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
- Participation plans 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 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.
Base salary and benefits form the fixed remuneration and are based on prevalent market practice.
Variable remuneration drives and rewards best-in-class performance based on ambitious and stretched targets. It consists of short-term and long-term elements:
- Short-term variable remuneration is based on the 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 element rewards individual performance as well as company success.
- 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 with those of shareholders and to foster retention of the executives.
Variable remuneration is capped to avoid rewarding 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).