7. Group Executive Board: remune­ration and share/option ownership in 2018

This section is audited by the external auditor.

7.1 Performance in 2018

Consolidated sales in 2018 increased by 5.9% to CHF 3,081 million. Total growth comprised organic growth in local currencies of 3.1% and a foreign currency effect of +2.8%. As in previous years, one-off costs related to the Sanitec acquisition and integration had an impact on results, although to a significantly lower extent and for the last time in this reporting year. Operating profit (EBIT) adjusted for these effects increased by 5.4% to CHF 744 million and the adjusted EBIT margin came to 24.2%. The increased year-on-year operating results were above all attributable to higher sales volumes, price increases, positive effects of the closure of two plants in France in the previous year as well as to continuous efficiency improvements, while higher raw material prices as well as tariff-related increases in personnel expenses had a negative impact. Adjusted earnings per share improved by 4.7% to CHF 17.21. The adjusted return on invested capital (ROIC) rose to 22.6% (previous year 22.4%).

To determine the variable cash remuneration (STI) of the members of the Group Executive Board, the following Key Performance Indicators (KPI) are used: sales performance, EBIT and EPS compared with the previous year as well as ROIC. The achievement of qualitative individual targets is also taken into consideration. The degree of achievement varies by KPI, and the weighted average of all elements used to calculate the variable cash remuneration slightly exceeded the targets.

7.2 Remuneration awarded in 2018

The remuneration of the Group Executive Board amounted to TCHF 8,727 in 2018 (previous year TCHF 9,608). The remuneration of the CEO amounted to TCHF 2,503 in 2018 (previous year TCHF 2,401). The lower total remuneration in 2018 for the Group Executive Board compared to the previous year is the result of two main factors:

  • no one-off employer contributions to the company pension funds in 2018
  • the lower remuneration of the new Group Executive Board member compared to his predecessor which affects the STI and LTI figures

At the 2017 General Meeting, the shareholders approved a maximum aggregate amount of TCHF 11,300 for the remuneration of the Group Executive Board for the year 2018. The compensation paid for that period amounts to TCHF 8,727 and is therefore within the approved amount.

Further information on the remuneration awarded to the Group Executive Board for the business year 2018, compared with the maximum potential amount of remuneration, is provided with the invitation to the ordinary General Meeting 2019.

The following table shows details of remuneration for 2018 and 2017:

    2018     2017
  C. Buhl
CEO
Total   C. Buhl
CEO
Total
  CHF CHF   CHF CHF
Salary          
- Fixed salary 931,801 3,342,650   861,809 3,449,744
- Variable salary1 541,350 1,947,550   516,250 2,013,879
thereof in shares in 20182 515,182 1,296,600
Shares/options      
- Call options MSOP 2018/20173 809,885 2,357,518   749,955 2,475,927
- Call options MSPP 2018/20174 43,639 109,830   56,385 167,211
Non-cash benefits  
- Private share of company vehicle5 7,056 46,380   7,056 48,978
Expenditure on pensions  
- Pension plans and social insurance 166,482 905,247   206,8546 1,433,4896
- Contribution health/accident insurance 2,476 18,172   2,497 18,319
Total7 2,502,689 8,727,347   2,400,806 9,607,547
1 The amounts to be paid (current year), and the amounts effectively paid (previous year) respectively, and 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 432.20 (PY CHF 435.95).
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 432.20 (previous year CHF 435.95); definitive acquisition of the option (“vesting”) dependent on various conditions, 3-5-year blocking period (3 tranches at 33%). Market value of CHF 39.29 (previous year CHF 39.87) 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 432.20 (previous year CHF 435.95); definitive acquisition of the option (“vesting”) dependent on various conditions, 1-4-year blocking period (4 tranches at 25%), market value of CHF 36.61 (previous year CHF 34.72) 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 Including one-off compensation in pension provision due to pension scheme modifications (reduction of pension conversion rate).
7 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.

7.3 Shareholdings of Group Executive Board

As of the end of 2018 and 2017, the Group Executive Board held the following shares in the company:

  Maturity Average exercise price in CHF C. Buhl
CEO
R. Iff
CFO
M. Baumüller E. Renfordt-Sasse K. Spachmann R. van Triest M. Ziegler Total
2018                    
Shareholdings Group Executive Board
Shares     7,404 31,564 3,078 1,546 12,500 300 2,416 58,808
Percentage voting rights shares     <0.1% <0.1% <0.1% <0.1% <0.1% <0.1% <0.1% 0.16%
                     
Call options*
End of vesting period:          
Vested 2020–2024 332.00 13,219 8,836 3,706 6,166 807 60 2,857 35,651
2019 2022–2026 394.76 11,600 7,665 754 4,074 6,766 2,621 980 34,460
2020 2023–2027 409.97 13,351 7,608 1,983 3,664 6,751 4,627 921 38,905
2021 2024–2028 409.97 19,945 10,746 3,462 5,161 9,684 6,653 2,548 58,199
2022 2025–2028 434.08 13,439 6,623 3,088 3,098 6,056 4,067 2,071 38,442
2023 2028 432.20 6,871 3,266 1,527 1,594 3,011 2,036 1,696 20,001
Total options 78,425 44,744 14,520 23,757 33,075 20,064 11,073 225,658
Percentage potential share of voting rights options   0.21% 0.12% <0.1% <0.1% <0.1% <0.1% <0.1% 0.61%
* 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 M. Baumüller Total
2017                    
Shareholdings Group Executive Board
Shares     6,212 32,840 2,500 2,452 12,407 200 2,850 59,461
Percentage voting rights shares < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% 0.16%
               
Call options*                    
End of vesting period:          
Vested 2020–2023 306.01 7,474 9,172 3,783 4,779 3,236 10 2,922 31,376
2018 2021–2024 357.20 5,745 7,091 7,261 2,631 6,140 50 784 29,702
2019 2022–2026 382.28 11,302 7,484 7,989 4,074 6,647 2,596 697 40,789
2020 2023–2027 398.85 13,053 7,427 7,895 3,664 6,632 4,602 1,926 45,199
2021 2024–2027 398.85 12,776 7,299 7,770 3,567 6,554 4,592 1,878 44,436
2022 2027 435.95 6,270 3,176 3,314 1,504 2,926 2,006 1,504 20,700
Total options     56,620 41,649 38,012 20,219 32,135 13,856 9,711 212,202
Percentage potential share of voting rights options   0.15% 0.11% < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% 0.57%
* Purchase ratio 1 share for 1 option

As of 31 December 2018, 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.

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