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 Chairperson 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 (see the Benchmark Peer Group graph in the Compensation Architecture for the CEO and members of the EC chapter). 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 Chair 2) |
|
420’000 |
|
|
|
10’000 |
|
Base fee for Board Vice Chair |
|
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 Chair |
|
60’000 |
|
|
|
|
|
Audit Committee / Strategy and Sustainability Committee members |
|
35’000 |
|
|
|
|
|
Nomination / Remuneration Committee / Governance Committee Chair |
|
35’000 |
|
|
|
|
|
Nomination / Remuneration / Governance Committee members |
|
20’000 |
|
|
|
|
1) Compensation for the period of service (from AGM to AGM).
2) The Chair of the Board of Directors does not receive additional remuneration for committee activities.
To align with market practices, the cash component for the Chairperson of the Nomination and Remuneration Committees was adjusted to CHF 35’000 to differentiate their responsibilities from those of other committee members.
Board members are compensated for their service from AGM to AGM. Cash compensation is paid quarterly for Board members and monthly for the Chairperson. The expense lump sum is paid in December, and RSUs are granted annually. 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 AGM date they were elected. One-third of the RSUs vest on March 25 each year following the grant date, or the next weekday if it falls on a weekend.
Upon vesting, each RSU converts into one company share. The vesting period for RSUs ends when the member steps down from the Board. Although the RSU grant value is fixed at the grant, it fluctuates with the share price during the vesting period, so the value at vesting can differ from the grant value.