Compensation architecture for the Board of Directors
The compensation of the Board of Directors is fixed and does not contain any performance-based variable component. This ensures that the Board of Directors is truly independent in fulfilling its supervisory duties towards the Executive Committee.
The compensation of the Board of Directors is governed by a compensation regulation, is reviewed by the Remuneration Committee (RC) annually and, if necessary, adjusted by a decision of the full Board of Directors based on a proposal by the RC.
The compensation of the Board of Directors consists of a fixed cash component and a restricted share unit (RSU) component with a fixed grant value. Each RSU represents a right to receive a Sulzer share free of charge after a certain period, as further detailed below. Further, Board members are entitled to a lump sum to cover business expenses. The RSU component strengthens the long-term alignment of the interests of the Board members with those of the shareholders. To reinforce the focus of the Board of Directors on the long-term strategy and to strengthen its independence from the Executive Committee, the compensation of the Board of Directors contains no performance-related elements and non-executive Board members are not entitled to pension benefits.
The amount of compensation for the Chairwoman and for the other members of the Board of Directors is determined based on the relevant compensation benchmarks. The list of companies is the same peer group as listed under the Compensation benchmark of the members of the Executive Committee. The compensation reflects the responsibility and complexity of their respective function, the professional and personal requirements placed on them, and the expected time required to fulfill their duties. The ongoing Board compensation structure and amounts are described in the table below:
Annual compensation of the Board of Directors1
|
in CHF |
|
Cash component (net of social security contributions) |
|
Grant value of RSUs (net of social security contributions) |
|
Lump-sum expenses |
|
Base fee for Board Chairperson 2) |
|
420’000 |
|
|
|
10’000 |
|
Base fee for Board Vice Chairperson |
|
100’000 |
|
155’000 |
|
5’000 |
|
Base fee for Board members |
|
70’000 |
|
125’000 |
|
5’000 |
|
Additional committee fees: |
|
|
|
|
|
|
|
Audit Committee / Strategy and Sustainability Committee Chairperson |
|
60’000 |
|
|
|
|
|
Audit Committee / Strategy and Sustainability Committee members |
|
35’000 |
|
|
|
|
|
Governance Committee Chair |
|
35’000 |
|
|
|
|
|
Nomination / Remuneration Committee Chairperson |
|
20’000 |
|
|
|
|
|
Nomination / Remuneration / Governance Committee members |
|
20’000 |
|
|
|
|
1) Compensation for the period of service (from AGM to AGM).
2) The Chairperson of the Board of Directors does not receive additional remuneration for committee activities.
The members of the Board of Directors are compensated for their service during their term of office (from AGM to AGM). The cash compensation is paid in quarterly installments for Board members and monthly installments for the Chairperson; the expense lump sum is paid out in December and the RSUs are granted once a year. The number of RSUs is determined by dividing the fixed grant value by the volume-weighted average share price of the last ten trading days before the grant date, which is the date of the AGM when they are elected. One-third of the RSUs vest on March 25 of each year following the grant date. If this date falls on a weekend, they vest on the immediately following weekday.
Upon vesting, one vested RSU is converted into one share in the company. The vesting period for RSUs granted to the members of the Board of Directors ends no later than on the date on which the member steps down from the Board. Although the value of the RSU grant is fixed (at grant), it then fluctuates with the share price during the vesting period, which means that the value at vesting can differ from the value at grant.