Compensation governance

Figure 1: Compensation governance at SIG.

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

Figure 2: Relevant provisions on compensation in the Articles of Association of SIG.

The Articles of Association can be found on the SIG home page for investors: https://www.sig.biz/investors/en/governance/articles-of-association, or downloaded directly here: https://api.sig.biz/media/e33d0ovl/sig-group-ag-articles-of-association.pdf

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

Figure 3: Authority table regarding compensation.

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 AGM in April 2025, as illustrated in Figure 4:

Figure 4: Overview of votes at the 2025 AGM.

Board of Directors and Executive Management

The Corporate Governance report provides a detailed overview of the composition of the Board of Directors as well as the Group Executive Board, including biographies of the current members.

Composition of the Compensation Committee

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. At the Annual General Meeting 2024, Wah-Hui Chu and Matthias Währen were re-elected as members of the Compensation Committee. Mariel Hoch did not stand for re-election as a member of the Compensation Committee. Her seat in the Committee has been taken over by Werner Bauer, who was elected as a new member of the Compensation Committee by the AGM 2024. Werner Bauer was appointed by the Board of Directors to be the Chair of the Committee.

Role of the Compensation Committee and activities during 2024

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 Chair 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 Chair convenes the meetings of the Compensation Committee as often as the business affairs of SIG require, but at least three times a year. In 2024, the Compensation Committee held seven meetings. Some of the meetings were held as video conferences or hybrid meetings. The majority of the meetings in 2024 had full attendance by all members of the Compensation Committee. The topics covered in the meetings are described in Figure 5.

Figure 5: Topics covered by the Compensation Committee in 2024.

As part of our annual outreach to investors, the Company undertook a comprehensive effort to understand shareholder opinions and perspectives regarding SIG’s compensation framework. The Compensation Committee noted certain concerns in relation to the ESG KPI component in the variable compensation plans as well as around target setting for the rTSR KPI measure in the LTIP. The Committee discussed the concerns expressed regarding both topics. It has decided to conduct a review in 2025 of the ESG component in the variable compensation plans.

A performance review of the Board, the Committees and the Group Executive Board was conducted by the Nomination and Governance Committee during 2024, with some members of the Compensation Committee in attendance to ensure close coordination.

The Compensation Committee may ask members of the Group Executive Board, one or more senior managers in the People & Culture function and third parties to attend meetings in an advisory capacity and may provide them with 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 Compensation Committee meeting as guests. The Chair of the Board and the members of the Group Executive Board did not attend the meeting when their own compensation and/or performance was discussed. The Chair 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. The documents and minutes of Compensation Committee meetings are available to all members of the Board.

The Compensation Committee may decide to consult external advisers on specific compensation matters. In 2024, the Compensation Committee appointed HCM International Ltd. (“HCM”) as an external independent adviser on certain compensation matters including on target setting for the Long-Term Incentive Plan, as described in the section Long-Term Incentive Plan. Apart from the aforementioned advice on compensation matters, HCM was not appointed for any other mandates in 2024.