of the relevant share price was shortened to one month (December).
The compensation structure of the Board of Directors is summarised in the following table.
Architecture of compensation of the Board of Directors
|
CHF |
In cash |
In shares 1 |
|
Retainer (gross p.a.) |
|
|
|
Chairman of the Board of Directors |
210,000 |
210,000 |
|
Vice Chairman of the Board of Directors |
90,000 |
90,000 |
|
Members of the Board of Directors |
50,000 |
50,000 |
|
Committee fees (gross p.a.) |
|
|
|
Chairman of the Nomination and Compensation Committee or Audit Committee |
50,000 |
|
|
Member of the Nomination and Compensation Committee or Audit Committee |
25,000 |
|
|
Expense lump sum (gross) 2 |
2,000 |
|
1 Converted into shares on the basis of the average volume-weighted share price during the period 1 December to 31 December, without discount.
2 The Chairman and Vice Chairman of the Board of Directors are paid an expense lump sum in line with the company’s rules on executives’ expenses depending on the work commitment (currently 50% for the Chairman of the Board of Directors and 25% for the Vice Chairman). No expense lump sum is paid to members of the Board of Directors based outside Switzerland. If the actual business expenses exceed CHF 2,000, then they are reimbursed on an actual cost basis