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– Compensation report – Letter to the shareholders

Paying for sustainable performance

Winterthur, February 18, 2022

Dear Shareholder,

On behalf of the Board of Directors as well as the Nomination and Remuneration Committee (NRC), I am pleased to present to you this year’s compensation report. Once again in 2021, I appreciated the opportunity to work together with my colleagues and our stakeholders towards ensuring that Sulzer’s compensation structure continues to reflect best-practice standards, proves to be attractive and competitive for employees, rewards sustainable performance and drives value creation for our shareholders.

2021 was a challenging year — however, I’m proud to say that Sulzer surmounted the challenges and was able to celebrate a strong finish to the year with record-high profitability. What was challenging for our company over the last year? On the one hand, the constraints from COVID-19 in many countries continued to impact our business. Nonetheless, thanks to the outstanding engagement of all employees, Sulzer once again demonstrated resilience and was able to clearly steer back to the path of success that the company was on before the pandemic broke out in 2020. On the other hand, in May 2021, the decision was made to spin off Sulzer’s Applicator Systems (APS) division, and the spin-off was successfully executed with the listing of medmix on the Swiss Stock Exchange on September 30, 2021. To find out more about the rationale behind this decision and how it impacted the compensation of our Executive Committee in 2021, please refer to the corresponding special report covering the medmix spin-off.

Notwithstanding our great success story in 2021, a new leadership team will write the next chapter of Sulzer’s success story. After 6 years of management stability, we are simply at the end of a leadership cycle and it’s time to hand the baton over for the next leg. The leadership changes relate to both the Board of Directors as well as the Executive Committee.

Firstly, on the Board of Directors, Peter Löscher, the long-serving Chairman of Sulzer who has led the Board since 2014, will not stand for re-election at the Annual General Meeting (AGM) 2022. At the AGM 2022, Suzanne Thoma, currently Vice Chairwoman of the Board and member of the NRC, will stand for election as the Chairwoman of the Board. Furthermore, I, Gerhard Roiss, Chairman of the NRC, will also not stand for re-election at the AGM 2022.

At Executive Committee level, Greg Poux-Guillaume, Sulzer’s CEO, decided to step down after six years at the helm of Sulzer and having led a successful turnaround of the company. Frederic Lalanne, formerly President of Sulzer’s Flow Equipment division, was appointed CEO to succeed Greg Poux Guillaume as of February 18, 2022. Tim Schulten, formerly Sulzer’s Group Head of Strategy, Marketing and Digital, has been promoted to be the President of Sulzer’s Services division as of January 1, 2022, succeeding Daniel Bischofberger, who is leaving for an external CEO position. These appointments from our internal leadership bench underscore our sharp and committed focus on building our internal talent pipeline.

Executive Committee’s compensation

The compensation eligibilities of our Executive Committee remained unchanged in 2021. Sulzer's compensation represents a modern and tailor-made system to guide the company successfully through the next years:

  • A significant portion of variable compensation ensures a strong pay-for-performance orientation.
  • Performance criteria are selected to provide appropriate incentives to achieve operational and strategic goals, thereby ensuring a strong alignment with Sulzer’s corporate strategy.
  • Variable compensation is granted in the form of performance share units (PSUs) to align the interests of the Executive Committee with those of shareholders.
  • Short- and long-term variable compensation is subject to malus and clawback provisions.
  • Share Ownership Guidelines (SOG) are implemented which oblige the Executive Committee members to hold Sulzer shares for the term of their office.
  • Compensation levels are competitive and in line with market practice to attract and retain highly qualified employees who will keep Sulzer on the road to success through severe crises and beyond.

Paying for performance — our year 2021

Despite the constrained environment of the pandemic in 2021, Sulzer demonstrated agility in further strengthening its position as a leading company in industrial flow control products and services for markets such as water, energy, chemicals and industrial infrastructure. During the year, Sulzer streamlined its portfolio with the spin-off of medmix and the acquisition of Nordic Water, while continuing to advance on its growth path. Record-high profitability was achieved in 2021, with all divisions reaching new heights in profitability.

In 2021, we implemented the following adjustments to the Executive Committee’s compensation system:

  • To emphasize the pay-for-performance approach of our variable compensation even more, we decided to implement a clawback provision to our short-term incentive, i.e. the annual bonus.
  • To reduce the complexity of the performance measurement within the Performance Share Plan (PSP), from 2021, the performance measurement of the relative total shareholder return (TSR) is evaluated against one peer group instead of two different peer groups as done in previous years. This decision reduces and simplifies the performance indicators for the PSP program from four to three, bringing Sulzer in line with market practice. The weighting of 50% of the performance criterion “relative TSR” within the PSP remained unchanged. As a recap, in the past years, the relative TSR was measured against the performance of a peer group of international peers (assigned with a weight of 75% within the “relative TSR” key performance criterion), as well as against the performance of the Swiss Market Index Mid (SMIM, assigned with a weight of 25% within the “relative TSR” key performance criterion). This approach meant that there were four performance indicators being measured for the PSP program, thereby adding complexity and deviating from market practice.
  • To better reflect portfolio development and ensure a more appropriate composition of the peer group, there were also changes to the composition of the international peer group: SPX flow and Kirloskar Brothers were replaced by OC Oerlikon and Burckhardt Compression, which were selected from the predefined successor list of companies.

In terms of pay levels, we neither increased base salaries nor the target amounts for the bonus and PSP. In addition, there were no special grants on variable compensation. This given, for 2021, the target cash compensation remained unchanged compared to 2020. The compensation for the Executive Committee amounted to kCHF 14’609 in 2021 and was thereby below the maximum amount previously approved by Sulzer’s AGM 2020 for the respective period.

Board of Directors’ compensation

The Board of Directors compensation paid in 2021 was below the maximum amounts previously approved by the AGM for the respective periods. No changes to the Board's compensation were deemed necessary.

Compared to 2020, the compensation for the Board of Directors paid in 2021 remained unchanged and was 0.7% lower.


The NRC performed its regular activities in 2021, including recommending Executive Committee performance targets to the Board and compensation of Board, CEO and Executive Committee members. You will find further information on the NRC’s activities, as well as compensation models and governance, in the following pages.

At Sulzer’s AGM in 2022, you will be asked to vote on the maximum aggregate compensation for the Board of Directors for its 2022–2023 term and on the maximum aggregate compensation for the Executive Committee for 2023. For the fourth consecutive year, the maximum aggregate for the Board will remain flat. Reflecting the medmix spin-off and the subsequent reduction of the Executive Committee's size, the maximum aggregate for the Executive Committee will be reduced by CHF 2 million compared to 2022.

As per practice, this compensation report will be submitted for a non-binding, consultative vote to our shareholders. We encourage and pursue an open, regular dialogue with our stakeholders. Your constructive input is highly valued and appreciated as we continue to improve and align our compensation system. On behalf of Sulzer, the NRC and the Board, I thank you for your supportive feedback and for your continued trust in our company.


Gerhard Roiss

Chairman of the Nomination and Remuneration Committee