Compensation Report

5. Additional information on compensation, guarantees, loans, and credits for the business year 2023

5.1 Compensation to the Board of Directors in the business year 2023

In 2023, the members of the Board of Directors received a total compensation of CHF 1.4 million (previous year: CHF 1.4 million) in the form of fixed compensation of CHF 0.8 million (previous year: CHF 0.8 million), share-based compensation of CHF 0.6 million (previous year: CHF 0.6 million), and national insurance contributions of CHF 0.1 million (previous year: CHF 0.1 million).

The compensation of the Board of Directors remained unchanged in the reporting year compared to the previous year.

In 2023, the total compensation paid to the Board of Directors was 1.5% higher than during the previous year as a result of the following factors:

• Following the addition of one member to the Board of Directors from the 2022/23 term of office, all members of the Board of Directors worked for Zehnder Group for the entire duration of the reporting year and were compensated accordingly.

Compensation for the members of the Board of Directors

The Annual General Meeting 2023 approved a maximum budget of CHF 1.7 million for the Board of Directors for the period of office from the Annual General Meeting 2023 to the Annual General Meeting 2024. The compensation effectively paid during the period under consideration in this Compensation Report (1 January to 31 December 2023) is within this budget approved by the shareholders. The final reporting for the entire period from the Annual General Meeting 2023 to the Annual General Meeting 2024 is included in the Compensation Report 2024.

At the Annual General Meeting of 7 April 2022, the shareholders approved a maximum total compensation of CHF 1.7 million for the Board of Directors during the period of office from the Annual General Meeting 2022 to the Annual General Meeting 2023. The compensation effectively paid to the members of the Board of Directors over this period was CHF 1.4 million and therefore is within this approved budget.

5.2 Compensation of the Group Executive Committee in the business year 2023

For 2023, the members of the Group Executive Committee received a total compensation of CHF 3.9 million (previous year: CHF 4.8 million) in the form of fixed compensation of CHF 2.0 million (previous year: CHF 1.9 million), variable compensation of CHF 0.8 million (previous year: CHF 1.9 million), other benefits including a one-off recognition payment and the value of the discount on the shares of CHF 0.6 million (previous year: CHF 0.3 million), and employer social security and pension fund contributions of CHF 0.6 million (previous year: CHF 0.7 million).

The fixed compensation of the Group Executive Committee increased by 1.8% compared to the previous year due to a standard market adjustment.

In 2023, the Group achieved a net profit of EUR 44.6 million. With this result, the budget value for the payment of an STI amount for 2023 was not achieved and no STI payment could be made to the members of Group Executive Committee.

Due to the results actually achieved, which were nevertheless solid in view of the slowdown of the construction industry and the difficult market environment, the Board of Directors has decided to pay the members of Group Executive Committee a one-off payment in the form of an recognition payment. This is intended to recognise the performance achieved during this challenging year and environment and to document the trust placed in the management team. To determine this one-off payment, the calculation is based on the STI formula and corresponds to a maximum of 25% of the individual profit share amount for 2023. The rules for granting and determining the one-off recognition payment are also applied to the other Zehnder Group executives for whom the lower limit for an STI payment has not been reached.

The long-term incentive (LTI) increased by 3.9% compared to the previous year in order to harmonise the target compensation mix for the members of Group Executive Committee.

The PSU allocations made in 2021 as part of the LTI plan (LTI 2021-2023) can be transferred during the first quarter of 2024. Of the performance conditions, 50% 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 the payout of the two performance conditions, rTSR of 128.8% and EPS growth of 0.0% were achieved, corresponding to a combined performance factor of 64.4%. Accordingly, 9,413 PSUs were converted into 9,413 Zehnder shares.

The PSU awards for the 2020-2022 LTI plan that were published in the previous year have been incorrectly allocated with a combined performance factor of 146.7% (instead of 146.4%). Accordingly, 16,350 PSUs were vested into 16,350 Zehnder shares, resulting in a difference of 34 shares compared to the 16,316 shares that were published in the Compensation Report 2022. As the difference is not material, the Nomination and Compensation Committee decided on 23 February 2024 not to reclaim the over-allocated shares.

In 2023, the total compensation paid to the Group Executive Committee was 18.2% lower than during the previous year as a result of the following factors:

• No STI payout for 2023 compared to the previous year due to a low Group net profit in 2023;
• This results in lower employer contributions to social security and pension schemes;
• EUR/CHF exchange rate differences compared to the previous year;

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

The Annual General Meeting 2023 authorised a maximum budget for the compensation of the Group Executive Committee of CHF 6.0 million for 2023. The total compensation amount of CHF 3.9 million paid to the Group Executive Committee for the fiscal year 2023 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 2023

No compensation was paid to former members of the Board of Directors or 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.

5.5 Shareholdings in the company

As at the balance sheet date, the members of the Board of Directors owned the following shares:

As at the balance sheet date, the members of the Group Executive Committee owned the following shares: