1. Introduction by the Chairman of the Nomination & Compensation Committee

Dear Shareholder

The purpose of the remuneration programs is to attract, retain and motivate employees, to drive best-in-class performance and to encourage behavior that is aligned with the company’s high standards of integrity. We strive to proactively refine our remuneration system in order to respond to the changing business and regulatory environment and we are keen to ensure that our remuneration principles reward performance and are well aligned to the interests of our shareholders.

Based on your feedback, we undertook a review of our remuneration system leading to a number of changes in 2013, such as the elimination of performance-based remuneration for members of the Board of Directors, the introduction of a performance condition in the long-term incentive plan for the Group Executive Board and the implementation of a claw-back policy on the variable remuneration payments made to the Group Executive Board. Further, we have expanded the disclosure of remuneration in our Remuneration Report. Based on the positive outcome of the shareholder consultative vote on the Remuneration Report at the 2014 General Meeting, we believe that shareholders welcome the changes made to our remuneration programs and disclosure.

In 2014, we continued to assess our remuneration system, especially in the context of the implementation of the Ordinance against Excessive Compensation in Stock Listed Corporations. We concluded that while no fundamental changes to the remuneration programs seem necessary, we need to further enhance our compensation disclosure with additional information so that you can better assess the link between pay and performance. Looking ahead, we will continue to review and refine our remuneration framework in order to promote sustainable performance and employees’ engagement, while ensuring compliance to the regulatory requirements.

At the 2015 General Meeting, we will request your approval of the total remuneration amount to be awarded to the Board of Directors for the period until the following General Meeting, and to the Executive Board for the 2016 business year. Further, you will have the opportunity to express your opinion on this Remuneration Report in a consultative vote.

The Board of Directors would like to thank you for the time you took to meet with us and share your views on remuneration. We hope that you find this report informative and are confident that our remuneration system rewards for performance in a balanced and sustainable manner and aligns well with the shareholders’ interest.


Yours sincerely

Signature Robert F. Spoerry

Robert F. Spoerry
Chairman of the Nomination & Compensation Committee