Introduction by the Chairwoman of the Compensation Committee
On behalf of the Board of Directors of GF and of the Compensation Committee, I am pleased to present the 2018 Compensation Report.
Although our shareholders approved the 2017 Compensation Report, but with a relatively weak majority, the year 2018 has been a year of intense dialogue. The Chairman of the Board and I consulted a significant number of shareholders and proxy advisors throughout 2018 to better understand their rational for their responses, both positive and negative, to GF’s LTI-Plan design.
During the reporting year, following last year’s amendments to the LTI-Plan and the introduction of a shareholding ownership guideline, the Board of Directors decided in December 2018 to amend the LTI-Plan once again, effective for the performance year 2019. The LTI-Plan design 2018 does not differ from the design 2017, as it would have contradicted an existing contractual commitment with the Executive Management by retroactively adjusting a running plan.
The LTI-Plan 2019 principles can be summarized as follows:
- –The performance conditions include Earnings per Share (EPS) as internal measure and relative Total Shareholder Return (rTSR) as external measure. Therefore, the performance criteria are well balanced in terms of both internal and external views. Most shareholders and proxy advisors support this approach.
- –The EPS value targets have been reviewed and are now better aligned with GF’s ambitious Strategy 2020.
- –The rTSR targets continue to be linked to the SMI-Mid; however, the focus will be on performance at and above median, so there will be no payout below median performance.
Further details of the plan can be found in the chapter Changes for the Business Year 2019.
The Board of Directors trusts that the changes made to the LTI-Plan fulfill our shareholders’ expectations as they take into account their latest feedbacks.
As last year, the compensation report for 2018 provides an Executive Summary. In the chapter, Compensation structure you will find the Key Performance Indicators GF selected for the variable compensation elements and their rational. All other content does not differ from previous years’ and continues to provide a high level of transparency.
At the upcoming Annual Shareholders’ Meeting, we will ask you to approve, as last year, prospectively in a binding vote the maximum calculated amounts of compensation for the Board of Directors until the next Annual Shareholders’ Meeting, and the maximum calculated amount of compensation for the Executive Committee for the next business year. Further, you will have the opportunity to express your opinion on the Compensation Report in a consultative vote.
Looking ahead, we will continue to assess and review our compensation structure to ensure that it continues to fulfill its purpose in the evolving context in which GF operates and is aligned with the interests of our shareholders. However, we also hope to stabilize the remuneration structure for our Executive Committee until the new Strategy phase 2021 – 2025. At that point in time, the intention will be to review the remuneration system once more in depth and possibly align it with market trends in management compensation.
We trust that you will find this report interesting and informative.
Chairwoman of the Compensation Committee