Letter from the Chair of the Compensation Committee
On behalf of the Board of Directors and the Compensation Committee, I am pleased to introduce the Compensation Report of SIG Group AG (“SIG” or the “Company”) for the year ended December 31, 2024. This report on compensation complements our business, financial, social responsibility and corporate governance reports, and describes SIG’s compensation system and its governance, as well as the underlying principles which ensure that compensation, particularly the variable components, is linked to the overall performance of SIG.
The principles guiding SIG’s compensation framework are to attract, engage and retain executives and employees, to drive sustainable performance and to encourage behaviors that are in line with SIG’s values as well as with the long-term interests of shareholders and other relevant stakeholders. The Compensation Committee regularly assesses, reviews and develops the compensation framework to ensure that it is aligned with these principles.
I would like to thank you for the very positive vote on the 2023 Compensation Report. The approval rate of more than 90% is a clear acknowledgement of the increased transparency of the report as well as of the strong and solid compensation structure. In the course of its regular annual activities, the Compensation Committee continues to assess, review and develop the compensation framework to foster sustainable performance and considers market trends and insights for further development of the compensation system.
As part of our annual outreach to investors, the Company undertook a comprehensive effort to gain a more detailed understanding of shareholder views on our compensation system. Based on the findings, the Compensation Committee has decided to review the ESG component in the variable compensation in the course of 2025, in order to further improve rewards for ESG achievements. We will communicate any changes in next year’s Compensation Report.
A strong focus on ESG matters is integral to SIG’s business strategy and activities, and the compensation framework has for some years included a sustainability metric linked to our EcoVadis score. This score reflects SIG’s performance in the areas of environment, labor and human rights, ethics and sustainable procurement, and encompasses a comprehensive view on ESG matters with relevance for all SIG stakeholders. We are happy to inform you that in 2024 we were able to increase the level and transparency of reporting under the EcoVadis rating methodology and have maintained our platinum rating. Please refer to the section headed Compensation framework of the Group Executive Board in this report to read more about the methodology of the EcoVadis Score.
The Compensation Committee has concluded that the general principles, elements and processes currently in place remain appropriate for SIG, especially considering the changes which were announced in the 2023 Compensation Report and became effective in 2024. These are increased shareholding requirements for both the Board of Directors and the Group Executive Board as well as some changes to the Short-Term Incentive Plan. On a Group level, the weighting of the free cash flow component in the Short-Term Incentive Plan has increased from 15% to 20% while the weighting of the adjusted EBITDA component has been reduced from 55% to 50%. For the Short-Term Incentive Plan at a regional level, adjusted operating net working capital as a percentage of revenue has been replaced by a free cash flow KPI.
SIG is convinced that diversity, equity and inclusion (DE&I) as well as an open corporate culture are important drivers for innovation and successful collaboration. We are committed to creating a workplace where employees are treated fairly with equal employment, compensation and development opportunities. SIG has committed to running regular gender pay analyses, even where we are not required to do so under applicable local laws, thereby underpinning our commitment to a gender-diverse and fair workplace. We provide you with additional insights into our initiatives and activities for our most valued assets – our employees – in the Sustainability section of the Annual Report.
At the upcoming Annual General Meeting (“AGM”), we will ask our shareholders to approve prospectively, in binding votes, the maximum aggregate amount of compensation for the Board of Directors until the next AGM in 2026 and the maximum aggregate amount of compensation for the Group Executive Board for the year 2026. Furthermore, this Compensation Report will be submitted to shareholders for a non-binding, consultative vote.
We believe that this report provides a comprehensive overview of SIG’s compensation philosophy and approach. We are convinced that our remuneration system rewards performance in a balanced and sustainable manner that is well aligned with the interests of shareholders and other relevant stakeholders and equips SIG with effective tools in a competitive work environment.
On behalf of SIG, the Compensation Committee and the entire Board of Directors, I would like to thank you, our shareholders, for your contribution and your continued trust in SIG.
Werner Bauer
Chair of the Compensation Committee
Neuhausen am Rheinfall, December 31, 2024
Information marked with the check mark icon check pink has been audited by PricewaterhouseCoopers AG.