Annual Report 2021
Annual Report 2021

Focused Datwyler achieves profitable growth

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About us (#)Anchor

Leading provider of high-quality, system-critical elastomer components

Datwyler is focusing on high-quality, system-critical elastomer components and has leading positions in attractive global markets such as healthcare, mobility, food & beverage and general industry. With its recognized core competencies and technological leadership, the company delivers added value to customers in the markets served. Datwyler concentrates on markets that offer opportunities to create more value and sustain profitable growth.

With more than 20 operating companies, sales in over 100 countries and more than 6'900 employees Datwyler, headquartered in Switzerland, generates annual sales of more than CHF 1'000 million. Looking back on more than 100 years of successful corporate history, the company has been listed on the SIX Swiss Exchange since 1986 (security no. 3048677).

1 Highlights

Datwyler increased its revenue to CHF 1’101.7 million and the net result to CHF 194.0 million in 2021. The continuing operations generated record revenue and currency-adjusted growth of 15.0%. The associated EBIT margin improved to 16.9%.

Annual Report 2021
Annual Report 2021
Annual Report 2021
Annual Report 2021
Annual Report 2021

Key figures, reported

2021 2020 Change Continuing operations
2021		 Continuing operations
2020		 Continuing operations
Change
Net revenue (CHF millions) 1'101.7 1'069.2 +3.0 % 947.6 823.3 +15.1 %
EBITDA before non-recurring items1 (CHF millions) 241.8 211.0 +14.6 % 225.6 188.5 +19.7 %
as % of net revenue 21.9 % 19.7 % n/a 23.8 % 22.9 % n/a
EBIT before non-recurring items1 (CHF millions) 175.8 148.6 +18.3 % 160.4 130.2 +23.2 %
as % of net revenue 16.0 % 13.9 % n/a 16.9 % 15.8 % n/a
Operating result (EBIT) (CHF millions) 234.2 –315.9 n/a 160.4 130.2 +23.2 %

as % of net revenue (EBIT margin)

 21.3 % –29.5 % n/a 16.9 % 15.8 % n/a
Net result (CHF millions) 194.0 –346.3 n/a 123.7 105.2 +17.6 %
as % of net revenue 17.6 % –32.4 % n/a 13.1 % 12.8 % n/a
ROCE1 (%) 23.8 % 20.4 % n/a 22.5 % 20.6 % n/a
Average capital employed (CHF millions) 738.0 729.4 +1.2 % 712.4 632.4 +12.7 %
Net cash from operating activities (CHF millions) 183.5 185.3 –1.0 %
Net cash used in investing activities (CHF millions) –23.1 –69.6 –66.8 %
Free cash flow1 (CHF millions) 160.4 115.7 +38.6 %
Net cash used in financing activities (CHF millions) –113.0 –132.7 –14.8 %
Net change in cash and cash equivalents1 (CHF millions) 47.4 –17.0 n/a
Cash, cash equivalents and money market investments (CHF millions) 279.6 169.5 +65.0 %
Capital expenditures1 (CHF millions) 110.9 90.8 +22.1 %
Total assets (CHF millions) 1'261.0 1'106.9 +13.9 %
Equity (CHF millions) 948.3 735.1 +29.0 %
as % of total assets 75.2 % 66.4% n/a

Number of employees at 31 December

6'909

 6'748 +2.4 %

Full-time equivalents at 31 December

 6'805 6'634 +2.6 %
  1. The definition of alternative performance measures and adjustments, not defined by Swiss GAAP, are provided in the document Alternative Performance Measures.

Per share data

2021 2020
Earnings per bearer share (CHF) 11.41 –20.37
Dividend per bearer share (CHF)

4.201

3.20
Distribution yield at 31 December 1.0 % 1.2 %
Market price (high/low) per bearer share (CHF) 409 / 251 264 / 126
  1. Board of Director's proposal to the Annual General Meeting

2 Letter to the Shareholders

Datwyler experienced high demand in 2021 thanks to strong positions in attractive markets and leading core competencies. In comparison with the previous year, our sales markets and production were significantly less impacted by the negative effects of the pandemic. The safety concepts and rules of conduct at the sites were optimized continuously and proved to be effective, enabling us to protect our employees’ health and guarantee delivery capacities for our customers at all times.

Focused Datwyler achieves profitable growth (#)Anchor

  • Currency-adjusted revenue growth of 15.0% and EBIT margin of 16.9% from continuing operations.
  • Proposal for increased cash dividend of CHF 4.20 per bearer share.
  • Following the sale of Reichelt, Datwyler is focusing exclusively on system-critical elastomer components.
  • Opening up of attractive Chinese healthcare market through strategic acquisition.
  • For 2022, Datwyler is aiming to achieve the lower value in its medium-term target range for the EBIT margin of 18% to 21% in 2022. Revenue growth should also in 2022 exceed the upper value of the medium-term target range of 6% to 10%.

Review

Profit increase and higher dividend (#)Anchor

The figures reported for the year 2021 are influenced by the sale of the online distributor Reichelt at the end of September. Datwyler’s reported revenue rose to CHF 1'101.7 million (previous year: CHF 1'069.2 million). Reichelt’s revenue contribution for the first nine months of the year was CHF 154.1 million. The profit figures reported also include contributions from Reichelt for the last time. At the level of the operating result (EBIT), this contribution was CHF 15.4 million from the operating business and CHF 58.4 million profit from the sale of the subsidiary. Datwyler thus achieved a total EBIT of CHF 234.2 million and a net result of CHF 194.0 million for 2021. In view of the strong and sustainably profitable growth, the Board of Directors will ask the Annual General Meeting to pay a substantially increased cash dividend of CHF 4.20 per bearer share (previous year: CHF 3.20) and CHF 0.84 per registered share (previous year: CHF 0.64). This equates to an increase of 31.3% in the total dividend to CHF 71.4 million (previous year: CHF 54.4 million).

Record revenue from continuing operations (#)Anchor

Datwyler was able to significantly increase revenue from continuing operations in all business units. Our record revenue figure of CHF 947.6 million (previous year: CHF 823.3 million) constitutes currency-adjusted growth of 15.0% (the currency effect was negligible). We surpassed average growth rates in all the markets we serve and are 8.0% above the pre-pandemic levels from 2019. Having been hit particularly hard by the pandemic in 2020, the Mobility and General Industry business units also performed encouragingly. The Mobility business unit, for example, acquired more new projects than it ever has in the past. In the Food & Beverage business unit, Datwyler grew successfully together with its coffee customers. In total, the Industrial Solutions business area (Mobility, General Industry and Food & Beverage) generated currency-adjusted revenue growth of more than 13%. The Healthcare Solutions business area posted currency-adjusted revenue growth of 16.0%. Here, Datwyler supports the leading pharmaceutical companies with the provision of COVID-19 vaccines. We are proud to make an important contribution to the global fight against the pandemic with our system-critical components.

Datwyler supplies the leading manufacturers of COVID-19 vaccines.

Sustainable increase in profitability (#)Anchor

Thanks to strong growth, continual efficiency improvements and strict cost management, the EBIT for continuing operations increased over-proportionally by 23.2% to CHF 160.4 million (previous year: CHF 130.2 million). As a result, the EBIT margin improved significantly to 16.9% (previous year: 15.8%). The net result for continuing operations rose by 17.6% to CHF 123.7 million (previous year: CHF 105.2 million). In comparison with 2019, both EBIT and the EBIT margin for continuing operations are well above pre-pandemic levels.

Transformation complete – focus on organic growth and targeted acquisitions (#)Anchor

With the sale of online distributor Reichelt in autumn 2021, Datwyler’s strategic transformation into a specialist in system-critical elastomer components is now complete. In the forthcoming phase, we will focus on organic growth and targeted acquisitions so as to bolster existing business sustainably. Our strong balance sheet, our highly distinctive core competencies and the associated competitive advantages provide an ideal basis from which to accelerate the implementation of our growth strategy and overcome the challenges of the pandemic. We will also continue to make acquisitions in order to open up new geographical markets, technologies or related product segments. The companies we acquire must be suited to Datwyler in terms of strategy, core competencies and culture. A current example of a targeted acquisition is the takeover of Yantai Xinhui Packing in China that was announced in December 2021. With this transaction, Datwyler has gained direct access to the fast-growing healthcare market in China and filled an important strategic gap. Yantai Xinhui Packing’s modern production facility with reserve capacity offers an optimal platform for manufacturing our product range for the Chinese healthcare market locally.

Aerial view Yantai Xinhui Packing

Acquisition of Yantai Xinhui Packing in China.

Strategic topics

Two-thirds of revenue in low cyclical, structurally growing markets (#)Anchor

Datwyler generates around two-thirds of its revenue in low cyclical, structurally growing markets like healthcare and food & beverages. The healthcare market in particular has long-term structural growth drivers that are independent of economic trends and the COVID pandemic. The aging society in the industrial countries, the rapidly growing middle class in the emerging countries, the increasing rates of chronic diseases like diabetes and the use of injections as the preferred method for administering medicines are keeping growth rates high.

System-critical elastomer components with low cost share and high barriers to entry (#)Anchor

Datwyler’s elastomer components perform critical functions in our customers’ systems. In vehicle brakes or pre-filled syringes, for example, they make a vital contribution to the safety of car drivers and patients all around the world. Despite their importance for the quality of the end products, Datwyler’s components are set apart by the fact that they account for a low share of the overall costs of customer systems.

Furthermore, the barriers to entry are high due to the long learning curve and the strict regulatory requirements. New trends and technologies mean that the demand for increasingly powerful and complex products is rising. In many cases, our system-critical components are one of the things that make technological progress possible in the first place. We have summarized this potential in our mission statement:

We materialize ideas for a safer, smarter and more sustainable world.

Systemkritische Komponenten für die Abgasnachbehandlung

System-critical components for exhaust gas aftertreatment.

Core competency-based market development and innovation (#)Anchor

By bundling our technological core competencies in the Technology & Innovation Group function, we enhance our capacity for innovation and increase the share of our new primary products in total revenue. In the healthcare business, among our promising innovation projects are the coated NeoFlex components for pre-filled syringes and the soft dry electrodes for measuring brain, heart and muscle activity in wearable devices. Besides medical technology, applications in the fields of lifestyle, sport and computer games are also evolving. In the Mobility business, Datwyler is continuing to develop its material and technology portfolio. The electroactive polymer (EAP) technology and the electrically and thermally conductive ETEMI materials will open up new applications in the vehicle of the future. We are therefore confident that, thanks to our leading core competencies, we will be able to utilize the transformation to electromobility to increase our component number and revenue per vehicle.

Further development of the materials and technology portfolio.

Further improvement in agility and digital competencies (#)Anchor

In addition to the core competencies, the innovation pipeline and the expansion of production capacities, it is our proven strategic priorities that enable us to proactively seize market opportunities and accelerate organic growth. We have been facilitating profitable growth, increasing our agility, accelerating digitalization and promoting sustainability for a number of years now. In parallel to the actual digitalization process, we have significantly increased network and cyber security in recent years. With our modern management culture, we are continuously implementing our vision of being a self-learning organization.

Enhanced sustainability strategy (#)Anchor

One of the things we launched in the year under review was our enhanced sustainability strategy. We introduced 12 focus topics in order to reduce our environmental footprint and deliver more value for all stakeholders. The focus topics are structured according to Environmental, Social and Governance dimensions and are intended to close gaps and build on existing strengths. Each topic bundles activities relating to current and future projects, and contains clear responsibilities with measurable objectives and quantifiable key figures for effective management. Datwyler has been a member of the UN Global Compact since 2009 and aims to attain climate neutrality (scope 1 and 2) at all its sites by 2030.

Support for the local communities in India.

Outlook

Confirmation of the medium-term target ranges (#)Anchor

On the basis of its high order backlog and increased use of new production capacities and the positive change in the Healthcare product mix, we are confident that we will be able to reach the target ranges we set for ourself, namely to increase revenue by between 6% and 10% and to achieve an EBIT margin of 18% to 21%, in the medium term. However, the rising costs of raw materials, upstream products, energy and logistics services will present an increasing challenge in 2022. Despite this, Datwyler is aiming to achieve the lower value in its target range for the EBIT margin in 2022. Revenue growth should also in 2022 exceed the upper value in the target range.

Investments in the expansion of production capacities.

Changes to the Board of Directors (#)Anchor

For personal reasons, Hanno Ulmer will not be available for re-election at the 2022 ordinary Annual General Meeting. We would like to thank him for his valuable work over the last seven years. Judith van Walsum will be nominated for election as a new Director and a representative of the public shareholders. Judith van Walsum is Chief Financial Officer and Head of IT at Roche Diabetes Care, a globally active division of the Roche Group.

A very special thank you goes once again to our employees.

Despite pandemic-related constraints both at work and in private, they continued to achieve excellence day in, day out. Thanks to their exemplary work, we were able to supply our customers with important products at all times, and that is something we as a company and our employees can be very proud of. We also thank our customers for their trust and flexibility. Both are necessary to overcome the challenges of a pandemic. Finally, we would like to take this opportunity to thank you, our shareholders, for your loyalty to Datwyler.

On behalf of the Board of Directors and the Executive Management

Portrait image of Paul Haelg

Dr. Paul Hälg

Chairman

Portrait image of Dirk Lambrecht

Dirk Lambrecht

CEO

3 Business Areas

Datwyler is focusing on high-quality, system-critical elastomer components and has leading positions in attractive global markets such as healthcare, mobility, food & beverage and general industry.

3.1 Healthcare Solutions

Datwyler is a leading supplier of system-critical elastomer components for injectable drug delivery systems. These components are used in billions of prefilled syringes, glass vials and cartridges worldwide, improving patients' lives. With a worldwide network of highly automated production facilities, Datwyler is able to supply locally manufactured components to global pharmaceutical companies in the key economic regions. The market for healthcare components is low cyclical and is characterised by high entry barriers and structural growth trends such as the aging society in industrialised countries or the increase in living standards in emerging markets.

System-critical components
to improve patients' lives

Target groups

  • Pharmaceutical and biotech companies
  • Manufacturers and contract fillers of injectable drugs
  • Manufacturers of diagnostic and medical products
  • Manufacturers of parenteral drug delivery systems

Products and services

  • High-quality rubber components for prefilled syringes, pens and injection systems
  • Components and closures for injectable drugs in vials
  • Rubber components for blood collection systems, IV administration sets, disposable syringes, etc.
  • Rubber components for diagnostics and medical devices

Geographical markets

  • Europe
  • North and South America
  • Asia
  • Australia
Annual Report 2021
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Key figures
Healthcare Solutions

2021 2020 Change

Net revenue (CHF millions)

466.8

403.4

+15.7 %
Operating result (EBIT) (CHF millions)

104.6

79.2

+32.1 %
as % of net revenue (EBIT margin)

22.4 %

19.6 %

 n/a

ROCE1

26.4 %

23.7 %

 n/a

Average capital employed1 (CHF millions)

 396.1 334.2

+18.5 %

Capital expenditures1 (CHF millions)

 69.3 54.4

+27.4 %

Full-time equivalents at 31 December

2'480

2'228

+11.3 %
  1. The definition of alternative performance measures and adjustments, not defined by Swiss GAAP, are provided in the document Alternative Performance Measures.

Healthcare Solutions reports significant
growth in revenue and margins (#)Anchor

Revenue and earnings (#)Anchor

As a partner to the leading vaccine manufacturers, the Healthcare Solutions business area experienced additional demand for components for COVID-19 vaccines in the year under review.

In comparison with 2020, revenue was up by 16.0% in currency-adjusted terms to CHF 466.8 million (previous year: CHF 403.4 million). The currency effect was negligible.

Thanks to the good utilization of capacities and a positive change in the product mix, Datwyler increased the operating result (EBIT) by 32.1% to CHF 104.6 million (previous year: CHF 79.2 million). This equates to a significantly higher EBIT margin of 22.4% (previous year: 19.6%).

Important developments in 2021 (#)Anchor

Datwyler generated strong organic growth in its core business for system-critical components for injectable medicines.

The increasing share of high-margin, high-quality components from FirstLine manufacturing had a positive effect on the product mix.

To cope with the increased demand, Datwyler invested in the earlier expansion of production capacities at all locations. The new capacities can be used for all product categories.

As a founding member of the Alliance to Zero, Datwyler campaigns for healthcare products with net-zero CO₂ emissions. The Alliance to Zero consists of eight companies that cover a large proportion of the value chain.

Newspaper iconMore about Alliance to Zero membership

System-critical components for injectable medicines.
System-critical components for injectable medicines.

Current priorities (#)Anchor

As a result of the bottlenecks caused by the pandemic, Datwyler has come into contact with many new potential customers. The company aims to further tap into these potential revenue sources with targeted measures.

After the planned completion of the acquisition of Yantai Xinhui Packing in the first quarter of 2022, the focus is on integrating the Chinese firm. The modern production facility with reserve capacity offers a perfect platform for local manufacturing of the Datwyler product range (excluding FirstLine) for the Chinese healthcare market.

The company is continually expanding its product portfolio through new NeoFlex products and needle shield designs and new developments for coating components.

Yantai Xinhui Packing has modern production facilities.
Yantai Xinhui Packing has modern production facilities.

Thanks to an optimized organization, Datwyler will be able to serve its existing customers even more effectively in the future and drive the acquisition of new customers.

Newspaper iconMore about the acquisition of Yantai Xinhui Packing

Outlook (#)Anchor

Alongside the US and EMEA, the market development activities are currently focusing on China and other emerging countries with high growth rates for modern injectable medicines.

For 2022, Datwyler continues to expect strong demand in the healthcare market. Structural trends will also support this growth in the medium term.

With the new production capacities in the US, India and now also in China, Datwyler is well-positioned to participate in market growth over-proportionately.

Aerial view production site in India
Doubling of the Indian site.

In order to meet customer expectations, Datwyler also intends to invest in the expansion and automation of production capacities in 2022. Production will get under way in the second plant at the existing Indian site in mid-2022.

The scarcity and rise in the prices of raw materials, energy and logistics services require additional attention.

3.2 Industrial Solutions

Datwyler is a leading supplier of system-critical elastomer components to the attractive global Mobility, General Industry and Food & Beverage markets. For instance, customer-specific components make an important contribution to driver and passenger safety in more than every second car worldwide. Leading core competencies in solution design, material expertise and operational excellence as well as a worldwide presence with its own production sites form the successfull basis for this. As a recognised development partner, Datwyler maintains close, long-standing relationships with global innovation leaders and has in-depth knowledge of business models, technologies and development trends in the markets it serves.

Development partner for innovation leaders

Target groups

  • Automotive system suppliers
  • Oil and gas service companies
  • Aerospace and heavy machinery
  • Manufacturers of power tools
  • Process and water treatment industries
  • Manufacturers of portioned food products

Products and services

  • System-critical components for brake systems, fuel and engine management, exhaust gas aftertreatment (Selective Catalytic Reduction), active assistance and safety systems, electromobility of the future
  • Sealing components for upstream systems in the oil and gas industry, aerospace and heavy machinery, power tools, process and water treatment industries
  • Sealing solutions for portioned food and beverages

Geographical markets

  • Europe
  • North and South America
  • Asia
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Key figures
Industrial Solutions

20212

20202

 Change

Net revenue (CHF millions)

488.4

427.5

+14.2 %

Operating result (EBIT)) (CHF millions)

55.8

50.4

+10.7 %

as % of net revenue (EBIT margin)

11.4 %

11.8 %

 n/a

ROCE1

17.8 %

17.1 %

 n/a

Average capital employed1 (CHF millions)

313.3

294.8

+6.3 %

Capital expenditures1 (CHF millions)

40.5

33.7

+20.2 %

Full-time equivalents at 31 December

4'200

4'015

+4.6 %
  1. The definition of alternative performance measures and adjustments, not defined by Swiss GAAP, are provided in the document Alternative Performance Measures.
  2. Continuing operations

Strong growth in
Industrial Solutions (#)Anchor

Revenue and earnings (#)Anchor

In comparison with pandemic-hit 2020, the Industrial Solutions business area was able to increase revenue for continuing operations (excluding Civil Engineering) by over 13% to CHF 488.4 million in currency-adjusted terms (previous year: CHF 427.5 million) in the year under review. The currency effect was negligible.

Thanks to the higher utilization of capacity and consistent cost management, the operating result (EBIT) rose by 10.7% to CHF 55.8 million (previous year: CHF 50.4 million). This equates to a slightly lower EBIT margin of 11.4% (previous year: 11.8%). The slowdown in the automobile industry in the second half of the year prevented an improvement in the margin.

Important developments in 2021 (#)Anchor

To streamline its organization and increase agility and speed in the market, Datwyler reduced the manage­ment levels in the Industrial Solutions business area. The integration of the former Oil & Gas business unit into the General Industry business unit makes it possible to exploit further synergies.

Despite a high prior-year basis, the Food & Beverage business unit recorded strong revenue growth for all customers in this area as planned. The expansion of production capacities went to plan and will be continued in 2022.

Successful customer event in China.
Successful customer event in China.

The forecasts for global vehicle production were constantly adjusted downwards during the course of the year due to the general shortage of IT components. This led to a significant fall in demand in the Mobility business unit in the second half of the year. Thanks to its proactive market development activities with webinars and a large customer event in China, the Mobility business unit acquired record numbers of new projects and customers and thus exceeded growth in global vehicle production.

Liquid silicon production technology now in Mexico and China, too.
Liquid silicon production technology now in Mexico and China, too.

With the transfer of the liquid silicone production technology to the sites in Mexico and China, Datwyler established a global production base for complex multi-component parts, which are used in electric vehicles in particular.

The General Industry business unit enjoyed strong demand, particularly in the final quarter of 2021 and from the American market. It was also able to acquire many promising development projects for smart elastomer components.

Newspaper iconMore about the expansion of materials competencies in China

Current priorities (#)Anchor

In the Food & Beverage business unit, the focus is on the further expansion of production capacities on the basis of the global customers’ specific growth plans for portioned coffee. Through the switch to recycled aluminum, Datwyler is supporting its main customer Nespresso on its journey to achieving climate neutrality.

Using its longstanding core competencies as a foundation, the Mobility business unit is further expanding its material and technology portfolio. A key basis for this is provided by electroactive polymers and the electrically and thermally conductive ETEMI materials. In this way, Datwyler is opening up new applications in the vehicle of the future in parallel to the current brake and exhaust gas treatment business. The focus is on electrified powertrain, battery systems, vehicle interiors and fuel cells.

Expansion of production capacities in the Food & Beverage business unit.
Expansion of production capacities in the Food & Beverage business unit.

The new center of competence for surface technology at the Swiss site will begin operations in the first half of 2022. By launching this center, Datwyler is significantly expanding its expertise in the development and production of multi-material components.

To promote growth, Datwyler is placing additional emphasis on the sales and engineering resources in the General Industry business unit in the three key global regions of Europe, the US and Asia.

Newspaper iconMore about the expansion of materials capabilities

Outlook (#)Anchor

The ongoing shortage of electronic components in the automobile industry will continue to dominate revenue performance in the Mobility business unit in 2022. We expect revenues to remain generally flat in the first two quarters before undergoing a stronger recovery in the second half of 2022.

However, due to the high order backlog in the Food & Beverage business unit and the very high number of new projects in the Mobility and General Industry business units, we are confident that we will achieve our medium-term growth target.

Economies of scale and the continuous improvement in production processes offer potential for further margin increases in the medium term.

Continuous improvement of production processes
Continuous improvement of production processes.

4 Sustainability

For Datwyler, sustainability means operating successfully in the present, while also being oriented toward the long term and delivering more value for all stakeholders.

4.1 Sustainable approach to management

At the Datwyler Group, we strive for sustainable profitable growth for the benefit of our stakeholders. In line with our unique values, we maintain a sustainable management approach.

Datwyler stands for a sustainable approach to management

At the Datwyler Group, we strive for sustainable profitable growth for the benefit of our stakeholders. In line with our unique values, we maintain a sustainable management approach. As a reliable partner, we fulfill our social and environmental responsibilities and contribute to the achievement of the UN Sustainable Development Goals.

Sustainability is an important strategic goal to us and we live by it – from product development to customer service, employee management and production all the way to social commitment. This is how we make our business and our products future-proof.

Discover more

(#)Anchor4.2Sustainability strategy

Our twelve Environmental, Social, and Governance (ESG) focus topics for further development (#)Anchor

In 2021, Datwyler established a landscape with 12 focus topics that embody the company’s commitment to reducing its environmental footprint and delivering more value for all stakeholders.

The focus topics are structured according to Environmental, Social, and Governance (ESG) priorities and are intended to close gaps and build on existing strengths. Each topic bundles activities relating to current and future projects, and contain clear responsibilities with measurable objectives, derived measures, and quantifiable key figures for effective monitoring.

(#)AnchorEnvironmental

Reduce footprint

Reducing its ecological footprint is an important aspect of sustainability, supported by many of Datwyler’s stakeholders. To achieve this, one of the company’s environmental initiatives is to attain climate neutrality by 2030 following the Science Based Targets approach. Other environmental initiatives focus on: embedding ecodesign principles into its product and manufacturing development processes, increasing sustainability awareness and lifecycle thinking in the company; reinforcing initiatives to reduce water, heating, and electricity consumption; reducing waste generation; and finding sustainable procurement solutions through the supplier base that align with internal and external benchmarks.

Learn more about:
Climate-neutral operations 2030
Eco-design
Resource-friendly production
Sustainable procurement

(#)AnchorSocial

Deliver more value

By focusing on social activities Datwyler aims to deliver more value and meaningful purpose to its customers and employees. Employee satisfaction and commitment are crucial for continued success and employer branding. Having a dynamic, diverse, and multicultural workforce brings several advantages such as increased productivity and creativity, improved cultural awareness, a positive reputation, and expanded marketing opportunities. Other social initiatives include: engaging with customers to co-create sustainable products; safeguarding the safety and health of the workforce; initiating volunteer communities for employees to contribute to sustainability-related activities; and contribute to society initiatives.

Learn more about:
Employer of choice
Value-driven engagement with customers
Safe and healthy workforce
Engagement for sustainability

(#)AnchorGovernance

Be responsible

In the area of governance, Datwyler focuses on continuous development of transparency, compliance and ethics, diversity of the Board of Directors and Executive Management, and commitments such as integrating a sustainability component into variable pay for all bonus eligible employees.

Learn more about:
Transparency
Compliance and ethics
Diversity of the BoD and Executive Management
Commitment

4.3 Sustainability Report

The online Sustainability Report 2021 will be available at the end of May 2022.

5 Corporate Governance

at 31 December 2021

As a company committed to creating long-term value, Datwyler has a clear framework of management and control policies in place to ensure compliance with the principles of good corporate governance. These policies are set out in the Articles of Association and the Rules of Organisation and Business Conduct of Dätwyler Holding Inc. They are presented below following the applicable Directive issued by the SIX Swiss Exchange.

Where appropriate, reference is made to issues that are discussed in detail in the notes to the financial statements and in the Remuneration Report. Where information required under a section of the SIX Directive has been omitted, it is either not applicable to Datwyler or the corresponding situation does not exist at Datwyler or does not apply to Datwyler.

5.1 Group structure and shareholders

Datwyler is focusing on high-quality, system-critical elastomer components and has leading positions in attractive global markets such as healthcare, mobility, food & beverage and general industry.

With its recognised core competencies and technological leadership, the company delivers added value to its customers in the markets served. Datwyler concentrates on markets that offer opportunities to create more value and sustain profitable growth.

Substantial shareholders and shareholder structure (#)Anchor

The ownership structure of Datwyler is the result of the Dätwyler family succession arrangements of 1990. The family's primary objective was to ensure the long-term independence of the company.

Following the 1986 IPO, Peter and Max Dätwyler's interest had been reduced to roughly 50% of capital and just below 80% of votes. They placed this ownership interest without compensation in a company they had founded, Pema Holding AG (PeMa = Peter and Max). Today, the Board of Directors of Dätwyler Holding Inc. controls these assets and the associated voting rights on a fiduciary basis and without beneficial ownership.

It does so through Dätwyler Führungs AG, likewise founded by the Dätwyler brothers in 1990. The members of the Board of Directors of Dätwyler Holding Inc. are concurrently members of the Board of Directors of Pema Holding AG and hold equal interests of CHF 0.1 million in the share capital of Dätwyler Führungs AG.

A shareholders' agreement requires departing Board members to pass their shares in Dätwyler Führungs AG on to their successors at par value and without financial gain. The Board members are likewise not entitled to receive dividend payments from Dätwyler Holding Inc. Dividends are retained by Pema Holding AG and can be reinvested in Dätwyler Holding Inc.

Under the shareholders' agreement, Pema Holding AG may invest only in Datwyler and its spin-offs. It therefore has no conflicts of interest with other shareholdings and completely reflects the interests of the bearer shareholders. Disposal of a majority of votes is permitted only by a qualified majority, and only in the event that it is no longer economically feasible to maintain Dätwyler Holding Inc. as an independent going concern. In this case, Dätwyler Führungs AG and Pema Holding AG are to be liquidated, with the proceeds going to the Datwyler Foundation.

Shareholder structure

Pema Holding AG may be compared to a family of entrepreneurs who hold the majority of the capital and voting rights in a listed company. The restriction relating to Dätwyler Holding Inc., as set out in the shareholders’ agreement, allows Pema Holding AG a management mandate with an obligation to create long-term value. The representatives of public shareholders on the Board of Directors of Dätwyler Holding Inc. are not member of the Boards of Directors of Pema Holding AG or of Dätwyler Führungs AG. Concluded in 1990, these Dätwyler family succession arrangements entailed a waiver of claims to substantial assets and are unique.

Pema Holding AG currently owns all 22 million registered shares and 5'080'937 of the total of 12.6 million bearer shares of Dätwyler Holding Inc. This represents 78.27% of the voting rights and 55.77% of the share capital.

The Board of Dätwyler Holding Inc. is not aware of any other shareholders, or groups of shareholders subject to voting agreements, who hold 3% or more of the total voting rights. No disclosure notices were received in the year under review.

Group structure and companies (#)Anchor

Datwyler has combined its market and production activities in the two business areas Healthcare Solutions and Industrial Solutions. These two market units are supported by the two service units Technology & Innovation and Finance & Shared Services. This organisational structure strengthens Datwyler's market focus, core competencies and agility.

Organizational structure

Additional information on the company's structure can be found in the following sections of the Annual Report and on our website:

No listed companies are included in the consolidation of Dätwyler Holding Inc. There are no cross-shareholdings with other companies.

5.2 Capital structure

Composition of share capital:
in CHF, at 31 December 2021

22'000'000 registered shares of CHF 0.01 each 220'000
12'600'000 bearer shares of CHF 0.05 each 630'000
Total ordinary share capital 850'000
Authorised additional share capital none
Authorised contingent share capital none
Participation certificates none
Profit-sharing certificates none
Registration and voting restrictions none
Opting-out and opting-up provisions none

All shares are fully paid-up and – irrespective of their value – are entitled to vote and rank for dividend. Information about changes in equity for 2021 and 2020 is presented in the statement of changes in equity (Financial Report, page F09).

Changes in equity for 2020 and 2019 are shown in the statement of changes in equity in the Annual Report 2020 (page 67).

(#)AnchorConvertible bonds and share options

As at 31 December 2021, Datwyler did not have any outstanding convertible bonds or options. On 30 May 2018, a 0.625% CHF 150 million bond (Financial Report, page F28, Note 18, Bond) was placed. The bond is repayable on 30 May 2024.

5.3 Internal organisation

Role of the Board of Directors (#)Anchor

The Board of Directors is the ultimate decision-making, management and governing body of Datwyler. The Board consists of no fewer than five and no more than eleven members. At 31 December 2021, the Board comprised eight Directors. The roles of the Chairman and Chief Executive Officer (CEO) are separate. The Directors or companies and organisations which they influence have no executive functions in the Group and do not have any business relationship with the Datwyler Group. The current Chairman, Paul Hälg, was the CEO of the Datwyler Group from 2004 to 2016.

The other members of the Board never served in executive functions for the Datwyler Group. No Director holds cross-directorships with other Directors through involvement in other listed companies. When members are appointed to the Board of Directors, care is taken to ensure that the kinds of competencies important to Datwyler with regard to the various industries, technologies and markets are suitably represented.

Directors are elected for one-year terms. They are eligible for re-election for further periods, with no limit on the number of terms they may serve. Directors retire at the Annual General Meeting following their 70th birthday. Each class of shares is entitled to nominate at least one representative to the Board. The average age of the Directors currently in office is 61 and their average tenure is 6.6 years.

Main responsibilities and operation of the Board (#)Anchor

The Board organises itself. Its main responsibilities are defined in Art. 716a of the Swiss Code of Obligations. In order to discharge these responsibilities efficiently, the Board has authority under the Rules of Organisation and Business Conduct of Dätwyler Holding Inc. to appoint Committees from among its members to deal with specific matters. There are currently two Committees: the Audit Committee and the Nomination and Compensation Committee.

In accordance with the Rules of Organisation, the Board holds at least five regular meetings a year, each lasting between half a day and one full day. A two-day annual strategy workshop is held to review and develop the strategy. The strategy workshop is usually combined with a visit to one of the locations. Special Board meetings are held when necessary. Agendas for Board meetings are set by the Chairman in consultation with the CEO and CFO. Any Director may request that an item be placed on the agenda or that a special meeting be held. The CFO acts as Secretary to the Board.

Directors receive papers and information in good time in advance of meetings to allow them to prepare for discussion of each item. Depending on the nature of the business to be transacted, the Chairman may invite members of the Executive Management to provide information at Board meetings and participate in an advisory capacity. The Board operates as a team and strives to reach decisions unanimously, wherever possible.

If a unanimous decision cannot be reached, the minutes of the meeting must give the names of who voted and how they voted. The Board has a quorum when at least a majority of its members is present. Its resolutions are passed by a majority of the members present. The Chairman is also a voting member and has the casting vote in the event of a tie. Resolutions may also be adopted by telephone conference or by circular letter.

During 2021, the Board held six meetings. In addition, there were two conference calls and two decisions by circular letter. Two Directors were absent for one conference call. Some of the Directors participated in some meetings by telephone due to the restrictions of the pandemic.

Operation of the Committees (#)Anchor

The Committees have written terms of reference specifying their responsibilities. In addition to these written terms, the Audit Committee has defined its tasks and responsibilities in a detailed checklist. The Committees generally prepare the groundwork for decision-making by the full Board. They meet at the call of their chairmen as often as necessary to discharge their duties, but at least once a year. Their meetings usually last half a day. All Directors, Executive Management members and the external auditors may request a meeting of the Committees. Depending on the nature of the business to be transacted, meetings are attended by the CEO, CFO or, if required, a representative of the external auditors or a specialist in an advisory capacity.

The agendas for Committee meetings are set by the respective chairmen in agreement with the CEO and CFO. Committee members receive papers and information in advance of meetings to allow them to prepare for discussion of each item. At least two members must be present to constitute a quorum. The Committees pass their resolutions by an absolute majority of the votes cast. In the event of a tie, the chairman has the casting vote. The Committees keep a record of their decisions and recommendations in minutes submitted to the Board and report the results of their activities at the next Board meeting.

Audit Committee (#)Anchor

The Audit Committee consists of at least three Directors, each of whom has experience in finance and accounting, who are appointed by the Board from among its members for a period of one year. The Audit Committee appoints its chairman. Members of the Audit Committee are: Jürg Fedier (Chairman), Gabi Huber and Hanno Ulmer. In 2021, the Audit Committee held four meetings with all members present, each of which was attended by the CEO and CFO. The reporting of the internal audit is a standard agenda item at the meetings of the Audit Committee. The representatives of the external auditors attended all the meetings for the discussion of selected items. In 2021, other external specialists were not called in.

Responsibilities of the Audit Committee:

  • To ensure a comprehensive and effective audit programme for Dätwyler Holding Inc. and the Datwyler Group.
  • To comment on the annual and consolidated financial statements.
  • To comment on the audit plan and results of audits.
  • To receive recommendations from the external auditors, discuss the recommendations with the Executive Management and provide a summary for the Board of Directors.
  • To present the Executive Management's proposal for the appointment of Dätwyler Holding Inc.'s external auditors to the Board of Directors for consideration by the Annual General Meeting of Shareholders.

Nomination and Compensation Committee (#)Anchor

The responsibilities of the Nomination and Compensation Committee are recorded in the Remuneration Report.

Division of responsibilities between the Board of Directors and Executive Management (#)Anchor

The authority and responsibilities delegated to the Board of Directors and Executive Management are laid down in the “Rules of Organisation” as provided in Article 20 of the Articles of Association of Dätwyler Holding Inc. These rules are updated on a regular basis. They describe the duties and responsibilities of the Board of Directors and define the duties and responsibilities of the Executive Management, presided over by the CEO. In addition to the non- delegable functions reserved for the Board of Directors by law, the Rules of Organisation delegate the following duties, among others, to the Board:

  • To determine the principles of corporate strategy.
  • To make decisions on financial policy.
  • To adopt resolutions on the establishment of new business units and discontinuation of existing ones.
  • To adopt resolutions on the setting up of new sites and closure of existing ones.
  • To adopt resolutions on the acquisition and disposal
    of equity holdings.
  • To adopt resolutions on the acquisition, encumbrance and disposal of land and buildings.
  • To review the risk management system.

As a rule, the Board of Directors approves major projects it deems expedient together with the rolling forecast. For urgent capital expenditures not included in the budget, levels of authority are defined and a return on investment analysis must be prepared. Capital expenditures exceeding CHF 3 million must be approved by the full Board of Directors.

The policies set out in the “Rules of Organisation” are detailed for all business and functional areas in the following written documents: “Division of Responsibilities of the Executive Management” and “Investment Manual”. Datwyler operates a systematically decentralised management system within a clear framework. The Group fosters an entrepreneurial culture where decisions are taken at the lowest possible level close to the market and customers.

Information and control systems for monitoring the Executive Management (#)Anchor

The Board has an internal control system in place to monitor and control the Executive Management. This is based on an institutionalised, annual management process cycle, of which the key elements available to the full Board of Directors are as follows:

  • Monthly report with a business area and Group consolidation: actual and forecast figures, including variance analyses and a written commentary by the business area managers on current developments and potential risks.
  • Interim and annual report.
  • Quarterly review and approval of the rolling forecast for 18 months and annual review and approval of the three-year medium-term plan.
  • Annual review and approval of the updated Group and business area strategies.
  • Uniform Group-wide management system with integrated risk evaluation for strategic projects.
  • Special reports on major items of capital expenditures, acquisitions and alliances.
  • Inclusion of Executive Management members at Board and Committee meetings.

In addition to these institutionalised information and control systems, the Chairman of the Board and CEO engage in regular dialogue regarding all important business. In addition, the CEO and CFO are required to inform the Chairman of the Board without delay of any important unusual events or developments.

Internal Audit (#)Anchor

Internal Audit reports to the Audit Committee and is under the direct administrative line management of the CFO. Every year it draws up a risk-based audit plan, which is approved by the Audit Committee. The interval between audits of Group companies varies between two and five years, depending on the size and importance of the individual company. Due to the pandemic, some of the audits had to be conducted remotely using online data control and video conferencing. To optimise cooperation, the Head of Internal Audit meets regularly with the representatives of the external auditors. At their meetings they harmonise audit plans and audit priorities and exchange useful information.

Internal Audit verifies compliance with the division of responsibilities and monitors the internal control system, risk management and the efficiency of the structures and processes. The findings and recommendations of Internal Audit are recorded in written reports. Following completion of the audit, the findings are reviewed and discussed with the local management. In coordination with Internal Audit, the local management defines specific corrective measures and a timetable for implementation. Business area management and local management each issue an opinion. The report (including the corrective measures, the timetable for implementation and the opinions) is sent to the line managers, the external auditors, Executive Management and the Audit Committee. The Head of Internal Audit presents the significant findings contained in the audit reports at the respective next meeting of the Audit Committee. Comments and suggestions of the Audit Committee and the external auditors are taken into consideration in planning and conducting audits. Internal Audit also ensures that all discrepancies raised by its audits are addressed within the prescribed period and submits a report on such matters to Executive Management and the Audit Committee.

Risk Management (#)Anchor

Datwyler is aware of the importance of systematic risk management for lasting corporate success. Final responsibility in assessing risks lies with the Board of Directors. The Head of Internal Audit is responsible for the Group-wide coordination of risk management. He is supported by risk officers in both business areas.

As part of an ongoing process to ensure business continuity, risks are continuously identified and assessed throughout the Group. An open exchange of views on opportunities and risks is encouraged at all levels of the company and is part of the corporate culture. The management of each business area is responsible for significant risks and informs the Executive Management and the Board of Directors. The findings are recorded in a risk management software. The CFO and the Head of Internal Audit monitor the risk management process through active exchanges and quarterly meetings with the business areas. In particular, risks are regularly discussed at the meetings between the business area management and the Executive Management. These reviews ensure that uniform valuation approaches are applied and that similar risks are treated equally across the Group business areas. The consolidation of risks and the annual reporting to the Board of Directors are carried out by the Head of Internal Audit.

Datwyler basically divides the risks recorded into four categories: Strategic risks, operational risks, financial risks and compliance risks. Strategic risks include risks relating to the industry and the market, external stakeholders, social and environmental developments, corporate governance and catastrophic events. Datwyler also regularly assesses and minimises the risks of criminal cyber attacks as part of its strategic risks. For their part, operating risks include risks along the value chain, risks from investment activities and personnel and cultural risks. The financial risks category includes market risk, liquidity and credit risk, capital structure and compliance with tax and accounting regulations. Finally, compliance risks are defined as the risks arising from laws, regulations and other rules and regulations. This includes existing and new regulations on sustainability issues. Global risks such as climate change and other environmental, social and governance sustainability risks are assigned to the appropriate risk category based on their strategic, operational, financial or compliance impact.

Risks are assessed on the basis of the probability of occurrence and the potential loss amount. Once the individual risks have been identified and assessed, it is the responsibility of the business area management to develop a series of measures to reduce the risk of occurrence and the loss potential for each risk. The implementation of these measures is monitored as part of the continuous risk management process and taken into account in the next risk evaluation.

5.4 Board of Directors

The Directors of Dätwyler Holding Inc. are – with the exception of the representative of the public shareholders – also Directors of Pema Holding AG and Dätwyler Führungs AG. Pema Holding AG is the majority owner of Dätwyler Holding Inc. See substantial shareholders and shareholder structure.

Pursuant to Article 14 of the Dätwyler Holding Inc. Articles of Association, the number of mandates members of the Board of Directors may hold on management and supervisory boards of legal entities outside the Group is restricted as follows: Four mandates in exchange-listed enterprises, ten mandates in unlisted enterprises and fifteen mandates in other legal entities such as foundations and associations.

Annual Report 2021

Dr. Paul J. Hälg

1954, Swiss

Chairman
term expires in 2022

Annual Report 2021

Dr. Hanspeter Fässler

1956, Swiss

Vice Chairman
Chairman of the Nomination and Compensation Committee
term expires in 2022

Annual Report 2021

Jens Breu

1972, Swiss

Director / Public shareholders‘ representative
Member of the Nomination and Compensation Committee
term expires in 2022

Annual Report 2021

Claude R. Cornaz

1961, Swiss

Director
Member of the Nomination and Compensation Committee
term expires in 2022

Annual Report 2021

Jürg Fedier

1955, Swiss

Director / Public shareholders‘ representative
Chairman of the Audit Committee
term expires in 2022

Annual Report 2021

Martin Hirzel

1970, Swiss

Director / Public shareholders‘ representative
term expires in 2022

Annual Report 2021

Dr. Gabi Huber

1956, Swiss

Director
Member of the Audit Committee
term expires in 2022

Annual Report 2021

Hanno Ulmer

1957, Austrian

Director
Member of the Audit Committee
term expires in 2022

(#)AnchorChanges in the composition of the Board of Directors

At the Annual General Meeting 2021, Zhiqiang Zhang stepped down from the Board of Directors. Swissmem President Martin Hirzel was elected as a new Director and representative of the public shareholders.

At the Annual General Meeting 2022, Hanno Ulmer will step down from the Board of Directors. Judith van Walsum will be proposed for election as a new Director and representative of the public shareholders. Judith van Walsum is Chief Financial Officer and Head of IT of Roche Diabetes Care, a global division of the Roche Group.

5.5 Executive Management

Pursuant to Article 19 of the Dätwyler Holding Inc. Articles of Association, the number of mandates members of the Executive Management may hold on management and supervisory boards of legal entities outside the Group is restricted as follows: Two mandates in exchange-listed enterprises, five mandates in unlisted enterprises and ten mandates in other legal entities such as foundations and associations.

Annual Report 2021

Dirk Lambrecht

1960, German/Swiss

Chief Executive Officer (CEO)
Head of Business Area Industrial Solutions / Chief Operating Officer (COO)

Annual Report 2021

Walter Scherz

1977, Swiss

Chief Financial Officer (CFO)
Head of Group Function Finance & Shared Services

Annual Report 2021

Dirk Borghs

1963, Belgium

Head of Business Area Healthcare Solutions /
Chief Operating Officer (COO)

Annual Report 2021

Dr. Frank Schön

1975, German/Swiss

Chief Technology Officer (CTO)
Head of Group Function Technology & Innovation

(#)AnchorChanges in the Executive Management in the reporting year

Torsten Maschke, Head of the Industrial Solutions Business Area, stepped down from the Executive Board at the end of March 2021 and left Datwyler. The Industrial Solutions Business Area has been led directly by CEO Dirk Lambrecht since 1 April 2021.

(#)AnchorSignificant events after balance sheet date

There have been no changes in the Group Management since 31 December 2021.

(#)AnchorManagement contracts

There are no management contracts with external individuals or companies to perform management tasks for the Datwyler Group.

5.6 Remuneration, shareholdings and loans

The information on remuneration and loans is recorded in the Remuneration Report. Information on the shareholdings of the members of the Board and the Executive Management is provided in the notes to the financial statements of Dätwyler Holding Inc. (Financial Report, page F48).

5.7 Shareholders' participation rights

The shareholders' participation rights comply with the provisions of Swiss Corporation Law, subject to the one-share-per-vote principle presented below. The Articles of Association contain no quorum requirements that differ from those prescribed by law.

(#)AnchorVoting restrictions and proxy voting

There are no restrictions on registration or voting. Under the Articles of Association of Dätwyler Holding Inc., each share carries one vote at general meetings regardless of its par value. Persons representing shareholders must present a written proxy. Legal representatives of shareholders do not need a proxy appointment. Shareholders who are unable to attend a general meeting may also appoint and instruct an independent proxy to represent them. To do so, an electronic solution has been provided since 2014. The independent proxy is elected annually by the Annual General Meeting for the next ordinary Annual General Meeting.

(#)AnchorCalling of general meetings and additions to the agenda

The procedures for calling general meetings and adding items to the agenda are set out in the Articles of Association of Dätwyler Holding Inc. in accordance with the Swiss Code of Obligations (Art. 699 f.). Shareholders holding no less than 10% of the share capital are entitled to submit agenda items in writing. The deadline for submitting agenda items is published in advance in the Swiss Official Gazette of Commerce.

(#)AnchorShare registration

Every person whose name is entered in the share register no later than 14 days prior to a general meeting is recognised by the company as a shareholder and holder of all rights attached to the registered shares.

(#)AnchorChange of control and defensive measures

The Articles of Association do not contain any «opting out» or «opting up» provisions. Dätwyler Holding Inc. does not have any change of control clauses which benefit Directors or Executive Management members.

5.8 Statutory auditors

KPMG was mandated to audit the consolidated financial statements at the Annual General Meeting 2018. The auditors are appointed by the Annual General Meeting of Shareholders for a period of one year. In accordance with the Swiss Code of Obligations, the normal rate of rotation for the auditor in charge is seven years. Some of the Group companies are audited by other audit firms.

Fees paid in 2021 to the statutory
and other auditors:
in CHF

Statutory auditors Other auditors
Auditing services, total 580'000 212'000
Additional services, total 6'000 161'000
Tax consulting 6'000 159'000
Legal consulting – 2'000
Transaction services – –
Other advisory services – –

Representatives of the statutory auditors attend all meetings of the Audit Committee for the discussion of certain items. Four meetings were held in 2021. At each meeting, the statutory auditors present a written report on the progress of their work. The core element of the auditors' reporting is the annual audit report with recommendations to the Audit Committee.

The supervisory body for the external statutory auditors is the overall Board of Directors. It conducts an annual evaluation of the statutory auditors. This is based on the following criteria:

  • Professional competence
  • Scope and quality of their written reports and verbal statements
  • Practicability of recommendations
  • Priority setting
  • Transparent and effective communication and coordination
  • Ability to meet deadlines
  • Independence
  • Fees

The members of the Board of Directors rely on the competencies and experience they have gained in similar roles with other companies, on the statutory auditors' reports as well as on the comments made by the Audit Committee. The responsibilities of the Audit Committee are defined in the chapter Internal organization.

5.9 Information policy

The Datwyler Group maintains an open dialogue with all stakeholders. In the interests of shareholders, Datwyler especially fosters relationships with investors, banks and media representatives. Communication takes place through the Annual Report, Interim Report, Annual General Meeting and at least one press and analyst conference every year. Through press releases and on its website datwyler.com, Datwyler provides up-to-the-minute information on all important projects as required by the ad hoc publicity rules of SIX Swiss Exchange.

The ad hoc press releases are available in the archive on the website. On the website, interested persons can also register for the distribution list for the ad hoc announcements. Contact details as well as a financial calendar with the important dates are also available on the website. Official notices concerning Datwyler are published in the Swiss Official Gazette of Commerce. Notices and invitations to registered shareholders are made in writing.

Further information

6 Remuneration Report

The Remuneration Report describes the governance framework and principles of remuneration of the Board of Directors and Executive Management of the Datwyler Group. It also provides information on remuneration plans and remuneration paid for the 2021 fiscal year.

The Remuneration Report is written in accordance with the Ordinance Against Excessive Remuneration in Listed Companies Limited by Shares (ERCO), the Directive on Information Relating to Corporate Governance of the SIX Swiss Exchange and the Swiss Code of Best Practice for Corporate Governance of economiesuisse.

6.1 Remuneration governance framework

Nomination and Compensation Committee (#)Anchor

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: (#)Anchor
  • 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 (#)Anchor

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 (#)Anchor

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.

(#)AnchorRemuneration principles

(#)AnchorPay for performance

The variable incentive plan for Executive Management rewards the collective performance of the company.

(#)AnchorReward 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.

(#)AnchorMarket competitiveness

Remuneration levels are in line with competitive market practice and are designed to attract, retain and develop the best talent.

(#)AnchorFairness and transparency

Remuneration programmes are straightforward, transparent and fair.

The framework for implementing these remuneration principles is set forth in the Articles of Association.

6.2 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.

6.3 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

(#)AnchorFixed 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.

(#)AnchorVariable 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
(#)Anchor

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 (#)Anchor

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 (#)Anchor

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 (#)Anchor

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.

The total number of shares transferred to the participant after the vesting period will be calculated as follows:

Transition rules (#)Anchor

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.

(#)AnchorEmployer 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.

(#)AnchorPerquisites

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.

(#)AnchorEmployment 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.

6.4 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
  1. Highest remuneration
  2. 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.
  3. 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.
  4. 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
  1. Highest remuneration
  2. 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.
  3. 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.
  4. 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
  1. Highest remuneration
  2. 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
  1. Highest remuneration
  2. 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 (#)Anchor

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 (#)Anchor

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 (#)Anchor

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.

(#)AnchorRemuneration 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.

(#)AnchorLoans 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.

6.5 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 follow- ing 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.

6.6 Report of the statutory auditor on the Remuneration Report

Download: PDF

7 Financial Report

This section contains the complete financial report, including the consolidated financial statements and the financial statements of Dätwyler Holding Inc., the alternative performance measures and key financial figures for the company and the share over the past five years.

Appendix

Imprint (#)Anchor

Published, edited and designed by:

Dätwyler Holding Inc.
Gotthardstrasse 31, 6460 Altdorf, Switzerland
T +41 41 875 11 00, F +41 41 875 12 28
info@datwyler.com, www.datwyler.com

Disclaimer (#)Anchor

The Annual Report contains forward-looking statements. These statements reflect the Group's current assessment of market conditions, economic developments and future events. However, these forward-looking statements are subject to economic, regulatory and political risks, uncertainties, assumptions and other factors over which Datwyler has no control. Unforeseen events could therefore cause actual developments and report to differ materially from those anticipated and from the information published in this report. To that extent, all forward-looking statements contained in this report are qualified in their entirety and Datwyler cannot guarantee that they will prove to be correct. Datwyler is under no obligation, and assumes no liability, to update any such forward-looking statements. This document is neither an offer nor a solicitation to buy or sell Datwyler securities.

This Annual Report is available in English and German. The German version is binding.

All trademarks mentioned herein are the property of their respective owners.

Enquiries

Portrait image of Guido Unternährer

Guido Unternährer

Head of Corporate Communications & Investor Relations

guido.unternaehrer@datwyler.com
+41 41 875 19 00

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