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2. Compensation governance

FIGURE 1: COMPENSATION GOVERNANCE AT SIG

Compensation governance at SIG (illustration)

The compensation governance structure at SIG involves three primary bodies, as depicted in Figure 1: (1) the Board, (2) the Compensation Committee (“CC”), acting in an advisory capacity for the Board and (3) SIG’s shareholders at the Annual General Meeting (“AGM”). The Compensation Committee Charter and the Articles of Association outline and define the roles and responsibilities of these bodies. Figure 2 shows the relevant provisions on compensation in the Articles of Association.

FIGURE 2: RELEVANT PROVISIONS ON COMPENSATION IN THE ARTICLES OF ASSOCIATION OF SIG

Principles for the compensation of the members of the Board of Directors and the Group Executive Board
(Art. 24 to 26)

 

Members of the Board of Directors receive fixed compensation, while members of the Group Executive Board receive fixed and variable compensation. The variable compensation may include short-term and long-term variable compensation components. These are governed by quantitative and qualitative performance criteria that take into account the performance of SIG.

Compensation approvals by the General Meeting
(Art. 27)

 

The AGM has the authority to approve the maximum aggregate amount of compensation for the Board of Directors for the ensuing term of office and the maximum aggregate amount of compensation for the Group Executive Board for the following year.

Supplementary amounts available for members joining the Group Executive Board or being promoted within the Group Executive Board to CEO after the relevant approval of compensation by the AGM
(Art. 27, para. 4)

 

SIG is authorised to pay compensation to such members of the Group Executive Board without further approval even in excess of the maximum aggregate amount approved by the AGM for the relevant year, provided that the sum of such excess amount is not greater than 40% of the approved maximum aggregate amount of compensation for the Group Executive Board for such year.

Retirement benefits
(Art. 30)

 

SIG may establish or join one or more independent pension funds for occupational pension benefits. Instead or in addition, SIG may directly offer retirement benefits (such as pensions, purchase of health care insurances, etc.) outside of the scope of occupational pension benefit regulations to members of the Group Executive Board and may pay them out after retirement.

The Articles of Association can be found on the SIG homepage for investors https://www.sig.biz/investors/en/governance/articles-of-association or downloaded directly here: https://cms.sig.biz/media/6815/aoa-sig-combibloc-group-ag-2020_04_07.pdf.

The roles of the AGM and the Compensation Committee are described in more detail in the following paragraphs. The general split of responsibilities and authorities between the Board, the Compensation Committee and the AGM is illustrated in Figure 3.

FIGURE 3: AUTHORITY TABLE REGARDING COMPENSATION

 

 

CEO

 

Compensation Committee

 

Board of Directors

 

AGM

Compensation principles (Articles of Association)

 

 

 

 

 

Approval
(subject to AGM approval)

 

Approval
(in case of changes, binding vote)

Compensation strategy and guidelines

 

 

 

Proposal

 

Approval

 

 

Key terms of compensation plans and programmes for members of the Board of Directors and Group Executive Board

 

 

 

Proposal

 

Approval

 

 

Total compensation for members of the Board of Directors

 

 

 

Proposal

 

Approval
(subject to AGM approval)

 

Approval
(binding vote)

Total compensation and benefits for members of the Group Executive Board

 

 

 

Proposal

 

Approval
(subject to AGM approval)

 

Approval
(binding vote)

Employment and termination agreements for the CEO

 

 

 

Proposal

 

Approval

 

 

Employment and termination agreements for members of the Group Executive Board

 

Proposal

 

Review

 

Approval

 

 

Compensation Report

 

 

 

Proposal

 

Approval

 

Approval
(consultative vote)

Individual total compensation of the CEO

 

 

 

Proposal

 

Approval

 

 

Individual total compensation of other members of the Group Executive Board

 

Proposal

 

Review

 

Approval

 

 

Role of the shareholders – shareholder engagement

In line with SIG’s Articles of Association, particularly Art. 11 and Art. 27, the Board will submit three separate compensation-related resolutions for shareholder approval at the 2021 AGM, as illustrated in Figure 4:

Figure 4: Overview of votes at the 2021 AGM

Overview of votes at the 2021 AGM (illustration)

Role of the Compensation Committee – activities during 2020

The Compensation Committee consists of three independent, non-executive Board members who are elected annually and individually by the Annual General Meeting for a one-year term until the following Annual General Meeting. The main role of the Compensation Committee is to assist the Board in fulfilling its responsibilities relating to the compensation of the members of the Board and the Group Executive Board of SIG. The Compensation Committee supports the Board in discharging its duties, proposes guidelines regarding the compensation of the members of the Board, the Chief Executive Officer (“CEO”) and the other members of the Group Executive Board, proposes the maximum aggregate amounts of compensation to be submitted to the Annual General Meeting for approval, and assists the Board in preparing the related motions for the Annual General Meeting.

The Compensation Committee Chairwoman ensures that the Board members are kept informed in a timely and appropriate manner of all material matters within the Compensation Committee’s area of responsibility.

The Compensation Committee Chairwoman convenes the meetings of the Compensation Committee as often as the business affairs of SIG require, but at least three times a year. In 2020, the Committee held six meetings. Because of travelling restrictions due to the COVID-19 pandemic, all meetings after March 2020 were held as video conferences. The topics covered are described in Figure 5. Details on the Compensation Committee members are provided in the Corporate Governance Report . All members of the Committee had full meeting attendance during 2020.

FIGURE 5: TOPICS COVERED BY THE COMPENSATION COMMITTEE IN 2020

 

 

Agenda Item

 

Jan

 

Feb

 

Jul

 

Sep

 

Oct

 

Dec

Principles and design of compensation plans

 

Market intelligence (recent developments in compensation, legal, governance landscapes)

 

 

 

 

 

 

 

 

 

 

 

 

Long-term incentive framework for 2020 and onwards to enlarge participants group
– Proposal to the Board of Director to implement Equity Investment Plan

 

 

 

 

 

 

 

 

 

 

 

Review and update of the Performance Share Plan regulation
– Proposal to the Board of Directors to introduce a clawback clause

 

 

 

 

 

 

 

 

 

 

Compensation Group Executive Board

 

Short-Term Incentive Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

– Target achievement 2019

 

 

 

 

 

 

 

 

 

 

 

 

– Target setting 2020

 

 

 

 

 

 

 

 

 

 

 

 

– General target framework review

 

 

 

 

 

 

 

 

 

 

 

 

– Define KPI measures 2021, including an ESG target

 

 

 

 

 

 

 

 

 

 

 

 

Long-Term Incentive Plan
– Recommendation of plan participants and target setting for grant 2020

 

 

 

 

 

 

 

 

 

 

 

 

Review target compensation for the CEO and the Group Executive Board for 2021

 

 

 

 

 

 

 

 

 

 

 

Compensation Board of Directors

 

Review compensation for the Board of Directors

 

 

 

 

 

 

 

 

 

 

 

General framework

 

Shareholding Guidelines Assessment

 

 

 

 

 

 

 

 

 

 

 

 

Review key terms of current and future employment contracts for members of the Group Executive Board

 

 

 

 

 

 

 

 

 

 

 

 

Gender Pay Analysis according to new Swiss Law

 

 

 

 

 

 

 

 

 

 

Communication

 

AGM invitation including determination of the maximum amounts of compensation for the Board of Directors (for the term AGM 2020 to AGM 2021) and the Group Executive Board (year 2021)

 

 

 

 

 

 

 

 

 

 

 

 

Analysis of the compensation voting results of the AGM and the proxy advisors’ feedback

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Report

 

 

 

 

 

 

 

 

 

A performance review of members of the Board and of the Group Executive Board was conducted by the Nomination and Governance Committee during 2020 with the members of the Compensation Committee in attendance so that close coordination was ensured. In addition to the ordinary meetings, as summarised in Figure 5, the Compensation Committee set up ad hoc conference calls at short notice, for example, to discuss tasks related to personnel changes in the Group Executive Board.

The Compensation Committee may ask members of the Group Executive Board, one or more senior managers in the human resources function and third parties to attend meetings in an advisory capacity and may provide them with all appropriate information. However, the Compensation Committee also regularly holds private sessions (i.e. without the presence of members of the Group Executive Board, senior managers or third parties). Further, all members of the Board may attend any committee meeting as guests. The Chairman of the Board and the CEO did not attend the meeting when their own compensation was discussed. The Chairwoman of the Compensation Committee reported to the Board after each meeting on the substance of the meeting and explained the proposals of the Compensation Committee to the Board of Directors. All documents and the minutes of the Compensation Committee meetings are available to all members of the Board. The Compensation Committee may decide to consult external advisers for specific compensation matters. In 2020, the Compensation Committee appointed HCM International Ltd. (“HCM”) as an external independent adviser on certain compensation matters as well as on target setting for the Long-Term Incentive Plan, as described in the section Long-Term Incentive Plan. Other than for the aforementioned advice on compensation matters, HCM was not appointed for any other mandates in 2020.