Compensation Governance

Compensation Committee

The Compensation Committee consists of three non-executive Board members who are elected annually and individually by the Annual Shareholders’ Meeting for a one-year period until the next Annual Shareholders’ Meeting. At the 2018 Annual Shareholders’ Meeting, Riet Cadonau, Eveline Saupper, and Jasmin Staiblin were confirmed as members of the Compensation Committee. The Committee supports the Board of Directors in setting the compensation policy at the highest corporate level and regularly reviews the guidelines governing compensation of the executives. The Committee also proposes the amount of compensation to be paid to the Board of Directors, to the Chief Executive Officer, and to the other members of the Executive Committee, and prepares the related motions for the Annual Shareholders’ Meeting.

The Compensation Committee convenes as often as necessary, but at least twice per year. In 2018, the Committee held six meetings of approximately two hours each:

During the year 2018, the Committee evaluated the business performance for the 2017 business year against the preset objectives, and prepared a proposal to the Board of Directors on the short-term incentive to be paid to the Chief Executive Officer and to the Executive Committee members. The Committee determined the business objectives for the 2018 business year for the Chief Executive Officer and reviewed those of the Executive Committee members, before submitting them to the Board of Directors for approval. The Committee reviewed the Compensation Report 2017.

Based on the small majority in favor in the vote on the Compensation Report 2017 and also on the findings from the various discussions with proxy advisors and investors, the Compensation Committee recommended to the Board of Directors to amend the long-term incentive plan as of 1 January 2019. Further details on the amended plan can be found in the chapter Changes for the Business Year 2019.

The Committee annually reviews the benchmarking analysis of the compensation of the Chief Executive Officer and the members of the Executive Committee; it determined the target compensation of the Chief Executive Officer for the year 2018 and next business years based on a proposal from the Chairman of the Board. It also reviewed the target compensation for the year 2018 and following years for the members of the Executive Committee based on a proposal from the Chief Executive Officer. The Committee submitted the proposals to the Board of Directors for approval.

Overview of meetings’ schedule 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

February

 

June

 

July

 

November

 

December

CEO and EC compensation

 

Business performance 2017; STI 2017 for CEO and EC Business objectives for the year 2018 Review Compensation Report 2017 Determination of the maximum amounts of compensation for the Board of Directors until the next Annual Shareholders’ Meeting Determination of the maximum amounts of compensation for the Executive Committee for the business year 2019

 

Analysis of the Compensation Report voting results of the Annual Shareholders’ Meeting

 

Analysis of possible LTI-Plan adjustments

 

Review of feedback received from various proxy advisors and investors on potential adaptations of the LTI-Plan

 

2 Meetings Review of feedback received from various proxy advisors and investors on potential adaptations of the LTI-Plan LTI-Plan fine-tuning for 2019 Review compensation for the Board of Directors for the years 2018 and 2019 Review target compensation for the CEO and EC members for 2019

In 2018, all Committee members attended all meetings. The Chairman of the Board, the CEO and the Head of Corporate Human Resources attended the Committee meetings in an advisory capacity. The CEO did not attend the meeting when his own compensation or performance was discussed. The Chairwoman of the Committee reported to the Board of Directors after each meeting on the activities of the Committee. The minutes of the Committee meetings are available to all members of the Board of Directors.

The compensation proposals and decisions are made based on the following levels of authority:

Levels of authority

Approval framework

 

 

 

 

 

Subject >

 

Recommendation from >

 

Final approval from >

Aggregate compensation amount of Board of Directors

 

Board of Directors based on proposal by Compensation Committee

 

Annual Shareholders’ Meeting

Individual compensation of Board of Directors

 

Compensation Committee

 

Board of Directors

Aggregate compensation amount of Executive Committee including CEO

 

Board of Directors based on proposal by Compensation Committee

 

Annual Shareholders’ Meeting

Compensation of the CEO

 

Compensation Committee based on proposal by the Chairman of the Board

 

Board of Directors

Individual compensation of Executive Committee members

 

Compensation Committee based on proposals by the CEO

 

Board of Directors

On behalf of the Board of Directors, Internal and External Audit annually reviews the compliance of the compensation decisions made with the compensation regulations for the Executive Committee and the Board of Directors, the Organizational Rules, and the Articles of Association.

The Committee may call in external compensation specialists to obtain independent advice and/or to get benchmarking compensation data. In the year under review, no external compensation specialists were mandated.

Method of determination of compensation

The elements and levels of the compensation of the Board of Directors and the Executive Committee are reviewed in principle every two to three years and are tailored to the relevant sectors and labor markets in which GF competes for talent. For the purpose of comparison, the Compensation Committee relies on compensation surveys published by independent consulting firms and on publicly available information, such as compensation disclosures from comparable companies. Comparable companies are defined as companies listed on the Swiss stock exchange (SIX) with similar size in terms of market capitalization, sales, number of employees, complexity and geographic scope, are headquartered in Switzerland and, if available, operate in similar business segments.

The Compensation Committee also takes into consideration the effective business and individual performance while determining the compensation amounts to be paid to the Chief Executive Officer and to the other members of the Executive Committee. Individual performance is assessed through the annual Management By Objectives (MBO) process, where individual objectives are defined at the beginning of the year and the achievement against those objectives is evaluated at the end of the year. The objective setting and the performance assessment of the members of the Executive Committee are conducted by the Chief Executive Officer and are approved by the Chairman of the Board. The Chairman of the Board determines the objectives and evaluates the performance of the Chief Executive Officer; the objectives and evaluation are approved by the full Board of Directors.