The report complies with the provisions of the Ordinance of 1 Janury 2014 against Excessive Remuneration in Listed Companies Limited by Shares (ERCO) and associated provisions of the Swiss Code of Obligations. The basic principles of ERCO are anchored in the Articles of Association of HOCHDORF Holding Ltd (Art. 19 and Art. 23).

HOCHDORF places great importance on recruiting, engaging, motivating, and developing 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. On the one hand, remuneration should create incentives that promote long-term corporate development and increase the value of the company. Furthermore, the system of remuneration should be appropriate and in line with the market in order to be able to recruit qualified employees. All remuneration is paid out in cash.

There are no share or option plans or similar shareholding programmes at HOCHDORF.

The members of the Board of Directors receive a non-performance-related basic remuneration as well as allowances for roles and for memberships in committees. The Board of Directors may also determine special remuneration for special tasks. HOCHDORF Holding Ltd pays the legally required pension and social contributions; the members of the Board of Directors also receive an annual lump-sum expense allowance. The Board of Directors are not covered by the pension fund. Details are shown in the table "Remuneration of the Board of Directors". The remuneration of the members of the Board of Directors is paid in two to four instalments at the end of each quarter. In the event that a member the Board of Directors is not in place for the full term, the remuneration is calculated on a pro rata basis.

The remuneration of the members of the Group Management consists of a fixed monthly base salary and a performance-based variable remuneration. Both are paid out in cash. The variable remuneration results from the achievement of certain performance targets, which consist of financial targets (EBITDA, free cash flow at Group level) as well as qualitative targets. There is an upper limit to the variable remuneration for all members of Group Management that amounts to a maximum of 25% of the fixed compensation. The Board of Directors determines the respective targets as well as the degree of target achievement on the recommendation of the Personnel and Remuneration Committee.

Employment agreements are concluded for an indefinite period of time with a notice period of six months for members of Group Management.

The Board of Directors decides on all compensation-related issues within the compensation framework approved by the Annual General Meeting, in each case at the request of the Personnel and Remuneration Committee.

The Personnel and Remuneration Committee shall be composed of at least two members of the Board of Directors. The members are elected by the Annual General Meeting for a term of one year, until the conclusion of the next ordinary Annual General Meeting. The Board of Directors shall appoint the Chair.

The Personnel and Remuneration Committee assists the Board of Directors in setting and reviewing the remuneration policy and guidelines, the performance targets and in preparing the proposals for the attention of the General Meeting regarding the total amounts of remuneration of the members of the Board of Directors and the Group Management. In addition, the Personnel and Remuneration Committee prepares the medium and long-term HR planning for the members of the Board of Directors and the Group Management. The Chair may invite the CEO and the Head of Human Resources to the meetings as necessary. In the 2021 business year, the Personnel and Remuneration Committee met six times; the minutes are available to the Board of Directors.

The competencies and responsibilities of the PRC are detailed in the HOCHDORF Organisational Rules. The competencies with regard to remuneration are shown in the following table:

The approval by the Board of Directors is subject to the approval of the Annual General Meeting, which votes separately on maximum remuneration and consultatively on the remuneration report each year.

Shareholders will vote on the following remuneration components at the 2022 Annual General Meeting:

• Board of Directors: Prospectively over the maximum total amount of the fixed remuneration for the period from the 2022 AGM to the 2023 AGM
• Group management: Prospectively over the maximum total amount of the fixed and variable remuneration for the current business year 2022

The remuneration is shown according to the amounts actually paid out to the members of the Board of Directors who held office in the corresponding periods. The remuneration reported in 2020 also includes payments that were not made until 2021 for the period from 1 January 2020 to the 2020 AGM.

AC = Audit Committee; PRC = Personnel and Remuneration Committee; MSC = Market and Strategy Committee

1. Social contributions include employer contributions
2. In the Annual Report 2020, within the scope of the Remuneration Report (page 44), it was pointed out that as of 31 December 2020, not all remuneration for the period 1 January 2020 to the AGM 2020 had yet been paid to the members of the Board of Directors Bernhard Merki, Jörg Riboni, Markus Kalberer, Dr. Walter Locher and Markus Bühlmann who were in office at that time during this period (reported amount available: CHF 210,490). This was completed in 2021 within the approved amount and amount still available

For the completed term of office from AGM 2020 to AGM 2021, a total amount of CHF 600,000 was proposed by the AGM of 30 June 2020. This was observed.

For the current term of office from AGM 2021 to AGM 2022, a total amount CHF 600,000 was approved by the AGM of 09.06.2021. As of 31.12.2021, 53% of this was still available.

Approval of the total sum of the fixed remunerations for the Board of Directors to a maximum of CHF 600,000 for the period from the AGM 2022 to the AGM 2023.

The variable compensation (bonus) of the Group Management is accrued at the end of the year, as the performance-related salary components are only paid out in the following year. In the event that a member of the Group Management leaves or starts during the year, the remuneration is included pro rata up to the time of the completion or assumption of the corresponding role.

1. Monthly salary, 13th monthly salary payment, flat-rate amount for entertainment expenses, including employee contributions
2. Pension and social contributions include employer contributions to social insurance schemes and pension funds
3. Private shares for company vehicles, vehicle payments, company loyalty gifts
4. Dr Peter Pfeilschifter, CEO

The composition of the Group Management was unchanged in 2021.

The Annual General Meeting on 9 June 2021 approved a total amount of CHF 2,000,000 for the 2021 reporting year. This total amount will be exceeded.

Approval of the total sum of the fixed and variable remunerations for the Board of Directors to a maximum of CHF 2,600,000 for the 2022 business year. Group Management will be expanded in 2022 to include the departments of innovation, research & development as well as sales and marketing. 

The employment agreements for the members of Group Management do not include any change-of-control clauses.

No severance payments, remuneration in advance or commissions for the acquisition or transfer of companies or parts thereof by the company or by companies directly or indirectly controlled by the company were paid to members of the Board of Directors or the Group Management.

Remuneration still due to former members of the Board of Directors and the Group Management is accrued accordingly in the reporting year.

No additional benefits were paid to members of the Board of Directors or the Group Management or related persons or to former members of governing bodies.

No loans or credits were granted or paid out to related persons or members of governing bodies by HOCHDORF Holding or other group companies. Furthermore, no loans or credits are outstanding.

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: