3.1. Process of determination of remuneration

The Nomination & Compensation Committee (NCC) supports the Board of Directors (BoD) in the fulfillment of its duties and re­spon­si­bil­ities in the area of personnel policy, which include:

• Regular review of the remuneration system and benefits
• Yearly review of the individual remuneration of members of the Group Executive Board
• Yearly assessment of members of the Group Executive Board
• Personnel development of the Group Executive Board
• Succession planning and nomination for positions on the Group Executive Board
• Preparation of the selection of candidates for election or re-election to the Board of Directors

Approval and authority levels:

The Nomination & Compensation Committee consists exclusively of independent members of the Board of Directors, who will be, as of 2014 and in accordance with the Ordinance OaEC, proposed for election by the Annual General Meeting. For the period under review, the Nomination & Com­pen­sa­tion Committee consisted of Robert F. Spoerry as Chairman and Jørgen Tang-Jensen and Hartmut Reuter as members (the latter as of October 2013). The Chairman of the Nomination & Com­pen­sa­tion Committee can invite the Chairman of the Board of Directors/CEO and the Head Corporate Human Resources to join the meetings. However, the Chairman of the Board of Directors/CEO does not take part in the section of the meeting where his own remuneration is discussed.

After each meeting, the Chairman of the Nomination & Com­pen­sa­tion Committee reports to the Board of Directors on its activities and recommendations. The minutes of the Nomination & Compensation Committee’s meetings are available to the full Board of Directors.

3.2. Benchmarks and external consultants

Geberit regularly reviews the remuneration of its executives, including members of the Group Executive Board; this includes regular participation in benchmark studies on comparable functions in other industrial companies. In 2012, a detailed analysis of the remuneration of members of the Group Executive Board was carried out by an independent external com­pen­sa­tion consulting firm, Towers Watson. This consulting firm has no other mandates from Geberit. The remuneration analysis was conducted on the basis of a peer group of industrial companies of comparable size and geographic scope, with their head­quarters in Switzerland: Barry Callebaut, Bucher, Dätwyler, EMS-Chemie, Georg Fischer, Givaudan, Kaba, Lindt & Sprüngli, Logitech, Lonza, Mettler-Toledo, Nobel Biocare, Oerlikon, Sika, Sonova, Straumann, Sulzer and Zehnder. The study revealed that remuneration of the CEO and other members of the Group Executive Board was broadly in line with that of the peer group. However, it became apparent that the weighting of the different remuneration components deviated from that of the market; in particular, the proportion of the Long-Term Incentive as a percentage of the total remuneration at Geberit was below that of the peer group. The Board of Directors intends to rebalance the remuneration components in line with market practice over the coming years.

In regard to the remuneration of the Board of Directors, the remuneration of non-financial companies of the Swiss Market Index Mid (SMIM) and of the Swiss Market Index (SMI) is taken into consideration, as well as public surveys. The remuneration system (structure) is reviewed periodically by the Nomination & Compensation Committee. Such a review took place in 2012 and has led to a fundamental change: the elimination of any performance-related remuneration for the Board of Directors.

3.3. Shareholder involvement

It is important for Geberit to receive feedback on the Re­mu­ner­ation Report through a consultative vote at the Annual General Meeting, and to make corrections where appropriate. The weaker-than-expected approval of the Remuneration Report at last year’s General Meeting was one of the main reasons for the decision to critically examine areas of improvement. The com­pa­ny has made significant efforts to improve the compensation disclosure in terms of transparency and level of detail about the remuneration system. Further, the company has made changes to the remuneration programs as mentioned above. At the 2014 General Meeting, shareholders will have the opportunity to comment on those improvements in the course of the con­sul­ta­tive vote on the 2013 Remuneration Report. Geberit is also in contact with shareholders and shareholders’ representatives in order to explain and discuss its remuneration policy and programs.