30. Share-based payment plans and arrangements

The Group has share-based long-term incentive plans for certain members of management and other key employees and talents. The members of the Board of Directors receive a part of their total compensation under share-based payment arrangements. These plans and arrangements have an insignificant impact on the Group’s result.

The Group expects to settle its obligations under its equity-settled plans and arrangements using own shares (treasury shares) or, alternatively, using shares issued from its conditional share capital (see note 25). The majority of the Group’s share-based payment plans and arrangements are equity-settled.

Share-based long-term incentive plans for SIG employees

Performance share unit plan

The Group grants performance share units (“PSUs”) to the members of the Group Executive Board and certain other members of management on an annual basis. The PSU plans have equivalent terms and vesting conditions, including a three-year service vesting condition.

One PSU represents the contingent right to receive one SIG share. The number of granted PSUs is determined by dividing each participant’s award under the plan by the volume-weighted average of the closing prices of the SIG share over the last 20 trading days prior to the grant date as per the PSU regulations. The number of PSUs that vest depends on the Group’s long-term performance over the three-year vesting period. The plans include the following vesting conditions:

• Service condition: Continuous employment through to the vesting date.
• Two non-market performance conditions: Achievement of a cumulative diluted adjusted earnings per share target and a cumulative free cash flow target.
• One market performance condition: Achievement of a relative total shareholder return target, measured relative to the SPI® ICB Industry 2000 “Industrials” Total Return Index (with a vesting factor capped at 1.0 for a negative absolute TSR).

At vesting, the three performance conditions are first assessed individually to determine the level of achievement of the set targets (in a range from 0% to 200%). The achievement percentage of each performance condition is then combined based on a relative weighting of the performance conditions (50% for the relative total shareholder return target and 25% each for the earnings per share and cash flow targets). The combined vesting multiple determines how many shares the plan participants are entitled to receive at the end of the vesting period.

The fair value of one PSU is calculated based on a Monte Carlo simulation model, which reflects the probability of over- or underachieving the market performance condition. The model also takes into account various inputs such as the closing share price of one SIG share on the grant date and adjusts for expected dividends (discounted at a risk-free interest rate) to which the plan participants are not entitled until the PSUs vest after three years.

The table below provides an overview of the annual management PSU plans.

The table below provides a reconciliation of the outstanding management PSUs.

A total of 154,642 PSUs under the 2021 PSU plan vested on March 31, 2024, of which 109,818 PSUs relate to members of the Group Executive Board at the vesting date. Based on the achievement of the targets described above, the participants were entitled to 71,139 shares, of which 50,518 shares relate to members of the Group Executive Board at the vesting date. Under the 2020 PSU plan, 158,088 PSUs vested on March 31, 2023, of which 142,860 PSUs related to members of the Group Executive Board at the vesting date. Based on the achievement of the targets described above, the participants were entitled to 265,591 shares, of which 240,007 shares related to members of the Group Executive Board at the vesting date.

The Group settled its obligation under the 2021 and 2020 PSU plans by delivering treasury shares (see note 25). The total amount of €3.5 million recognized as a share-based payment expense for the 2021 PSU plan has been recognized as a decrease in equity (€3.0 million for the 2020 PSU plan). The difference between this amount and the sum of the cost of the delivered treasury shares is presented as an adjustment of additional paid-in capital.

Any resignation of members of the Group Executive Board results in forfeitures of a certain number of granted PSUs as per the good and bad leaver clauses in the PSU plan regulations.

Restricted share unit plan

The Group grants a small number of restricted share units (“RSUs”) to a limited number of employees on an annual basis. One RSU represents the contingent right to receive one SIG share, subject to the fulfilment of a three-year service vesting condition.

RSUs under the 2021 and 2020 RSU plans vested on March 31, 2024 and March 31, 2023, respectively. The Group settled its obligation by delivering treasury shares.

Equity investment plan

The Group has an annual equity investment plan (“EIP”) for a wider group of management in leadership positions and other key employees and talents, under which the participants may choose to invest in SIG shares at market value. The shares are blocked for three years. For each purchased share, the Group grants the participants two matching options to purchase another two shares at a predefined exercise price at the end of a three-year vesting period.

A total of 97,112 options under the 2021 EIP plan vested on June 1, 2024. The options can be exercised during a ten-month period after the vesting date. No options had been exercised as of December 31, 2024. The Group’s obligation under the 2021 EIP plan will be settled by delivering treasury shares. A total of 190,380 options under the 2020 EIP plan vested on June 1, 2023. A total of 187,500 options had been exercised within the ten-month exercise period after the vesting date and settled by delivering treasury shares.

The grant date for the 2024 EIP plan was May 31, 2024, when 51 employees were granted a total of 123,536 options. Under the 2023 EIP plan, 60 employees were granted a total of 130,212 options on June 2, 2023. The fair value of one option, calculated using the Black-Scholes model, was CHF 3.06 as of the grant date for the 2024 EIP (CHF 4.58 for the 2023 EIP).

A total of 369,758 not yet vested options under all EIPs were outstanding as of December 31, 2024, of which 18,640 options were held by a member of the Group Executive Board (360,794 options as of December 31, 2023, of which 41,365 options were held by members of the Group Executive Board).

Integration plans

As part of the integration of Scholle IPN and Evergreen Asia into the Group, 41 employees who are key to the integration were granted a total of 302,792 PSUs under two smaller PSU integration plans in August 2022. One of the plans is cash-settled. The number of PSUs that will vest on December 31, 2025 depends on the achievement of certain targets, including targets linked to the performance and integration of the two acquired businesses.

A total of 234,128 PSUs under the integration plans were outstanding as of December 31, 2024, of which 10,469 PSUs were held by a member of the Group Executive Board (260,234 PSUs as of December 31, 2023, of which 10,469 PSUs were held by a member of the Group Executive Board).

Share-based payment arrangements for members of the Board of Directors

The members of the Board of Directors receive 40% of their total compensation in SIG shares that are blocked for three years. The grant date is the date of the Annual General Meeting (normally held in April), when the total compensation package for the next term of office is approved. The compensation is paid out four times during the one-year term of office (i.e. there are four award dates, each relating to work performed during the quarter before the respective award date). The fair value of one blocked share is calculated based on the closing share price of one SIG share on the grant date.

The Group granted 54,740 blocked shares to the members of the Board of Directors in the year ended December 31, 2024 (38,959 blocked shares in the year ended December 31, 2023). The fair value of one granted instrument was CHF 19.36 as of the grant date in the year ended December 31, 2024 (CHF 24.42 in the year ended December 31, 2023). The blocked shares have been delivered using treasury shares.

Share-based payment expense

The share-based payment expense (including adjustments due to varying plan performance) recognized as a personnel expense for the year ended December 31, 2024 relating to the PSU, RSU, equity investment and integration plans for all SIG employees totals €1.5 million. The share-based payment expense for only the members of the Group Executive Board amounts to €1.7 million. The share-based payment expense relating to these plans for the year ended December 31, 2023 amounted to €6.8 million, of which €4.2 million related to members of the Group Executive Board.

The share-based payment expense recognized as part of general and administrative expenses for the year ended December 31, 2024 relating to the arrangement for the Board of Directors amounts to €1.0 million (€0.9 million for the year ended December 31, 2023).