Compensation Governance

Rules relating to compensation in the Articles of Association

The Articles of Association of GF contain provisions regarding the compensation principles applicable to the Board of Directors and to the Executive Committee. Those provisions are available on GF’s website and include:

According to Articles 22 and 23 of the Articles of Association, the Annual Shareholders’ Meeting approves annually the maximum aggregate compensation of the Board of Directors for the period from the Annual Shareholders’ Meeting to the next Annual Shareholders’ Meeting, as well as the maximum aggregate compensation of the Executive Committee for the following calendar year. In addition, the Compensation Report is submitted to the Annual Shareholders’ Meeting for an advisory vote on a yearly basis, so that shareholders can express their opinion on the compensation policy and programs.

Compensation Committee

The Compensation Committee consists of three non-executive Members of the Board of Directors who are elected annually and individually by the Annual Shareholders’ Meeting for a one-year period until the next Annual Shareholders’ Meeting. At the 2019 Annual Shareholders’ Meeting, Eveline Saupper (Chairwoman), Roman Boutellier and Jasmin Staiblin were elected as Members of the Compensation Committee.

The Compensation Committee supports the Board of Directors with the following duties:

During the year 2019, the Compensation Committee performed the following regular tasks:

The Compensation Committee convenes as often as necessary, but at least twice per year. In 2019, the Committee held 4 meetings of approximately two hours each according to the schedule below:

Overview of meetings’ schedule 2019

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February

 

July

 

September

 

December

Business performance 2018; STI 2018 for CEO and EC Determination business objectives for the year 2019 Approval of the Compensation Report 2018 Maximum amounts of compensation for the Board of Directors until the next Annual Shareholders’ Meeting Maximum amounts of compensation for the EC for the business year 2020

 

Analysis of the voting results on compensation motions at the Annual Shareholders’ Meeting Review of proxy advisors’ and investors’ feedback on compensation

 

Review of the compensation policy and incentive design applicable to the CEO and EC Benchmarking of Board and EC compensation Review of clawback and malus provisions

 

Review compensation for the Board of Directors for the next compensation period Review target compensation for the CEO and EC members for the coming business year Approval of new clawback and malus provisions Review of the Compensation Report 2019

In addition to the meetings listed above, the Compensation Committee held one extraordinary meeting in November for the review and discussion of the new format of the Compensation Report.

In 2019, all Compensation Committee members attended all meetings. The Chairman of the Board, the CEO and the Head of Corporate Human Resources are invited to attend the Compensation Committee meetings in an advisory capacity. The CEO does not attend the meeting when his own compensation or performance is discussed.

The Chairwoman of the Compensation Committee reports to the Board of Directors after each meeting on the activities of the Compensation Committee. The minutes of the Compensation 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

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Subject

 

Recommendation from

 

Final approval from

Compensation policy and principles

 

Compensation Committee

 

Board of Directors

Aggregate compensation amount of the Board of Directors

 

Board of Directors based on proposal by Compensation Committee

 

Annual Shareholders’ Meeting (binding vote)

Individual compensation of the Members of the Board of Directors

 

Compensation Committee

 

Board of Directors

Aggregate compensation amount of the Executive Committee

 

Board of Directors based on proposal by Compensation Committee

 

Annual Shareholders’ Meeting (binding vote)

Individual compensation of the CEO

 

Compensation Committee based on proposal by the Chairman of the Board

 

Board of Directors

Individual compensation of the Executive Committee members

 

Compensation Committee based on proposals by the CEO

 

Board of Directors

Compensation Report

 

Board of Directors based on proposal by Compensation Committee

 

Annual Shareholders’ Meeting (consultative vote)

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

The Compensation Committee may call in external compensation specialists to obtain independent advice and/or to get benchmarking compensation data. In the year under review, external compensation specialists provided advice on executive compensation matters. These companies have no other mandates with GF.

Method of determination of compensation

Benchmarking

The compensation structure and levels of the Board of Directors and the Executive Committee are reviewed every two to three years and are tailored to the relevant sectors and labor markets in which GF competes for talents. For the purpose of comparison, the Compensation Committee relies on compensation surveys published by independent consulting firms and on publicly available information such as the compensation disclosures of comparable companies. Comparable companies are defined as multinational industrial companies listed on the Swiss stock exchange (SIX) with similar size in terms of market capitalization, sales, number of employees, complexity and geographic scope. The benchmark for the Board of Directors includes the companies of the SMI-Mid: AMS, Aryzta, Baloise, Barry Callebaut, Clariant, Dormakaba, Dufry, EMS-Chemie, Flughafen Zurich, GAM, Helvetia, Kühne + Nagel, Lindt, Logitech, OC Oerlikon, Partners Group, PSP Swiss Property, Schindler, Sonova, Straumann, Sunrise, Swiss Prime Site, Temenos, VAT and Vifor Pharma. The benchmark for the Executive Committee comprises the following industrial companies listed in Switzerland: Arbonia, Autoneum, Bobst, Bucher Industries, Conzzeta, Datwyler, Dormakaba, Geberit, Huber + Suhner, OC Oerlikon, Rieter, Schweiter Technologies, SFS Group, Sika, Sulzer and Sonova.

Performance management

The Compensation Committee also takes into consideration the effective business and individual performance while determining the compensation amounts to be paid to the CEO 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 CEO and by the Chairman of the Board for the CEO. The performance assessment of the CEO and the other Members of the Executive Committee is reviewed by the Compensation Committee.

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