5.1 Remuneration governance framework
Nomination and Compensation Committee
The Nomination and Compensation Committee generally consists of three members of the Board of Directors who are elected individually each year by the Annual General Meeting. The Nomination and Compensation Committee appoints its chairman.
At the end of 2021, the members of the Nomination and Compensation Committee were: Hanspeter Fässler (Chairman), Jens Breu and Claude R. Cornaz. In 2021 the Nomination and Compensation Committee met for four meetings and one conference call. All members were present at all appointments.
Responsibilities of the Nomination and Compensation Committee:
Basic human resource matters (e.g. talent management, succession planning, etc.) of the Datwyler Group.
Nominations to the Board of Directors and Executive Management.
Preparation of the maximum compensation amounts to the Board of Directors and Executive Management to be submitted to shareholders' vote at the Annual General Meeting.
Determination of remuneration for members of the Board of
Directors within the parameters of the maximum amount approved by the Annual General Meeting and in compliance with Art. 21b of the Articles of Association.
Employment terms for members of the Executive Management.
Determination of performance-based remuneration for members of the Executive Management within the parameters of the maximum amount approved by the Annual General Meeting and in compliance with Art. 21c of the Articles of Association.
Monitoring of structure and development of remuneration.
Oversight of compliance by the members of the Board of Directors and Executive Management with the provisions of the Articles of Association concerning the number of mandates in top management and supervisory bodies of legal entities outside the Datwyler Group (Art. 14 section 5 and Art. 19 section 3 of the Articles of Association) including any necessary measures.
Compliance with regulations concerning the disclosure of remuneration of members of the Board of Directors and Executive Management.
Preparation of the remuneration report.
The Nomination and Compensation Committee has written terms of reference setting out its responsibilities. The Committee generally prepares the groundwork for proposals and decision-making by the full Board. It has executive authority only within the remuneration framework already approved in principle by the Annual General Meeting or Board of Directors and where expressly provided in the Articles of Association or a policy. It meets upon invitation of its Chairman as often as necessary, but at least once a year. The CEO attends the meetings by invitation and in an advisory capacity, and the HR officer of the Group takes the minutes.
At the agenda points, where his own performance and remuneration are being discussed, the CEO does not attend. The members of the Committee receive documentation before meetings to enable them to prepare for the individual agenda items. At least two members must be present to adopt decisions. The committees pass resolutions by an absolute majority of the votes cast. In the event of a tie, the Chairman casts the deciding vote. The Nomination and Compensation Committee keeps a record of its decisions and recommendations in minutes submitted to the full Board of Directors and reports the results of its activities at the next Board meeting.
Approval levels
Proposal |
Review |
Approval |
|
|---|---|---|---|
Remuneration principles (Articles of Association) |
Nomination and Compensation Committee |
Board of Directors | Annual General Meeting (binding vote) |
Remuneration models for the Board of Directors and Executive Management |
Nomination and Compensation Committee | Board of Directors | |
Remuneration Report |
Nomination and Compensation Committee | Board of Directors | Annual General Meeting (consultative vote) |
Maximum aggregate amount of remuneration for Board of Directors |
Nomination and Compensation Committee | Board of Directors | Annual General Meeting (binding vote) |
Individual remuneration of Board of Directors members |
Nomination and Compensation Committee | Board of Directors | |
Maximum aggregate amount of remuneration for Executive Management |
Nomination and Compensation Committee | Board of Directors | Annual General Meeting (binding vote) |
Remuneration CEO |
Nomination and Compensation Committee | Board of Directors | |
Individual remuneration other members of Executive Management |
CEO | Nomination and Compensation Committee | Board of Directors |
Determination procedure for the remuneration system
The remuneration system is normally reviewed every three years by the Nomination and Compensation Committee and may be adjusted to reflect the evolving business environment.
The Datwyler Group's remuneration policy is compared against common standards for similar positions at comparable companies. The process for determining the elements and levels of remuneration for the Board of Directors and Executive Management is based on a periodic benchmarking analysis on the basis of remuneration surveys and of remuneration disclosures published by comparable companies in their annual reports.
Comparable companies are defined as international industrial companies listed on the SIX Swiss Exchange with similar geographic scope, revenue, complexity, capitalisation and employee headcount. They include: ALSO, Belimo, Bucher Industries, DKSH, Dormakaba, Emmi, Forbo, Galenica, Georg Fischer, Idorsia, Landis+Gyr, OC Oerlikon, SFS Group, Sigfried, Sulzer, Tecan and VAT Group.
The Annual General Meeting approves the proposals of the Board of Directors concerning the maximum aggregate amount for remuneration of the Board of Directors each year for the period up to the next ordinary Annual General Meeting pursuant to Art. 21b of the Articles of Association, and of remuneration for the Executive Management for the following fiscal year pursuant to Art. 21c of the Articles of Association.
The amount of remuneration for members of the Board of Directors is based on service on the individual committees. It is determined annually by the Nomination and Compensation Committee within the parameters of the maximum amount approved by the Annual General Meeting and in compliance with Art. 21b of the Articles of Association. The full Board of Directors approves the result. Members of the Board of Directors have a right to be consulted at these meetings of the Board of Directors.
The effective performance-based remuneration of members of the Executive Management is determined annually by the Nomination and Compensation Committee within the parameters of the maximum amount approved by the Annual General Meeting and in compliance with Art. 21c of the Articles of Association. The full Board of Directors approves the result.
Under Art. 21a section 5 of the Articles of Association, the company is authorised to pay an additional amount of up to 50% of the applicable aggregate amount of the applicable maximum total remuneration of the Executive Management to members of the Executive Management who join the Executive Management or assume additional duties during a period for which Executive Management remuneration has already been approved in the event that the approved maximum aggregate amount of remuneration is insufficient for this period.
The Remuneration Report is submitted to the Annual General Meeting for approval in an consultative vote.
Remuneration philosophy and principles
The remuneration philosophy, as set forth in the Articles of Association, is aligned with the business strategy of sustainable, profitable growth and aims to promote and support the four core values of the Datwyler Group:
We are entrepreneurs.
We excel at what we do.
We bring value to our customers.
We have respect for others.
The framework for implementing these remuneration principles is set forth in the Articles of Association.
Pay for performance
The variable incentive plan for Executive Management rewards the collective performance of the company.Reward long-term and sustainable value creation
Part of the remuneration is paid in the form of blocked shares for the Board of Directors and in the form of performance share units for the Executive Management in order to encourage a long-term view and to create alignment with the interests of the shareholders. Furthermore, the variable incentive plan for Executive Management has no excessive leverage and therefore does not encourage inappropriate risk-taking.Market competitiveness
Remuneration levels are in line with competitive market practice and are designed to attract, retain and develop the best talent.Fairness and transparency
Remuneration programmes are straightforward, transparent and fair.
5.2 Remuneration structure of the Board of Directors
The remuneration of members of the Board of Directors is determined based on the responsibility and time requirements of their function and includes a base fee for Board membership and additional fees for special functions such as committee chairmanship and membership. The additional fees are cumulative in the case of multiple functions.
Members of the Board of Directors receive their remuneration in the form of a fixed fee in cash and a grant of bearer shares of Dätwyler Holding Inc., blocked for five years. The number of bearer shares granted is calculated from the fixed amount and the average price on the 20 trading days prior to the grant date. In the event of death or disability of a Board member, the shares may be subject to early un-blocking if the participant or their beneficiaries so choose. They remain blocked in all other instances.
Remuneration model for
members of the Board of Directors
| Cash (CHF) |
Blocked shares (CHF) |
|
|---|---|---|
Base fee |
||
For Board membership |
30'000 | 150'000 |
Additional fee |
||
For special functions |
||
Board chairmanship |
100'000 | 180'000 |
Board vice-chairmanship |
50'000 | |
Committee chairmanship |
40'000 | |
Committee membership |
20'000 |
The elements and levels of remuneration for the Board of Directors is based on benchmarking analysis with a group of comparable international industrial companies listed on the SIX Swiss Exchange with similar geographic scope, revenue, complexity, capitalisation and employee headcount. They include: ALSO, Belimo, Bucher Industries, DKSH, Dormakaba, Emmi, Forbo, Galenica, Georg Fischer, Idorsia, Landis+Gyr, OC Oerlikon, SFS Group, Sigfried, Sulzer, Tecan and VAT Group.
Board members may receive additional compensation for assuming special duties, as well as for participation in meetings of a temporary additional committee (other than the Audit Committee and the Nomination and Compensation Committee). Both the special duty and the additional committee and the corresponding compensation must be determined in advance by the Board of Directors.
Fees are paid and shares allocated in June for the current year of Board service. They are subject to regular social security contributions but are not pensionable. Members of the Board of Directors receive no additional reimbursement of business expenses beyond actual expenditures for business travel.
5.3 Remuneration structure of the Executive Management
The remuneration of Executive Management members is determined based on the scope and responsibilities of their position and consists of a fixed base salary, a variable incentive, a long-term incentive plan with performance share units and benefits such as retirement pension, insurance and perquisites.
Remuneration model for
the Executive Management
Instrument |
Purpose |
|
|---|---|---|
Fixed base salary |
Monthly cash payments | To compensate for performance of duties and for qualifications required to perform the role |
Variable incentive |
Annual cash payment | To reward collective business performance in the reporting year |
Long-term incentive plan |
Annual granting of performance share units with a vesting period of three years | To drive sustainable results and create long-term alignment with shareholders' interests |
Employer social insurance contributions and perquisites |
Retirement pension, insurance and perquisites | To protect against risks and reimburse business expenses |
Fixed base salary
The amount of the fixed base salary depends on the scope of the position, the qualifications and experience required to perform the role together with the market environment. The objective is to pay fixed salaries in line with those offered by comparable companies for similar positions.
Variable incentive
The variable incentive plan rewards the collective performance of the company over a time horizon of one year. The variable incentive is capped at 180% of the annual fixed base salary for the CEO and at 45% to 120% for the other members of the Executive Management.
In alignment with the overall strategy of sustainable profitable growth, the variable incentive will be measured on the basis of two performance indicators weighted equally:
Net sales growth compared to previous year, relative to a peer group of companies;
EBIT improvement (earnings before interest and tax) compared to previous year, relative to the same peer group of companies.
To calculate the two performance indicators, the Healthcare Solutions and Industrial Solutions business areas are being used since the 2020 reporting year. The comparison of the two Datwyler performance indicators with the performance of similar companies is performed by an independent consulting firm. The peer group includes industrial firms that have a comparable base of products, technology, customers, suppliers or investors and thus are exposed to similar market cycles as Datwyler.
The peer group corresponds to that of the former Sealing Solutions division and is identical for all members of the Executive Management. The intention of measuring the performance relatively to peer companies is to neutralise the effect of market cycles and external factors that impact the company's performance but are outside of the control of management. The external market cycles being neutralised, the true performance of the company can be better assessed.
The target amount of the variable incentive will be to achieve the median performance of the peer group on both indicators (net sales growth and EBIT improvement), which provides for a 100% payout. The maximum payout of 200% can only be achieved if Datwyler achieves the best ranking among all peer companies on both net sales growth and EBIT improvement. Should Datwyler perform below all peer companies on both indicators, the variable incentive will be set at zero. The payout percentage for any point between the lowest ranking (0% payout), the median (100%) and the best ranking (200%) is determined by linear interpolation.
Overview of calculation and
payout of the variable incentive
Target values in % of annual fixed base salary |
CEO |
COO, CFO, CTO |
|---|---|---|
Net sales growth relative to peers |
45 % |
11.25 % – 30 % |
EBIT improvement relative to peers |
45 % |
11.25 % – 30 % |
Total (at target) |
90 % | 22.5 % – 60 % |
Total (at maximum) |
180 % | 45 % – 120 % |
Peer group of companies to measure the collective performance
Companies:
Aluflexpack
Amgen
Aptargroup – Food & Beverages
Aptargroup – Pharma
Aptiv
Atrion Corp.
Becton Dickinson & Company – Life Sciences
Becton Dickinson & Company – Medical
Bridgestone Corporation
Continental – Autonomous Mobility and Safety
Continental – Powertrain
Continental – Vehicle Networking and Information
Continental – ContiTech
Delphi Technologies
Gerresheimer – Plastics & Devices
Gerresheimer – Primary Packaging Glass
Hexpol AB
Johnson Control
Parker-Hannifin – Diversified Industrial (America and International)
Sanok Rubber
Semperit AG Holding
Trelleborg – Sealing Solutions
Valeo
West Pharmaceutical
ZF Friedrichshafen
The Board of Directors may decide to adjust both performance indicators to reflect currency effects, extraordinary effects such as one-time costs or sale of real estate and structural changes such as acquisitions or divestments affecting net sales by more than 10% of the previous year figure. In case of a negative net result, the Board of Directors reserves the right to deviate from the above-mentioned calculation approach.
The illustration at the top of this page summarises the performance objectives and their respective weighting in percentage of the annual fixed base salary for the CEO and the other members of the Executive Management.
In the 2020 financial year, Datwyler for the first time replaced the individual performance target with a correspondingly collective performance target. This approach, including a uniform peer group, applies to all employees of the company who are entitled to a variable incentive. By replacing personal targets with collective targets, Datwyler promotes agile collaboration across hierarchical levels and departments and accelerates the implementation of customer requests and development projects. By simultaneously introducing the concept of Objectives and Key Results (OKRs), Datwyler focuses the activities of all employees on a clearly defined number of over- arching company objectives.
Long-term incentive plan
With the 2018 financial year, Datwyler replaced the previous share participation for the Executive Management with a long-term incentive plan. This measures performance relative to comparable peer companies. This is intended to neutralise the effect of market cycles and external factors that impact the company's performance but are outside of the control of management. The external market cycles being neutralised, the true performance of the company can be better assessed.
Share-based remuneration will be awarded under a long- term incentive plan in future in the form of performance share units (PSUs). A PSU is a conditional right to receive shares of the company subject to the fulfilment of certain conditions during a three-year vesting period. The vesting conditions will include both the achievement of predetermined performance objectives (performance conditions) and continuous employment at the end of the vesting period (service condition).
As a basis for the allocation of PSUs, a target amount for the long-term incentive plan was determined for each member of the Executive Management. This target amount is based on the relevant compensation benchmarks.
At grant date (1 January), the target incentive amount will be converted to a number of PSUs on the basis of the average closing share price during the twenty trading days before the grant date. The PSUs will be subject to a three-year vesting period, conditional on continued service within the company and on the following performance targets being achieved:
Relative net sales growth, with one-third weight
Relative ROCE growth, with one-third weight
Relative total shareholder return (TSR), with one-third weight
Datwyler's performance on all three indicators is compared annually with a peer group of companies. The peer group is a consolidation of the peer companies that are already considered for the calculation of the annual variable incentive.
Peer group
Due to the divestment of the distribution companies, the peer group was reduced to that of the former Sealing Solutions division as of 2020. The peer group is confirmed by the Board prior to the annual grant of PSUs and may be adjusted if required.
The peer group consists of the following companies:
Aluflexpack
Amgen
Aptargroup
Aptiv
Atrion Corp.
Becton Dickinson & Company
Bridgestone Corporation
Continental
Delphi Technologies
Gerresheimer
Hexpol AB
Johnson Control
Parker-Hannifin
Sanok Rubber
Semperit AG Holding
Trelleborg
Valeo
West Pharmaceutical
ZF Friedrichshafen
Reward for long-term performance
With the long-term incentive plan, a significant portion of Executive Management compensation is linked to the company's long-term performance. This strengthens the alignment to shareholders' interests. Datwyler's relative performance will be expressed as a percentile rank, which determines a payout factor between 0% and 200%:
Ranking < 25% of the peer group (threshold): 0% payout
Ranking at the median of the peer group: 100% payout
Ranking > 75% of the peer group (cap): 200% payout
Linear interpolation between those points
The combined payout factor is a weighted average of the payout factors for relative sales growth (one-third weight), relative ROCE growth (one-third weight) and relative TSR (one-third weight) over the three-year vesting period. An independent external specialist will calculate the level of relative performance achievement and the combined payout factor.
If Datwyler reports a negative profit after tax (i.e. a loss) from continuous operations during the last year of the three-year vesting period, or if the Board of Directors believes that an adequate dividend cannot be paid out to shareholders, the Board of Directors reserves the right to determine whether and to what extent the PSUs for this period should be forfeited, irrespective of the combined payout factor achieved.
In the case of someone leaving, the PSUs are usually forfeited, except in the case of retirement, death, disability or change of control of the company where they are converted into shares for the number of months up to the time of leaving based on the payout factor achieved (pro-rata vesting).
In the event of death, the pro-rata payout is made at the time of leaving (accelerated vesting). It follows the regular vesting schedule in the other cases.
If Datwyler is required to prepare an accounting/financial restatement, clawback and malus provisions will apply to PSUs or shares awarded under the long-term incentive plan. Datwyler shall have the right to forfeit (malus provision) and/or or to obtain reimbursement (clawback provision) of any PSU or shares that were granted or allocated to the participant in the case that fraud or misconduct by the participant has led to the booking correction.
Transition rules
In order to facilitate the transition from the former long-term incentive plan (fixed number of restricted shares) to the new long-term incentive plan that is fully performance-based, specific transition rules have been determined for those members of the Executive Management who were members of the Executive Management on 1 January 2018.
First of all, the individual grant value in the transition years 2018, 2019 and 2020 were multiplied by a factor of 1.75, 1.5 and 1.25 respectively. This is to compensate for the fact that in each of those years, neither shares will be allocated under the former share participation programme (discontinued) nor under the new long- term incentive plan (no vesting before the year 2020).
Secondly, the vesting schedule for the awards granted in the transition years 2018, 2019 and 2020 were subject to an upper limit, but also a lower limit as follows:
PSUs granted in 2018: the vesting in 2020 will range from a minimum of 80% to a maximum of 120%
PSUs granted in 2019: the vesting in 2021 will range from 50% to 150%
PSUs granted in 2020: the vesting in 2022 will range from 25% to 175%
The Board of Directors has decided to introduce a lower upper limit during the transition period. This is due to the introduction of the above-mentioned factor, which could lead to all too high payout values. However, the Board of Directors also decided that the introduction of an upper limit would at the same time be supplemented by a symmetrical lower limit for reasons of fairness. This ensures that the payout values remain in a reasonable range within the transitional phase between the two systems. PSUs granted to longstanding Executive Management members from 2021 onwards follow the regular plan rules. The same applies to new Executive Management members who were hired after 1 January 2018.
Employer social insurance contributions
Members of the Executive Management participate in the regular employee pension plan provided by Datwyler to all employees in Switzerland. The pension plan consists of a basic plan covering annual earnings up to the sixfold of the maximal retirement pension of the Swiss Governmental Old-Age, Survivors' and Disability Insurance (AHV) and a supplementary plan in which earnings in excess of this limit are insured up to a maximum of the tenfold of the upper limiting amount according to the Swiss Federal Law on Occupational Retirement, Survivors and Disability Pension Plans (BVG). The benefits provided under the pension fund exceed the legal requirements of the Swiss Federal Law on Occupational Retirement, Survivors and Disability Pension Plans (BVG) and are in line with typical market practice of other industrial companies in Switzerland.
Perquisites
Members of the Executive Management do not receive any particular executive benefits. They are entitled to a company car and a fiscally approved entertainment allowance, in accordance with the expense rules applicable to all employees at management levels employed in Switzerland. Since representation allowance represent a reimbursement of expenses, they are not included in the remuneration tables.
Employment contracts
Employment contracts with members of the Executive Management stipulate a notice period of 6 to 12 months and of 12 months for the CEO. They contain neither a severance provision in the event of termination of employment, nor any change of control clauses. The employment contracts of Executive Management members contain a clawback clause allowing the company, where necessary under applicable Swiss law and the Articles of Association, to recover remuneration already paid, insofar as and to the extent that such remuneration was paid before approval by the Annual General Meeting and the next Annual General Meeting fails to approve the proposals of the Board of Directors.
5.4 Remuneration in the reporting year 2021
The remuneration to current and former members of the Board of Directors and Executive Management and persons connected with them are presented below. Explanations are available after the tables. Tables 1 to 4 have been audited by the statutory auditors.
Remuneration Executive Management in 2021
Table 1, in CHF
Surname and first name |
Function |
Fixed base salary, gross |
Variable incentive, gross3 |
Performance Share Units4 Number |
Performance Share Units4 Grant value |
Employer social insurance contributions | Perquisites |
Total remuneration |
|---|---|---|---|---|---|---|---|---|
| Lambrecht, Dirk1 | CEO | 655'000 | 924'750 | 2'636 | 650'169 | 395'837 | 10'012 | 2'635'768 |
Total for Executive Management2 |
1'799'000 | 1'609'301 | 5'537 | 1'365'701 | 1'054'458 | 62'842 | 5'891'302 |
Highest remuneration
One member of the Executive Management resigned on 30 September 2021 and was not replaced. As of 31 December 2021, the Executive Management comprised four members.
Best estimate at the time of publication of the annual report, as only the nine-month figures are available for the companies in the peer group at this date.
The performance share units of the long-term incentive plan were granted on 1 January 2021 based on the Datwyler bearer share price of CHF 246.65 (average closing price 20 trading days prior to the grant date).
Remuneration Executive Management in 2020
Table 2, in CHF
Surname and first name |
Function |
Fixed base salary, gross |
Variable incentive, gross3 |
Performance Share Units4 Number |
Performance Share Units4 Fair value |
Employer social insurance contributions3 | Perquisites |
Total remuneration |
|---|---|---|---|---|---|---|---|---|
| Lambrecht, Dirk1 | CEO | 655'000 | 837'207 | 3'633 | 650'016 | 319'602 | 9'532 | 2'471'357 |
Total for Executive Management2 |
2'377'583 | 2'103'230 | 8'655 | 1'548'508 | 1'264'400 | 142'157 | 7'435'878 |
Highest remuneration
Due to the new organisation, three new members had joined the Executive Management in 2020 and two members had left, which led to one-time effects in the remuneration.
The variable incentives paid to the Executive Management in 2021 reporting year and relating to the 2020 fiscal year were in total CHF 181'547 higher than the estimate published in the 2020 Annual Report. The social insurance contributions have also been adjusted accordingly.
The performance share units of the long-term incentive plan were granted on 1 January 2020 based on the Datwyler bearer share price of CHF 178.92 (average closing price 20 trading days prior to the grant date).
Remuneration Board of Directors in 2021
Table 3, in CHF
Surname and first name |
Function |
Fixed base salary, gross |
Share participation2 Number |
Share participation2 Fair value |
Employer social insurance contributions | Total remuneration |
|---|---|---|---|---|---|---|
| Hälg, Paul1 | Chairman |
130'000 | 1'125 | 330'075 | 27'804 | 487'879 |
Fässler, Hanspeter |
Vice Chairman |
70'000 | 682 | 200'099 | 17'712 | 287'811 |
Breu, Jens |
Director |
50'000 | 512 | 150'221 | 14'134 | 214'355 |
Cornaz, Claude R. |
Director |
50'000 | 512 | 150'221 | 14'134 | 214'355 |
Fedier, Jürg |
Director |
70'000 | 512 | 150'221 | 12'643 | 232'864 |
Hirzel, Martin |
Director |
30'000 | 512 | 150'221 | 12'386 | 192'607 |
Huber, Gabi |
Director |
50'000 | 512 | 150'221 | 11'163 | 211'384 |
Ulmer, Hanno |
Director |
50'000 | 512 | 150'221 | 11'963 | 212'184 |
Total for Directors |
500'000 | 4'879 | 1'431'500 | 121'940 | 2'053'440 |
Highest remuneration
The shares were granted on 1 June 2021. The reported market value corresponds to the average share price of CHF 293.40 during the 20 trading days prior to the grant date.
Remuneration Board of Directors in 2020
Table 4, in CHF
Surname and first name |
Function |
Fixed base salary, gross |
Share participation2 Number |
Share participation2 Fair value |
Employer social insurance contributions | Total remuneration |
|---|---|---|---|---|---|---|
| Hälg, Paul1 | Chairman |
130'000 | 2'016 | 330'019 | 26'890 | 486'909 |
Fässler, Hanspeter |
Vice Chairman |
110'000 | 1'406 | 230'162 | 23'311 | 363'473 |
Jens, Breu |
Director |
110'000 | 917 | 150'113 | 18'380 | 278'493 |
Cornaz, Claude R. |
Director |
70'000 | 917 | 150'113 | 15'382 | 235'495 |
Fedier, Jürg |
Director |
130'000 | 917 | 150'113 | 19'880 | 299'993 |
Huber, Gabi |
Director |
70'000 | 917 | 150'113 | 12'856 | 232'969 |
Ulmer, Hanno |
Director |
70'000 | 917 | 150'113 | 13'328 | 233'441 |
Zhang, Zhiqiang |
Director |
50'000 | 917 | 150'113 | 13'883 | 213'996 |
Total for Directors |
740'000 | 8'924 | 1'460'859 | 143'910 | 2'344'769 |
Highest remuneration
The shares were granted on 2 June 2020. The reported market value corresponds to the average price of CHF 163.70 for the 20 trading days prior to the allocation date.
Remuneration of the Board of Directors
As announced in the outlook to the Remuneration Report for 2020, the Board of Directors reduced its own remuneration from the 2021 Annual General Meeting. The cash component of the base fee was reduced for all members from CHF 50’000 to CHF 30’000. Further- more, the additional compensation for the representatives of the public shareholders will be omitted. As a result, the total remuneration of the Board of Directors fell by 12.4% from the previous year’s figure to CHF 2’053’440, with the number of members remaining the same.
The fixed base salary for members of the Board of Directors depends on membership of the various committees (see also Structure of remuneration of the Board of Directors).
The share participation for the members of the Board of Directors for the year 2021 was determined by the Nomination and Compensation Committee and approved by the Board of Directors in accordance with the maximum aggregate amount approved by the Annual General Meeting and Art. 21b of the Articles of Association.
The grant of Datwyler bearer shares as of 1 June 2021 was based on a fixed amount and the average share price of the 20 trading days prior to the grant date (CHF 293.40). Due to the significantly higher share price compared to the previous year, the number of granted shares decreased by 45.3% in the year under review. The granted shares are blocked for a period of five years.
Remuneration of the Executive Management
A member of the Executive Management left without being replaced on 30 September 2021. The fixed base salary of the Executive Management amounted to CHF 1’799’000 in the year under review. This was 24.3% less than in the previous year, which was characterised by one-time effects of the new organisation. The Executive Management’s variable incentive for the 2021 reporting year was calculated according to the model described in detail under Variable incentive. This involved comparing net revenue growth and EBIT improvement with a peer group of similar companies. On the basis of the available revenue and profit figures for the first nine months of the reporting year, Datwyler had outperformed 72.6% of its peer companies in terms of net revenue growth and 62.6% in terms of EBIT improvement at the end of September.
This corresponds to an aggregated percentage of 67.6%. On the basis of these figures and experience from previous years, Datwyler made best estimates for the calculation of the variable incentive at the time of publication of the Annual Report. The provisional figure calculated in this way for the Executive Management’s variable incentive amounts to CHF 1’609’301, which constitutes a decline of 23.5% due to the one-time effects of the previous year.
An external, independent specialist calculated the provisional figures for net revenue growth and EBIT improvement relative to peer groups of similar companies.
Based on the annual reports published by peer companies, the same specialist will ascertain the definitive figures in April 2022 before the date on which the variable incentive is paid out. The actual variable incentive paid out will be published in next year’s Remuneration Report.
Under the long-term incentive plan, performance share units (PSUs) were granted to the members of the Executive Management on 1 January 2021, based on the Datwyler bearer share price of CHF 246.65 (average closing price of the 20 trading days prior to the grant date). Due to the smaller group of participants and the higher share price compared to the previous year, the number of PSUs granted was 36% lower in the year under review.
The heading “Employer social insurance contributions” includes all employer expenditures for pension plans and social security contributions. Perquisites reflect the employer’s contribution to private use of business vehicles and child allowances.
The total remuneration of the Board of Directors and the Executive Management is below the maximum total remuneration figures of CHF 2.1 million and CHF 8.65 million respectively, which the shareholders approved for the 2021 fiscal year at the 2020 and 2021 Annual General Meetings.
Allocation of shares from the long-term incentive plan
In the spring of 2021, shares were allocated to members of the Executive Management from the long-term incentive plan for the first time. The number of shares for the 2018-2020 incentive plan was calculated according to the model described in detail under Long-term incentive plan. On account of Datwyler’s good performance, the payout factor amounted to 120% in comparison to the peer group and in accordance with the transition rules for the first three incentive plans. On 1 January 2018, the then members of the Executive Management were allocated a total of 7’821 performance share units (PSUs).
At the time, 1’397 PSUs went to a member who was no longer part of the Executive Management in spring 2021. These 1’397 PSUs were compensated with a pro-rata payment of CHF 228’689. The original total of 6’424 PSUs with a value of CHF 1’150’409.92 from 2018 of the other three members of the Executive Management increased due to the payout factor of 120% to 7’710 shares worth CHF 2’228’190 in spring 2021. In the case of the CEO, the 3’630 PSUs originally allocated in 2018 with a value of CHF 650’060.40 increased to 4’356 shares with a value of CHF 1’258’884 in 2021. The PSUs from the long-term incentive plan are recognised as remuneration and reported in the year in which they were originally allocated.
Remuneration of former members of the Board of Directors and Executive Management
In the year under review, one former member of the Executive Management who is now retired received 1’677 shares worth CHF 484’653 from the long-term incentive plan 2018-2020. No further remuneration was paid to former members of the Board of Directors or the Executive Management in the year under review, nor was any non-arm’s length remuneration paid to persons connected with current or former members of the Board of Directors or Executive Management.
Loans and credits
The Articles of Association do not allow for the possibility to grant loans and/or credits to current or former members of the Board of Directors or Executive Management or persons connected with them.
5.5 Remuneration outlook
The Board of Directors will propose the following maximum total sums to the 2022 ordinary Annual General Meeting for remuneration of the Board of Directors for their service during the period up to the 2023 ordinary Annual General Meeting and for remuneration of the Executive Management for the 2023 fiscal year:
Board of Directors: CHF 2'100'000, of which CHF 600'000 for cash remuneration plus CHF 1'500'000 for granting of Dätwyler Holding Inc. bearer shares.
Executive Management: CHF 7'000'000, of which CHF 4'500'000 for cash remuneration (fixed base salary, variable incentive, employer social insurance and perquisites) plus CHF 2'500'000 for the maximum value at grant of the Performance Share Units awarded under the new long-term incentive plan.
On the basis of the sustainability strategy, which was enhanced in 2021, the Board of Directors has decided to add a third performance indicator with sustainability measurement parameters to the two previous performance indicators used to calculate the variable incentive. The new sustainability performance indicator determines 20% of the variable incentive and will be applied for members of the Executive Management and for all eligible employees from 2022 onwards. The two previous performance indicators will be taken into account at a rate of 40% each. These are net revenue growth and EBIT improvement versus the previous year, relative to a peer group of similar companies. The model for calculating the variable incentive is described under Variable incentive.
The measurement parameters for the sustainability performance indicator are derived from the 12 focus topics of the enhanced sustainability strategy.
They can be redefined by the Board of Directors annually. The Board of Directors has defined the following three measurement parameters for 2022: reduction of CO2 emissions (scope 1 and 2) in relation to revenue, reduction in accident severity and employee satisfaction.
The reduction in CO2 emissions is weighted at 50% and the other two measurement parameters at 25% each. For all three parameters, there is a minimum threshold that has to be achieved in order to be taken into consideration and a maximum limit above which the contribution to target achievement no longer increases. The three measurement parameters for the sustainability performance indicator are not compared with the companies from the peer group.
By taking sustainability measurement parameters into account in the variable incentive for all eligible employees, Datwyler is promoting awareness of the sustainability focus areas. As a responsible company, Datwyler wants to do its part to help the global community to achieve the UN Sustainable Development Goals.
5.6 Report of the statutory auditor on the Remuneration Report
