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3. Compensation principles

The compensation framework of SIG reflects the commitment to attract, engage and retain top talent globally and to align the interests of SIG leaders with those of shareholders. SIG’s overall compensation framework is long-term in nature and designed to reward outperformance and effectively address underperformance, with performance defined relative to targets and, in some cases, relative to peers. SIG endeavours to make its compensation principles simple and transparent for the benefit of shareholders, the Board and management. The compensation principles are illustrated in Figure 6.

FIGURE 6: SIG COMPENSATION FRAMEWORK, OBJECTIVES AND PRINCIPLES

Objectives and Principles (illustration)

To assess SIG’s compensation system not only from an internal equity perspective but also from an external competitiveness perspective, compensation is regularly benchmarked against that of similar roles in comparable companies. The Compensation Committee uses this analysis to review the composition, the level as well as the structure of the compensation of the Board and the Group Executive Board on a regular basis.

For the Board, Swiss-listed industrial companies are considered the most relevant reference market for compensation comparison, reflecting the specific governance regime and regulatory aspects of the Swiss market1. For the Group Executive Board, a broader industry-related European comparator group is considered appropriate to assess compensation practices, structure and pay levels given SIG’s international footprint and reflecting the recruiting market2. In both cases, size criteria apply.

Figure 7 provides an overview of the compensation elements for the Board and the Group Executive Board:

FIGURE 7: OVERVIEW OF COMPENSATION ELEMENTS FOR THE BOARD OF DIRECTORS AND THE GROUP EXECUTIVE BOARD

 

 

 

 

Board of Directors

 

Group Executive Board

Fixed compensation elements

 

Annual base salary

 

 

 

 

Annual base fee

 

 

 

 

Annual Committee fee

 

 

 

 

Pension contributions

 

 

 

 

Other benefits

 

 

 

Variable compensation elements

 

Short-Term Incentive Plan

 

 

 

 

Long-Term Incentive Plan

 

 

 

Additional details for each compensation element are included later in this report.

1 The comparison group used for the most recent compensation benchmarking analysis of the Board consisted of the following Swiss listed industrial companies: ARYTZA, Barry Callebaut, BKW, Bucher, Clariant, DKSH, dormakaba, Dufry, Flughafen Zuerich, Geberit, Georg Fischer, OC Oerlikon, SFS Group, Straumann, Sulzer, Sunrise, Vifor Pharma.

2 The comparison group used for the compensation benchmarking analysis of the Group Executive Board initially conducted in 2018 and updated in 2019 consisted of the following comparators: Aalberts, AMS, ARYTZA, Barry Callebaut, BKW, Bucher, Clariant, DKSH, DMG MORI, dormakaba, Duerr, Dufry, Flughafen Zuerich, GEA, Georg Fischer, IMI, Kingspan, OC Oerlikon, SFS Group, Spirax-Sarco, Straumann, Sulzer, Vifor Pharma, Weir.