Integrated
Annual Report 2016

6. Group Executive Board: remuneration and share/option ownership in 2016

This section is audited by the external auditor.

6.1 Performance in 2016

The successful integration of Sanitec has led to a strong financial and operational performance of Geberit in 2016.

Net sales increased by 8.3% in 2016, to CHF 2,809.0 million. Total growth comprised organic growth in local currencies of 6.4%, a positive foreign currency effect of +0.7% and an acquisition- and divestment-related net increase of 1.2%. The very good development of the operating margins was supported by synergies derived from the integration of the Sanitec business, volume growth and – in spite of an increase in the second half of the year – lower raw material prices. The results comprise various special effects in connection with the Sanitec acquisition. Operating profit (EBIT) adjusted for these special effects increased by 16.2% to CHF 686.5 million and the correspondingly adjusted EBIT margin came to 24.4%. Adjusted net income rose by 18.4% to CHF 584.0 million, with an adjusted return on net sales of 20.8%. Adjusted earnings per share improved by 19.8% to CHF 15.85. The non-adjusted figures were CHF 640.1 million for the EBIT, CHF 548.2 million for net income and CHF 14.88 for earnings per share. Free cashflow rose by 16.5% to CHF 563.9 million. The average Return on Invested Capital (ROIC) was 21.5% (prior year 20.1%).

To determine the variable cash remuneration (STI) of the members of the Group Executive Board, the following Key Performance Indicators (KPI) are used: Sales, EBIT, Earning per Share (EPS) and ROIC, all equally weighted. Furthermore, the achievement of qualitative individual targets is considered. The degree of achievement varies by KPI, and the weighted average of all elements used to calculate the variable cash remuneration exceeded the targets.

6.2 Remuneration awarded in 2016

The remuneration of the Group Executive Board amounted to TCHF 9,126 in 2016 (previous year TCHF 6,764). The remuneration of the CEO amounted to TCHF 2,287 in 2016 (previous year TCHF 1,786). The higher total remuneration in 2016 for the Group Executive Board compared to the previous year is the result of various factors:

  • Compensation increase for the CEO in order to align compensation gradually to market
  • The Group Executive Board was increased from six to seven members
  • Target achievment in the STI programme was higher than in the previous year
  • Selected higher option grants (LTI) to align compensation to market

The base salaries of the existing Group Executive Board, except for the CEO, remained unchanged. Contributions to company pension funds increased due to higher results in the variable compensation (STI), as well as the other benefits with the additional member of the Group Executive Board.

At the 2014 General Meeting, the shareholders approved a maximum aggregate compensation amount of TCHF 9,750 for the Group Executive Board for the year 2016. The compensation paid for that period amounts to TCHF 9,126 and is therefore within the approved amount.

Further information on the remuneration awarded to the Group Executive Board for the business year 2016, compared with the maximum potential amount of remuneration, is provided with the invitation to the Ordinary General Meeting 2017.

The following table – reviewed by the external auditor – shows details of remuneration for 2016 and 2015:

    2016     2015
  C. Buhl
CEO
Total C. Buhl
CEO
Total
  CHFCHF CHF CHF
Salary       
- Fixed salary 791,8043,145,644 756,800 2,819,507
- Variable salary1 709,5502,776,122  401,500 1,459,092
thereof in shares in 20162  400,819 1,034,605
Shares/options  
- Call options MSOP 2016/20153 574,9862,123,866  439,927 1,502,281
- Call options MSPP 2016/20154 29,70581,824  18,937 144,005
Non-cash benefits  
- Private share of company vehicle5 7,05645,040  6,648 39,864
Expenditure on pensions  
- Pension plans and social insurance 171,254937,049  159,607 786,263
- Contribution health/accident insurance 2,45416,382  2,238 13,388
Total6 2,286,809 9,125,927  1,785,657 6,764,400
1 The amounts to be paid (current year), respectively the amounts effectively paid (previous year) are shown. The payment of the variable salary occurs in the following year. Members of the Group Executive Board are free to choose between a payment in shares or in cash.
2 Registered shares of the company with a par value of CHF 0.10 each, 3-year blocking period, valued at fair market value at grant date of CHF 361.75 (PY CHF 349.15).
3 Call options on registered shares of the company with a par value of CHF 0.10 each, issued within the scope of the Management Share Option Programme (MSOP); 1 option entitles to purchase 1 registered share at an exercise price of CHF 361.75 (previous year CHF 349.15); definitive acquisition of the option (“vesting”) dependent on various conditions, 3-5-year blocking period (3 tranches at 33%); previous year 2-4 year blocking period (3 tranches at 33%). Market value of CHF 31.42 (previous year CHF 33.48) determined using the binomial method.
4 Call options on registered shares of the company with a par value of CHF 0.10 each, issued within the scope of the Management Share Participation Programme (MSPP); 1 option entitles to purchase 1 registered share at an exercise price of CHF 361.75 (previous year CHF 349.15); definitive acquisition of the option (“vesting”) dependent on various conditions, 1-4-year blocking period (4 tranches at 25%), market value of CHF 26.81 (previous year CHF 34.06) determined using the binomial method.
5 Valuation in accordance with the guidelines of the Swiss Federal Tax Administration FTA (0.8% of the purchase cost per month).
6 Immaterial payments (below CHF 500) are not included in the total. Overall, these payments do not exceed CHF 2,000 per member of the Group Executive Board.

The parameters taken into consideration in the option valuation model are set out in Note 17 Participation plans of the consolidated financial statements.

6.3 Shareholdings of Group Executive Board

As of the end of 2016 and 2015, the Group Executive Board held the following shares in the company:

  Maturity Average exercise price in CHF C. Buhl
CEO
R. Iff
CFO
M. Reinhard E. Renfordt-Sasse K. Spachmann R. van Triest M. Baumüller Total
2016                    
Shareholdings Group Executive Board
Shares     4,588 31,812 2,500 2,336 8,691 40 1,343 51,310
Percentage voting rights shares     < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% 0.14%
                     
Call options*
Vesting period:          
Vested 2017–2022 242.80 1,633 0 0 1,990 7,314 0 3,046 13,983
2017 2020–2023 306.01 5,841 9,172 9,308 2,789 8,013 10 995 36,128
2018 2021–2023 330.95 5,339 6,834 7,011 2,477 6,140 10 687 28,498
2019 2022–2026 355.45 10,896 7,227 7,739 3,920 6,647 2,556 600 39,585
2020 2023–2026 361.75 6,377 3,994 4,331 2,006 3,706 2,556 325 23,295
2021 2026 361.75 6,100 3,866 4,206 1,909 3,628 2,546 277 22,532
Total options 36,186 31,093 32,595 15,091 35,448 7,678 5,930 164,021
Percentage potential share of voting rights options   0.1% < 0.1% < 0.1% < 0.1% 0.1% < 0.1% < 0.1% 0.44%
* Purchase ratio 1 share for 1 option

 

  Maturity Average exercise price in CHF C. Buhl
CEO
R. Iff
CFO
M. Reinhard E. Renfordt-Sasse K. Spachmann R. van Triest Total
2015                  
Shareholdings Group Executive Board
Shares     3,480 31,300 2,000 1,665 7,462 0 45,907
Percentage voting rights shares     < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% 0% 0.12%
           
Call options*                  
Vesting period:                  
Vested 2017–2021 225.54 1,547 0 375 2,298 2,103 0 6,323
2016 2017–2022 242.80 1,709 7,558 7,567 1,483 6,541 0 24,858
2017 2020–2022 287.43 5,564 9,044 9,183 2,692 7,935 0 34,418
2018 2021–2022 315.55 5,062 6,706 6,886 2,380 6,062 0 27,096
2019 2022 349.15 4,519 3,233 3,408 1,914 2,941 0 16,015
Total options   18,401 26,541 27,419 10,767 25,582 0 108,710
Percentage potential share of voting rights options   < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% 0% 0.29%
* Purchase ratio 1 share for 1 option

As of 31 December 2016, there were no outstanding loans or credits between the company and the members of the Group Executive Board, closely related parties or former members of the Group Executive Board.