7. Group Executive Board: remuneration and share/option ownership in 2020
This section is audited by the external auditor.
7.1 Performance in 2020
In 2020, consolidated net sales fell by 3.1% to CHF 2,986 million due to negative currency effects. Despite the COVID-19 crisis, which led to a historic slump in the construction industry in the second quarter, it was possible to increase net sales in local currencies by 1.3% and thus gain significant market share thanks to fast and successful crisis management. Furthermore, despite the sales decrease as a result of COVID-19, the operating and financial results in local currencies increased at all levels. Operating cashflow (EBITDA) increased by 2.4% to CHF 925 million. The EBITDA margin increased by 170 basis points to 31.0% (previous year 29.3%) and thus significantly above our medium-target range. This increase in the margin was mainly due to targeted cost savings, particularly in marketing, the targeted increased levels of flexibility in production and logistics, lower raw material prices, natural currency hedging achieved due to the deliberately balanced investment strategy, and the consequent implementation of 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. At CHF 17.95, earnings per share practically reached the previous year’s level despite the negative currency development (2019: CHF 17.97); in local currencies, the earnings per share could be increased. The return on invested capital (ROIC) also increased to 23.2% (previous year 23.1%).
It is important to mention that the increase in results at all levels was achieved despite the COVID-19 crisis and without restructuring, dismissals, wage cuts, furlough schemes or other government financial support.
The variable cash remuneration (STI) of the Group Executive Board is determined on the basis of the following key performance indicators, which all have the same weighting: sales performance and EPS compared with the previous year as well as EBITDA margin and ROIC. The achievement of qualitative individual targets is also taken into consideration. The goals for 2020 were set taking into account the challenging conditions created by COVID-19 and the need to gain further market share during the crisis. In this connection, the weighted average of all elements used to calculate the variable cash remuneration substantially exceeded the defined targets.
7.2 Remuneration awarded in 2020
The remuneration of the Group Executive Board amounted to TCHF 9,791 in 2020 (previous year TCHF 10,278). The remuneration of the CEO amounted to TCHF 3,009 in the same period (previous year TCHF 3,058). The total remuneration of the Group Executive Board in 2020 was less than in the previous year. The first reason is the fewer number of Group Executive Board members (since April 2020), and thus lower compensation, and the second reason is the lower social security contribution.
The CEO’s variable compensation represented 88.4% of his fixed salary. For the other members of the Group Executive Board, the variable compensation represented between 74.1% and 88.4% of their individual fixed salary.
At the 2019 Annual General Meeting, the shareholders approved a maximum aggregate amount of TCHF 11,500 for the remuneration of the Group Executive Board for the year 2020. The compensation awarded for that period amounts to TCHF 9,791and is therefore within the approved amount.
Further information on the remuneration awarded to the Group Executive Board for the business year 2020, compared with the maximum potential amount of remuneration, is provided with the invitation to the ordinary Annual General Meeting 2021.
The following table shows details of remuneration (gross) for 2020 and 2019:
| 2020 | 2019 | ||||
| C. Buhl CEO |
Total | C. Buhl CEO |
Total | ||
| CHF | CHF | CHF | CHF | ||
| Salary | |||||
| - Fixed salary | 1,001,806 | 3,386,672 | 966,810 | 3,412,642 | |
| - Variable salary1 | 897,550 | 2,889,359 | 866,600 | 3,032,650 | |
| thereof in shares in 20202 | 865,977 | 2,116,632 | |||
| Shares/Options | |||||
| - Call options MSOP 2020/20193 | 870,432 | 2,391,556 | 840,399 | 2,488,670 | |
| - Call options MSPP 2020/20194 | 31,817 | 77,766 | 52,415 | 119,412 | |
| Non-cash benefits | |||||
| - Private share of company vehicle5 | 7,056 | 33,751 | 7,056 | 45,646 | |
| Expenditure on pensions | |||||
| - Pension plans | 96,628 | 511,364 | 90,262 | 524,743 | |
| - Social insurance | 101,117 | 484,679 | 232,583 | 637,875 | |
| - Contribution health/accident insurance | 2,350 | 15,529 | 2,187 | 16,149 | |
| Total6/7 | 3,008,756 | 9,790,676 | 3,058,312 | 10,277,787 | |
1 The amounts to be paid (current year), and the amounts effectively paid (previous year) respectively 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 451.50 (PY CHF 406.75).
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 Stock Option Programme (MSOP); 1 option entitles to purchase 1 registered share at an exercise price of CHF 451.50 (PY CHF 406.75); definitive acquisition of the option (“vesting”) dependent on various conditions, 3-year vesting period (1 tranche at 100%); the total value of the call options is evaluated as of the grant date and afterwards measured annually according to the expected achievement of objectives. Market value of CHF 16.58 (PY CHF 39.39) 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 451.50 (PY CHF 406.75); definitive acquisition of the option (“vesting”) dependent on various conditions, 3-year vesting period (1 tranche at 100%); the total value of the call options is evaluated as of the grant date and afterwards measured annually according to the expected achievement of objectives. Market value of CHF 16.58 (PY CHF 39.39) 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.
7 Leaving of two members of the Group Executive Board as of March 31, 2020; one new member of the Group Executive Board as of April 1, 2020. |
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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 2020 and 2019, the Group Executive Board held the following shares in the company:
| Maturity | Average exercise price in CHF |
C. Buhl CEO |
R. Iff CFO |
R. van Triest | M. Baumüller | M. Ziegler | C. Rapp | Total | |
| 2020 | |||||||||
| Shareholdings Group Executive Board |
|||||||||
| Shares | 14,690 | 28,280 | 700 | 4,024 | 3,582 | 751 | 52,027 | ||
| Percentage voting rights shares | < 0.1% | < 0.1% | < 0.1% | < 0.1% | < 0.1% | < 0.1% | 0.14% | ||
| Call options1 | |||||||||
| Vesting-year: | |||||||||
| Lapsed | 2021–2027 | 357.20 | 21,392 | 0 | 6,058 | 4,107 | 1,781 | 1,617 | 34,955 |
| 2021 | 2024–2028 | 409.97 | 19,945 | 10,746 | 6,653 | 3,462 | 2,548 | 766 | 44,120 |
| 2022 | 2025–2028 | 424.97 | 47,421 | 22,641 | 14,498 | 11,294 | 11,377 | 1,775 | 109,006 |
| 2023 | 2028–2029 | 429.13 | 88,457 | 40,603 | 29,627 | 23,711 | 32,109 | 24,436 | 238,943 |
| Total options | 177,215 | 73,990 | 56,836 | 42,574 | 47,815 | 28,594 | 427,024 | ||
| Percentage potential share of voting rights options | 0.48% | 0.20% | 0.15% | 0.11% | 0.13% | < 0.1% | 1.15% | ||
1 Purchase ratio 1 share for 1 option. The unvested options are subject to a performance-based vesting condition. |
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| Maturity | Average exercise price in CHF |
C. Buhl CEO |
R. Iff CFO |
K. Spachmann | E. Renfordt- Sasse |
R. van Triest | M. Baumüller | M. Ziegler | Total | |
| 2019 | ||||||||||
| Shareholdings Group Executive Board |
||||||||||
| Shares | 12,772 | 28,316 | 12,000 | 646 | 400 | 3,408 | 2,908 | 60,450 | ||
| Percentage voting rights shares | < 0.1% | < 0.1% | < 0.1% | < 0.1% | < 0.1% | < 0.1% | < 0.1% | 0.16% | ||
| Call options1 | ||||||||||
| End of vesting period: | ||||||||||
| Lapsed | 2021–2026 | 372.20 | 8,041 | 695 | 119 | 10,240 | 1,431 | 3,228 | 2,316 | 26,070 |
| 2020 | 2023–2027 | 409.97 | 13,351 | 7,608 | 6,751 | 3,664 | 4,627 | 1,983 | 921 | 38,905 |
| 2021 | 2024–2028 | 409.97 | 19,945 | 10,746 | 9,684 | 5,161 | 6,653 | 3,462 | 2,548 | 58,199 |
| 2022 | 2025–2028 | 424.97 | 47,421 | 22,641 | 19,765 | 10,714 | 14,498 | 11,294 | 11,377 | 137,710 |
| 2023 | 2028 | 432.20 | 6,871 | 3,266 | 3,011 | 1,594 | 2,036 | 1,527 | 1,696 | 20,001 |
| Total options | 95,629 | 44,956 | 39,330 | 31,373 | 29,245 | 21,494 | 18,858 | 280,885 | ||
| Percentage potential share of voting rights options | 0.26% | 0.12% | 0.11% | < 0.1% | < 0.1% | < 0.1% | < 0.1% | 0.76% | ||
1 Purchase ratio 1 share for 1 option. The unvested options are subject to a performance-based vesting condition. |
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As of 31 December 2020, 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.
