2. Remuneration policy and principles

In order to ensure the company's success and to maintain its position as market leader, it is critical to attract, develop and retain the right talent. Geberit’s remuneration programmes are designed to support this fundamental objective and are based on the following principles:

• Remuneration is competitive with that of other companies with which Geberit competes for talents
• Both company performance and individual contributions are recognised and rewarded
• Remuneration programmes are balanced between rewarding short-term success and long-term value creation
• Shareholding programmes foster the long-term commitment and mindset of executives and the alignment of their interests to those of the shareholders
• Executives are protected against risks through appropriate pension and insurance programmes

Remuneration of the Board of Directors

In order to ensure the independence of the Board of Directors in its supervisory function over the Group Executive Board, members of the Board of Directors receive a fixed remuneration in the form of cash and non-discounted shares with a blocking period of four years. The remuneration system for the Board of Directors does not contain any performance-related components (see also Remuneration architecture, Board of Directors).

Remuneration of the Group Executive Board

The remuneration of the Group Executive Board consists of fixed and variable elements.

The base salary and benefits form the fixed remuneration and are based on prevalent market practice.

The variable remuneration drives and rewards best-in-class performance by way of continuously setting ambitious and stretched targets. The variable remuneration consists of short-term and long-term elements:

• The short-term variable remuneration is based on Geberit’s value drivers sales, earnings before interest and tax (EBIT), return on invested capital (ROIC) and earnings per share (EPS), as well as individual objectives that are embedded in the annual performance management process. This remuneration balances the reward of individual performance and company success.
• The long-term variable remuneration is based on the return on invested capital (ROIC) and aims to reward sustainable performance, to align the interests of management to those of shareholders and to foster long-term retention of the executives.

The variable remuneration is capped in order to not reward inappropriate risk-taking or short-term profit maximisation at the expense of the long-term health of the company (see also Remuneration architecture, Group Executive Board).

Governance and shareholders' involvement

Authority for decisions related to remuneration are governed by the Articles of Incorporation and the Organisational Regulations of Geberit AG.

The prospective maximum aggregate amounts of remuneration of the members of the Board of Directors and of the Group Executive Board are subject to a binding shareholders’ vote at the General Meeting. In addition, the Remuneration Report for the preceding period is subject to a consultative vote (see also Determination of remuneration).