Remuneration Report

The remuneration report summarises all the key principles for determining the compensation of the Board of Directors and Group Management and also explains the structure and amount of compensation.

HOCHDORF places great importance on recruiting, committing, motivating, and fostering well-qualified employees at all levels. This is particularly important when it comes to staffing those positions that have a significant bearing on the management of the company. Remuneration is designed in such a way as to create incentives that benefit the long-term development of the company. Performance evaluations are conducted on a qualitative basis through annual employee review meetings, at which personal targets and performance are assessed in general terms, as well as according to quantitative criteria, which are derived from the current financial results.

Ordinance Against Excessive Compensation (VegüV)

Pursuant to the Ordinance Against Excessive Compensation (VegüV), the Annual General Meeting is to decide on the remuneration of the Board of Directors and Group Management. The corresponding amendment of the Articles of Association was adopted at the 2015 Annual General Meeting. Article 19, Remuneration of the Board of Directors, provides that the Annual General Meeting decides on total remuneration for the current year until the next ordinary Annual General Meeting. Pursuant to Article 23, Remuneration of Group Management, the Annual General Meeting approves fixed and variable remuneration for the current year.

Decision-making responsibilities
Topic
Recommendation byApproval by
Remuneration paid to the Board of DirectorsPersonnel and Remuneration Committee Board of Directors
Fixed remuneration paid to Group Management (subsequent year)Personnel and Remuneration CommitteeBoard of Directors
Variable remuneration paid to Group Management (subsequent year)Personnel and Remuneration CommitteeBoard of Directors

Each year, the Annual General Meeting separately approves the proposed resolutions of the Board of Directors concerning the maximum total amounts of compensation to be paid to the Board of Directors for the period until the next ordinary General Meeting and the compensation to be paid to Group Management for the current year.

Remuneration of the Board of Directors

Compensation paid to the Board of Directors consists of a fixed remuneration and a fixed expenses allotment, which are not linked to any profit components. The social contributions to be remitted in relation to remuneration are covered by the company and then offset accordingly.

The amount of the emoluments paid to the Board of Directors is set based on a discretionary decision. In so doing, the Board of Directors relies on published studies on director remuneration, publicly available information on fees paid by listed companies in the same industry, as well as comparisons with remuneration paid for other director mandates.

Compensation includes a base amount for all members of the Board of Directors, a supplementary payment for work as Chairman or Vice Chairman, as well as flat-rate compensation for work on committees and for expenses.

Remuneration of the Board of DirectorsRemunerationSocial contributionsExpenses20162015
Josef Leu, Chairman, PCC85,00010,2005,000100,200111,954
Dr Anton von Weissenfluh, Vice Chairman, PCC, MSC 63,0009,2985,00077,29877,395
Meike Bütikofer, MSC53,0007,8225,00065,82265,904
Dr Walter Locher, AC55,0008,1185,00068,11868,202
Urs Renggli, AC, until 6 May 201624,0003,3431,87529,21878,693
Niklaus Sauter, PCC, AC61,0009,0035,00075,00363,606
Prof Dr Holger Karl-Herbert Till, MSC51,0007,5275,00063,52763,606
Dr Daniel Suter, AC, from 6 May 201640,0006,1313,12549,256n.a.
Michiel de Ruiter, MSC, from 29 November 20163,7505541,0495,353n.a.
Total435,75061,99636,049533,795529,360

AC = Audit Committee; PCC = Personnel and Compensation Committee MSC = Market and Strategy Committee

The Annual General Meeting on 6 May 2016 approved a total amount of CHF 535,000 for the current term of office until the 2017 AGM. This total amount will not be exceeded. The following remuneration is envisioned for the term of office starting with the 2017 Annual General Meeting, with social contributions being factored in at the flat rate of 15 %. Starting in 2017, 20 % of the remuneration will be paid out in the form of stock options with a vesting period of 3 years. If a person departs from the Board of Directors, the shares are freely available immediately.

Remuneration of the Board of Directors Basic salary Meetings
Committees
Social contributions Expenses Total 2017
Josef Leu, Chairman, PCC 95,000 40,000 20,250 5,000 160,250
Dr Anton von Weissenfluh, Vice Chairman, PCC 65,000 10,000 11,250 5,000 91,250
Meike Bütikofer, MSC 55,000 9,500 9,675 5,000 79,175
Dr Walter Locher, AC 55,000 12,500 10,125 5,000 82,625
Michiel de Ruiter, MSC 55,000 7,500 9,375 5,000 76,875
Niklaus Sauter, AC, PCC 55,000 22,500 11,625 5,000 94,125
Dr Daniel Suter, AC 55,000 21,500 11,475 5,000 92,975
Prof Dr Holger Karl-Herbert Till, MSC 55,000 7,500 9,375 5,000 76,875
Total 490,000 131,000 93,150 40,000 754,150

The Board of Directors is planning a reduction in the number of board members from eight to seven at the Annual General Meeting in 2017, with the total cost for board members being reduced accordingly.

The total amount for 2017 to be put to a vote comes to CHF 710,000, as rounded, if this reduction is taken into account.

Remuneration of Group Management

Compensation paid to Group Management is composed of a fixed basic salary and variable, performance-related remuneration, with variable compensation for each position being based on the consolidated EBIT of the Group or on the EBIT of the respective business area. Variable remuneration includes an upper limit for all members of the Group Management. It totals a maximum of twice the amount of the basic salary not including expenses. Hence, the total of the basic remuneration and the variable remuneration may not exceed 3 times the basic salary not including expenses. Total compensation also includes retirement benefits, service benefits, and benefits in kind. The Board of Directors defines the details in the compensation regulations. There are no share or option plans or similar shareholding programmes in the HOCHDORF Group. Starting in 2017, 20 % of the variable remuneration will be paid out in the form of stock options with a vesting period of 3 years. If a person departs from the Group Management, the shares are freely available immediately.

The Board of Directors sets the amount of the emoluments paid to Group Management. In so doing, it relies on the recommendation and proposed resolution of the Personnel and Remuneration Committee. The Board of Directors defines the range of total compensation and the strategic targets. As is the case with other members of Group Management, the CEO’s compensation is composed of a fixed basic salary and variable, performance-related compensation. For the CEO, variable remuneration amounts to 2.5 % of the consolidated EBIT for the HOCHDORF Group (2 % from 2017). Variable remuneration can be adjusted downwards depending on target achievement. The employment agreement is concluded for an indefinite period of time, with a notice period of six months.

For all other members of Group Management, the general achievement of personal targets, as well as company results, forms the basis for the decision on compensation. Variable remuneration is individual-specific. Depending on the business division and the position, it amounts to 0.5 % of the consolidated EBIT for the HOCHDORF Group or between 0.75 % and 3.5 % of the EBIT generated by the individual's business area. Variable remuneration can be adjusted downwards depending on target achievement. The employment agreements are concluded for an indefinite period of time, with a notice period of six months.

The amounts are calculated according to the accrual principle in accordance with the provisions of the VegüV.

Remuneration paid to the CEO and Group Management

Remuneration paid to the CEO and Group ManagementGroup Management totalCEO
In CHF (gross)2016201520162015
Basic salary 11,928,9251,660,237467,800467,800
Variable remuneration1,383,7181,151,725561,600503,641
Social contributions, including employee pension plan496,785425,756142,152136,208
Other benefits 2175,400129,88328,00028,000
Total3,984,8283,367,6011,199,5521,135,649
Number of members of Group Management88  
  1. Monthly salary, 13th monthly salary payment, flat-rate amount for entertainment expenses.
  2. Private apportionments for company vehicles, vehicle payments, company loyalty gifts.

In 2015, Christoph Peternell and Frank Hoogland joined the Group Management during the year, as a result of which total compensation in 2016 is not directly comparable to 2015. The Annual General Meeting on 6 May 2016 approved a total amount of CHF 4,700,000 for the 2016 reporting year.

Based on contractual agreements and the calculation of variable remuneration using the budgeted results for 2017, the total amount for 2017 to be put to a vote is composed of the following:

Remuneration paid to the CEO and Group Management Group Management total CEO
In CHF (gross) 2017 2017
Basic salary 1 2,102,695 558,020
Variable remuneration 2,112,668 952,490
Social contributions, including employee pension plan 729,525 238,796
Other benefits 2 176,800 28,000
Total 5,121,688 1,777,306
Number of members of Group Management 8  
  1. Monthly salary, 13th Monthly salary payment, flat-rate amount for entertainment expenses.
  2. Private apportionments for company vehicles, vehicle payments, company loyalty gifts.
  3.  

In order to be able to cover the possibility that the budget may be exceeded in 2017, a reserve of 10 % was factored in, which amounts to about CHF 600,000 in additional variable remuneration.

The total amount for 2017 to be put to a vote comes to CHF 5,700,000, as rounded.

Pursuant to Article 23 of the Articles of Association, the company or companies controlled by it are authorised to pay each member who joins Group Management or is promoted within Group Management after the time at which the total amount of fixed compensation is approved by the Annual General Meeting an additional amount if the compensation previously approved is insufficient for his or her compensation. For each compensation period, the additional amount may not exceed 30 % of the most recently approved maximum amount of fixed compensation for Group Management.

Change-of-control clauses

The employment agreements for the members of Group Management do not include any change-of-control clauses. There are no systems in place for severance payments, and none were set up during the reporting period. The notice period for members of Group Management is six months. They remain entitled to salaries and bonuses during this notice period.

Remuneration paid to former members of Group Management and the Board of Directors

Urs Renggli departed as Member of the Board of Directors on 6 May 2016. His compensation is already listed in advance. There were no personnel changes in Group Management.

 

Shareholdings

As at 31 December, the individual members of the Board of Directors and Group Management (including related persons) held the following number of shares in the company:

Board of Directors20162015
Josef LeuChairman, PCC1,5501,290
Dr Anton von WeissenfluhVice-President, PCC, MSC 1,3001,203
Meike BütikoferMSC531441
Dr Walter LocherAC1,4001,200
Urs RenggliAC, until 6 May 2016n.a.5,628
Michiel de RuiterMSC, starting 29 Nov 20160n.a.
Niklaus SauterPCC, AC400114
Dr Daniel SuterAC, starting 6 May 2016160n.a.
Prof Dr Holger Karl-Herbert TillMSC150150
Total5,49110,026

AC = Audit Committee; PCC = Personnel and Compensation Committee MSC = Market and Strategy Committee

Group Management 2016 2015
Dr Thomas Eisenring CEO 825 600
Marcel Gavillet CFO 1,230 1,300
Dr Karl Gschwend Managing Director Strategic Projects 114 114
Werner Schweizer Managing Director Dairy Ingredients 165 165
Michel Burla Managing Director Cereals & Ingredients 300 300
Fons Togtema Managing Director Baby Care 32 32
Christoph Peternell COO 400 200
Frank Hoogland Managing Director Global Marketing and Sales 0 0
Total   3,066 2,711

Additional fees and remuneration

In the reporting year, additional fees of CHF 10,000 were paid out to board member Niklaus Sauter for additional expenses and activities in connection with the acquisition of the Pharmalys companies. Otherwise, no additional fees or remuneration were paid to the Board of Directors or to Group Management, including related persons.

Loans/collateral granted to the Board of Directors and Group Management

Loans are never granted to members of the Board of Directors, the CEO, Group Management, or employees of the HOCHDORF Group. No collateral (loan guarantees, other guarantees, etc.) was granted during the reporting year. Neither HOCHDORF Holding Ltd nor other Group companies have waived a claim in respect of a member of the Board of Directors or Group Management.

Loans/collateral to related persons

As was the case in the previous year, no loans or collateral were granted to related persons during the reporting period. No loans or collateral existed as at the end of the reporting period.