2. Foreword by the Chairman of the Nomination & Compensation Committee
On behalf of the Nomination and Compensation Committee (NCC, Nomination and Compensation Committee), I am pleased to present the 2020 Remuneration Report.
Following the election of the members of the Nomination and Compensation Committee during the Annual General Meeting for 2020, Werner Karlen was welcomed as a new member of the Committee.
Despite the COVID-19 crisis and the resulting, unprecedented slump seen in the construction industry in the second quarter, we are able to look back on a very good business and financial year. The results were negatively affected by currency developments. However, results in local currencies increased on all levels and significant market shares were gained despite the sales decrease as a result of COVID-19. The currency-adjusted sales growth was down to our rapid, successful crisis management, the conscious decision to not furlough employees in order to also maintain the levels of contact with customers during the lockdown periods, and a rapid transition to a digital customer service approach. This increase in the margin was mainly due to targeted cost savings (particularly marketing and expenses), the targeted, increased levels of flexibility in production and logistics, lower raw material prices, the natural currency hedging followed over the long term, and price increases. Thanks to these measures, it was also possible to compensate for the significant tariff-related increases in personnel expenses and additional investments in digitalisation initiatives. As a consequence of further improved, high profitability, we succeeded in further consolidating our position as the leading supplier of sanitary products and gained further market shares. Despite the COVID-19 crisis, the results were achieved without restructuring, dismissals, loss of pay, short-term work or other financial support from the state. The Remuneration Report summarises how these results impacted the variable remuneration made to the members of the Group Executive Board under the different remuneration components.
There were no changes to the remuneration system of the Board of Directors in the reporting year. The remuneration system and the amount of remuneration for Geberit’s Board of Directors conform to standard market practice and the Board of Directors confirmed that no changes were necessary.
There were no changes to the remuneration programmes for the Group Executive Board in 2020. The purpose of the changes implemented in the previous year was to harmonise and simplify the remuneration programmes.
In order to bring the interests of the members of the Group Executive Board into line with those of the shareholders and to strengthen their ties to the company, the CEO and each member of the Group Executive Board must satisfy the minimum requirements with respect to the ownership of shares in Geberit.
In the course of the year, the Nomination and Compensation Committee dealt with the conversion of the supplementary benefits under the Wohlfahrtsfonds into a collective foundation (Sammelstiftung) in accordance with Art. 1e BBV 2 (Ordinance on Occupational Retirement, Surviving Dependants’ and Disability Pension Plans) for members of the Group Executive Board and around 100 additional managerial staff from Switzerland. In addition, the Committee has taken account of the feedback received from the shareholders at the Annual General Meeting in 2020 and modified the Remuneration Report slightly, rendering it more transparent. Otherwise, the Committee performed its regular activities throughout the year such as the performance goal setting at the beginning of the year and the performance assessment at year end, the determination of the compensation of the members of the Board of Directors and of the Group Executive Board, as well as the preparation of the Remuneration Report and of the “say-on-pay”-vote for the Annual General Meeting. You will find further information on our activities and on Geberit’s compensation system and governance on the following pages.
At the 2021 Annual 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 Annual General Meeting, and the maximum aggregate remuneration awarded to the Group Executive Board for the 2022 business year. Additionally, you will have the opportunity to express your opinion on this Remuneration Report in a consultative vote. You will see in the report that the remuneration awarded to the Board of Directors for the compensation period ending with the 2021 Annual General Meeting and the remuneration awarded to the Group Executive Board in 2020 are within the limits approved at the 2020 Annual General Meeting and 2019 Annual General Meeting respectively.
Looking ahead, we will continue to assess and review our compensation programmes to ensure that they are still fulfilling their purpose in the evolving context in which the company operates. We will pursue an open and regular dialogue with our shareholders as we continue to enhance the compensation system. Environmental protection, social responsibility and good Corporate Governance, also known as ESG topics (Environmental, Social and Governance), are growing in relevance. ESG topics and their measurability have been an integral part of the corporate strategy and operational implementation since the 1990s. To further emphasise accountability for and management of these efforts, we will integrate ESG targets in the remuneration of the Group Executive Board from 2022.
This report contains all relevant information on the remuneration paid to the Board of Directors and to the Group Executive Board in 2020. Our remuneration system rewards performance in a balanced and sustainable manner and aligns well with shareholders’ interests.
Chairman of the Nomination & Compensation Committee