The total compensation for a Member of the Executive Group Management reflects the responsibility assigned, qualifications, complexity of the task, achievement of goals and local market conditions in the machinery and electrical industry.
Comparisons in order to benchmark the Executive Group Management’s salaries are executed every year, the last time in 2024 (based on 2023 compensation reports). The fixed and variable elements assessed are short-term incentives (basic salary and cash bonus), long-term incentives (shares) and complementary benefits (pension fund and other compensation).
In 2024, the comparison of the Executive Group Management’s salaries included manufacturing industrial companies with registered seat in Switzerland and of similar size (based on net sales, EBIT margin, number of employees and market capitalisation) like Arbonia, Belimo, Bossard, Burckhardt Compression, Comet, dormakaba, Kardex, Komax, Landis+Gyr, LEM, SFS and Zehnder Group.
In addition, every three to five years an international compensation analysis for selected management positions is conducted. The latest comparison was executed in 2021 by Mercer, a consulting company specialising in international salary benchmarking. It is based on anonymised data and helps to determine the Executive Group Management's salaries. The elements assessed are short-term incentives
The comparison mentioned above was made by Mercer using two peer
Remuneration for the Members of the Executive Group Management consists of the following components:
Executive Group Management Members receive a fixed compensation in cash (Basic Salary) which is paid in monthly installments. This is determined individually and takes into account the role and responsibilities of the given Executive Group Management Member. It also includes allowances such as child or education allowances, work anniversary compensation and other compensation in connection with relocation for the purposes of conducting business on behalf of HUBER+SUHNER outside the Member’s country of residence.
The Executive Group Management variable compensation system is based on the MbO (Management by Objective) process, which also applies to the entire Group. The actual amount of variable compensation depends on the degree of achievement of the targets – set annually in a structured target setting process – measured at the end of each financial year as described hereafter.
The performance-related Cash Bonus depends on the achievement of a set of targets structured in Target Categories. The performance-related Cash Bonus Target (this corresponds to 100 % target achievement) for Executive Group Management Members is defined on an individual basis and corresponds to a ratio to the Basic Salary of 50 % for the CEO and a ratio between 20 % and 50 % for all other Executive Group Management Members.
The Target Categories and the weighting of the Target Categories is set as follows:
Target Category | Group Financial Targets | Individual Targets | Leader- ship Factor | |||
CEO | 60 % | 20 % | 20 % | |||
Other EGM Members | 40 %-60 % | 20 %-40 % | 20 % |
The Individual Targets are three to five market segment or function-specific measurable management targets. These are set and weighted annually in a structured target-setting process, which ensures the four-eyes-principle, by the Chairman of the Board of Directors for the CEO, and by the CEO for Members of the Executive Group Management.
The Individual Targets of each Member of the Executive Group Management include at least one Environmental, Social and Governance (ESG) target. Taking into account the various aspects of ESG, HUBER+SUHNER deliberately relies on individual ESG targets for the Members of the Executive Group Management. The Board of Directors is convinced that the Members of the Executive Group Management can achieve the greatest impact on their respective business area and thus achieve a positive ESG-development most efficiently within the framework of their Individual Targets. For the completed financial year 2024, individual ESG targets for example aimed at (i) increasing the share
A Leadership Factor which assesses the performance regarding the implementation of HUBER+SUHNER's leadership principles, the cooperation and conduct, networking, market and customer focus as well as relevant contributions to the success of the Group beyond the defined bonus objectives. The Leadership Factor is also included in the calculation of the Cash Bonus and its setting and performance review is conducted annually in a structured process along with the Individual Targets.
The specific targets are considered confidential information and are therefore not disclosed. However, an ex-post performance assessment is provided in the section Executive Group Management compensation 2024 below.
Failure to reach targets means that no bonus is paid out. Outperforming all targets may increase the Cash Bonus to a maximum of 150 % of the agreed Cash Bonus Target. Payment is made following approval by the Annual General Meeting. The amount of the Cash Bonus is accrued in accordance with the accrual principle in the financial statements of the corresponding financial year.
As Long-Term Incentive the Members of the Executive Group Management receive a variable number of HUBER+SUHNER shares each year. The annual Target Number of Shares for the CEO is 4 000, and between 800 and 2 000 shares for other Executive Group Management Members. The number of shares effectively allotted annually (Target Number of Shares multiplied by a factor (Multiple) between 0.0 and 1.5) is determined by the Board of Directors according to the long-term business success, which is assessed based on the performance measures “Market Environment”, “Strategy Implementation” and “Financial Position” including macro-economic indicators and benchmarking with relevant competitors as detailed in the table below.
Market Environment | Strategy Implementation | Financial Position | ||||
Description | Assessment of the performance of HUBER+SUHNER in the completed year compared to the strategically important target markets and compared to benchmark companies. | Assessment of progress regarding the implementation of key strategic initiatives both from a Group perspective and in terms of the individual contribution of the Members of the Executive Committee compared to the targets set in the annual business planning cycle for a five-year period. | Assessment of the company's financial starting position and financial outlook. | |||
Relevant KPIs |
|
| Development of:
| |||
Rationale | Relative external measure. Demonstrates HUBER+SUHNER's business performance compared to the target markets and/or benchmark companies. | Absolute internal measure. Demonstrates the multi-year performance and individual contribution regarding the company strategy implementation. | Absolute internal measure. Demonstrates the financial performance and the long-term financial sustainability of the company. | |||
Weighting | Determined by the NCC and approved by the Board | |||||
Target level | Determined by the NCC and approved by the Board | |||||
Minimum / Maximum Multiple | 0.0 (0 % of Target Number of Shares) / 1.5 (150 % of Target Number of Shares) | |||||
Blocking period | Between 3 to 10 years | |||||
Achievement Levels | Objective not achieved = Multiple 0.0 Objective partly achieved = Multiple 0.25 / 0.50 or 0.75 Objective achieved = Multiple 1.0 Objective partially exceeded = Multiple 1.25 Objective exceeded = Multiple 1.5 | |||||
The detailed target levels for the KPIs are considered confidential information and are therefore not disclosed. However, an ex-post performance assessment is provided in the section Executive Group Management compensation 2024 below.
A blocking period of at least three years applies for the allocated shares. The share blocking periods are not rescinded on the resignation of the Member concerned.
The Board of Directors deliberately opts for a method without vesting period as the assessment of the Long-Term Incentive is based on a comprehensive analysis of all factors over a period of several years and against an approved five-year plan.
A detailed analysis confirmed that the average holding period of allocated shares for the current Members of the Executive Group Management is more than twice the defined minimum blocking period of three years. This emphasises clearly the long-term nature of compensation in the form of shares and confirms the alignment of the interests of the Executive Group Management with those of the shareholders.
The shares are only effectively allocated following approval by the Annual General Meeting. The market value of the shares is accrued in accordance with the accrual principle in the financial statements of the corresponding financial year.
The employer’s obligatory contributions to social security and accident insurance schemes and regulatory contributions to pensions from the compensations paid to the Members of the Executive Group Management are borne by the company. The Swiss system defines a portion of the pension and social security contribution to be paid by the employee. The employee's contribution to social security and pensions are deducted from the employee's gross salary.
The Executive Group Management Members’ employment contracts provide for a notice period of six months; under certain circumstances, this may be extended to a maximum of twelve months by the employer. If the employment relationship is terminated by notice, the person entitled to compensation loses his eligibility for the Long-Term Incentive in the form of shares for the current financial year, except if otherwise allocated by the Board of Directors. All other entitlements remain in force on a pro-rata basis.
Executive Group Management Members receive an expense allowance for effective minor expenses as per the expenses policy approved by the appropriate tax authorities.
The Board of Directors can approve additional fixed compensation for Executive Group Management Members who are appointed after the Annual General Meeting. In this case, the total amount of approved fixed compensation for Executive Group Management Members may be increased by a maximum of 20 % per new Executive Group Management Member and by 40 % if a new CEO is appointed.