29Share participation plans

Share-based payments charged to personnel expenses

The compensation charged to personnel expenses for the services received during the period amounts to CHF 18.4 million including CHF 17.3 million (2024: CHF 12.7 million) relating to equity-settled plans credited in the retained earnings. The remaining CHF 1.1 million (2024: CHF 0.7 million) corresponds to cash-settled plans.

Restricted share unit plan settled in Sulzer shares

This long-term incentive plan covers the Board of Directors. Restricted share units (RSU) are granted annually. Awards to members of the Board of Directors automatically vest with the departure from the Board members. The plan features graded vesting over a three-year period. One RSU award is settled with one Sulzer share at the end of the vesting period. The fair value of the RSU granted is measured at the grant date closing share price of Sulzer Ltd, and discounted over the vesting period using a discount rate that is based on the yield of Swiss government bonds for the duration of the vesting period. Participants are not entitled to dividends declared during the vesting period. Consequently, the grant date fair value of the RSU is reduced by the present value of the dividends expected to be paid during the vesting period.

Restricted share units

Blocked shares

In 2025, the Group introduced a new long‑term incentive plan, Blocked Shares, which replaces the former Restricted Share Unit Plan (RSU) for the Board of Directors. As of the 2025 AGM, the Board members receive a blocked share grant. The shares are blocked for three years from the allocation date on March 1st of the following year. The fair value of the granted shares is measured at Sulzer’s closing share price on the grant date. The number of shares allocated is calculated by dividing the individual grant value by the three‑month volume‑weighted average share price (VWAP) preceding the relevant allocation date. Participants are entitled to receive dividends declared during the blocking period.

Performance share plan settled in Sulzer shares

This long-term incentive plan covers the members of the Executive Committee and the members of the Sulzer Management Group. Performance share units (PSU) are granted annually, depending on the organizational position of the employee.

Vesting of the PSUs is generally subject to continuous employment and to the achievement of performance conditions over the performance period. Participants are not entitled to dividends declared during the vesting period. Vesting of the performance share plans (PSP) is based on three performance conditions: operational income before restructuring, amortization, impairments and non-operational items (operational profit) in the last year of the performance period (weighted 25%), average operational return on capital employed (operational ROCEA) (weighted 25%), and Sulzer’s total return to shareholders (TSR), compared to a selected group of peer companies (weighted 50%).

TSR is measured with a starting value of the volume-weighted average share price (VWAP) over the last three months prior to the first year, and an ending value of the VWAP over the last three months of the vesting period. The rank of Sulzer’s TSR at the end of the performance period determines the effective number of total shares.

For PSU granted in 2025, the Group redefined its profit measures. Newly granted plans are still subject to the achievement of performance conditions over the performance period. However , vesting of the performance share plans of (PSP) is now based on three performance conditions: earnings before interests ,taxes, depreciation and amortization (EBITDA) in the last year of the performance period (weighted 25%), return on capital employed in the last (ROCE) in the last year of the performance period (weighted 25%), and Sulzer’s total return to shareholders (TSR), compared to a selected group of peer companies (weighted 50%). Definition of newly introduced performance conditions can be found in the Compensation Report.

The group neutralized the consequences of the spin-off of the Applicator Systems division in 2021. The number of originally granted PSUs was recalculated to neutralize the effect of the spin-off on share price, resulting in the same fair value before and after the spin-off.

The following inputs were used to determine the fair value of the PSUs at grant date using a Monte Carlo simulation:

The expected volatility of the Sulzer share and the peer group companies is determined by the historical volatility. The zero-yield curves of those countries in which the companies and indices are listed were used as the relevant risk-free rates. Historical data was used to arrive at an estimate for the correlation between Sulzer and the peer companies. For the TSR calculation, all dividends paid during the vesting period are added to the closing share price.

Performance share units – terms of awards

Performance share units