Compensation Report
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. These provisions can be found on GF’s website and include:
- Principles of compensation of the Board of Directors (Article 22);
- Principles of compensation of the Executive Committee (Article 23c);
- Additional amount for new members of the Executive Committee (Article 23c.9);
- Provisions on the employment contracts for members of the Executive Committee (Article 23b);
- Credits and loans (Article 23d.1);
- Provisions on early retirement for members of the Executive Committee (Article 23d.2).
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 2022 Annual Shareholders’ Meeting, Eveline Saupper (Chairwoman) and Riet Cadonau were re-elected as members of the Compensation Committee and Hubert Achermann was replaced by Roger Michaelis, who was elected as a new member of the Compensation Committee.
The Compensation Committee supports the Board of Directors with the following duties:
- Determining the compensation policy of the company at the highest corporate level, including the principles for the variable compensation and shareholding programs;
- Reviewing the guidelines governing compensation of the Board of Directors and the Executive Committee;
- Preparing the motions related to the maximum aggregate amounts of compensation for the Annual Shareholders’ Meeting;
- Proposing the amount of compensation to be paid to the Board of Directors, to the CEO and to the other members of the Executive Committee within the limits approved by the Annual Shareholders’ Meeting;
- Reviewing and proposing the annual Compensation Report to the Board of Directors.
During 2022, the Compensation Committee performed the following regular tasks:
- Conducted a benchmark analysis for the compensation of the Board of Directors and, based on the outcomes, proposed adjustments to the Board of Directors;
- Conducted a benchmark analysis for the compensation of the CEO and of the other members of the Executive Committee, and proposed salary adjustments to the Board of Directors;
- Evaluated the business performance for the 2021 financial year against the pre-set objectives and prepared a proposal to the Board of Directors on the short-term incentive to be paid to the CEO and to the other members of the Executive Committee;
- Determined the business objectives for the 2022 financial year for the CEO and reviewed those of the other members of the Executive Committee, before submitting them to the Board of Directors for approval;
- Reviewed the Compensation Report 2021 and prepared the compensation motions to be submitted to vote at the 2022 Annual Shareholders’ Meeting;
- Reviewed and discussed the voting results on the compensation motions at the 2022 Annual Shareholders’ Meeting, as well as the proxy advisors’ and shareholders’ feedback received on compensation matters;
- Engaged with proxy advisors and major shareholders on compensation matters in order to gather their feedback and comments;
- Prepared the Compensation Report 2022.
The Compensation Committee convenes as often as necessary, but at least twice per year. In 2022, the Committee held four meetings of approximately two hours, each according to the schedule below:
Overview of meeting schedule 2022
February (8 February) |
February (21 February) |
September (22 September) |
December (15 December) |
Target setting for the STI 2022 (business and individual objectives) for CEO and EC Review draft of the Compensation Report 2021 |
Business performance 2021; approval of the STI 2021 (business and individual objectives) for CEO and EC Approval of the LTI 2018 vesting and LTI 2022 grant Approval of the Compensation Report 2021 Determination maximum amounts of compensation for the Board of Directors until the next Annual Shareholders’ Meeting Determination maximum amounts of compensation for the EC for the business year 2023 |
Analysis of the voting results on compensation motions at the Annual Shareholders’ Meeting Review of proxy advisors’ and investors’ feedback on compensation |
Review of proxy advisors’ and investors’ feedback on compensation (con't) Benchmark of compensation for the Board of Directors Review compensation for the Board of Directors for the next compensation period Benchmark of compensation for the CEO and EC members Review target compensation for the CEO and EC members for the coming financial year Review draft of the Compensation Report 2022 |
In 2022, all Compensation Committee members attended all meetings. The Chairman of the Board, the CEO, the Head of Corporate Human Resources and the Head of Corporate Compensation and Benefits are invited to attend the Compensation Committee meetings in an advisory capacity. The Chairman of the Board and the CEO do not attend the meeting when their own compensation or performance is discussed.
After each meeting, the Chairwoman of the Compensation Committee reports to the Board of Directors about the activities of the Compensation Committee. The minutes of the Compensation Committee meetings are available to all members of the Board of Directors.
Compensation proposals and decisions are made based on the following levels of authority:
Levels of authority
Approval framework
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, internal and external Auditors annually review 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 regularly calls in external compensation specialists and consultants to obtain independent advice and/or benchmarking compensation data. In the year under review, [dialog]unlocked provided services related to Executive Committee compensation. Obermatt was appointed to measure the relative performance of Georg Fischer for the purpose of the long-term incentive plan. These companies have no other mandates with GF.
Method used to determine 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 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 the compensation disclosures of comparable companies.
Comparable companies are defined as multinational industrial companies listed on the Swiss stock exchange (SIX) with a similar business model and size in terms of market capitalization, sales, number of employees, complexity and geographic scope. The peer group for the compensation benchmark of the Board of Directors and the Executive Committee include the following Swiss companies: Bucher Industries, DKSH, Dormakaba, Geberit, OC Oerlikon, SIG Combibloc, Sonova, Straumann and Sulzer. Compensation benchmarking was last conducted in 2022.
Performance management
The Compensation Committee also takes into consideration 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, for which 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.