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This section is audited by the external auditor.
6.1. Performance in 2015
The challenging environment in the construction industry, the integration of the acquired Sanitec business and the strong Swiss franc influenced the Geberit Group’s results in the 2015 financial year. Despite this, the company managed to achieve a good overall result, maintain performance on a high level and further consolidate our position as the leading supplier of sanitary products.
Net sales increased by 24.2% in 2015, to CHF 2,593.7 million. Total growth comprised organic growth in local currencies of +2.7%, a negative foreign currency effect of 9.6% and an increase of 31.1% due to the Sanitec acquisition. Operating margins for the old Geberit business were positively influenced by higher volume, product mix effects, lower raw material prices and diluted by the effect of the 10% currency rebate granted in Switzerland. However, as expected, overall results were impacted by the lower operating margins from the newly acquired Sanitec business . The results comprise various special effects in connection with the Sanitec acquisition. Operating profit (EBIT) adjusted for these special effects increased by 2.4% to CHF 590.9 million and the correspondingly adjusted EBIT margin came to 22.8%. Adjusted net income fell by 1.1% to CHF 493.1 million, with an adjusted return on net sales of 19.0%. Adjusted earnings per share declined by 0.4% to CHF 13.23. Free cashflow rose by 5.1% to CHF 484.0 million. The Return on Invested Capital (ROIC) was 20.1%.
To determine the variable cash remuneration (STI) the following Key Performance Indicators (KPI) are used: Sales, EBIT, Earning per Share (EPS) and ROIC, all equally weighted. Furthermore, the achievement of qualitative individual target is considered. The degree of achievement varies by KPI, and the weighted average of all elements used to calculate the variable cash remuneration slightly exceeded the targets.
6.2. Remuneration awarded in 2015
The remuneration of the Group Executive Board amounted to TCHF 6,764 in 2015 (previous year TCHF 7,707). The remuneration of the CEO amounted to TCHF 1,786 in 2015 (previous year TCHF 2,802). The lower total remuneration in 2015 for the Group Executive Board compared to the previous year is the result of various factors.
Reducing impact on remuneration:- The lower remuneration of the new CEO compared to his predecessor.
- Target achievement in the STI program was lower than in the previous year.
- Selected higher option grants (LTI) to align compensation to market.
- The Group Executive Board was increased from five to six members.
The base salaries of the existing Group Executive Board members remained unchanged. Contributions to company pension funds decreased due to the lower results in the variable cash compensation (STI), while the other benefits increased with the additional member of the Group Executive Board.
Further information on the remuneration awarded to the Group Executive Board for the business year 2015, compared to the maximum potential amount of remuneration, is provided as well in the invitation to the Ordinary General Meeting 2016.
The following table – reviewed by the external auditor – shows details of remuneration for 2015 and 2014:
| 2015 | 2014 | ||||
|---|---|---|---|---|---|
| C. Buhl CEO | Total | A. Baehny7 CEO |
Total | ||
| CHF | CHF | CHF | CHF | ||
| Salary | |||||
| - Fixed salary | 756,800 | 2,819,507 | 946,803 | 2,793,345 | |
| - Variable salary1 | 401,500 | 1,459,092 | 869,486 | 2,540,674 | |
| thereof in shares in 20152 | 0 | 1,113,090 | |||
| Shares/options | |||||
| - Call options MSOP 2015/20143 | 439,927 | 1,502,281 | 685,661 | 1,347,411 | |
| - Call options MSPP 2015/20144 | 18,937 | 144,005 | 41,813 | 112,290 | |
| Non-cash benefits | |||||
| - Private share of company vehicle5 | 6,648 | 39,864 | 9,660 | 39,984 | |
| Expenditure on pensions | |||||
| - Pension plans and social insurance | 159,607 | 786,263 | 246,523 | 861,830 | |
| - Contribution health/accident insurance | 2,238 | 13,388 | 2,262 | 11,903 | |
| Total6 | 1,785,657 | 6,764,400 | 2,802,208 | 7,707,437 | |
| 1 The amounts to be paid respectively the amounts effectively paid are shown. The payment of the variable salary occurs in the following year. Members of the Group Executive Board are free to choose between a payment in shares or in cash. 2 Registered shares of the company with a par value of CHF 0.10 each, 3-year blocking period, valued at fair market value at grant date of CHF 349.15 (PY CHF 281.95). 3 Call options on registered shares of the company with a par value of CHF 0.10 each, issued within the scope of the Management Share Participation Program (MSPP); 1 option entitles to purchase 1 registered share at an exercise price of CHF 349.15 (previous year CHF 281.95); definitive acquisition of the option (“vesting”) dependent on various conditions, 1-4-year blocking period (4 tranches at 25%), market value of CHF 34.06 (previous year CHF 23.65) determined using the binomial method. 4 Call options on registered shares of the company with a par value of CHF 0.10 each, issued within the scope of the Management Share Participation Program (MSPP); 1 option entitles to purchase 1 registered share at an exercise price of CHF 349.15 (previous year CHF 281.95); definitive acquisition of the option (“vesting”) dependent on various conditions, 1-4-year blocking period (4 tranches at 25%), market value of CHF 34.06 (previous year CHF 23.65) determined using the binomial method. 5 Valuation in accordance with the guidelines of the Swiss Federal Tax Administration FTA (0.8% of the purchase cost per month). 6 Immaterial payments (below CHF 500) are not included in the total. Overall, these payments do not exceed CHF 2,000 per member of the Group Executive Board. 7 The remuneration of A. Baehny as Chairman of the Board of Directors in 2014 was compensated with his total CEO remuneration. |
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The parameters taken into consideration in the option valuation model are set out in Note 17 Participation plans of the consolidated financial statements.
6.3. Shareholdings of Group Executive Board
As of the end of 2015 and 2014, the Group Executive Board held the following shares in the company:
| Maturity | Average exercise price in CHF |
C. Buhl CEO |
R. Iff CFO |
M. Reinhard |
E. Renfordt- Sasse |
K. Spachmann |
R. van Triest |
Total | ||
|---|---|---|---|---|---|---|---|---|---|---|
| 2015 | ||||||||||
| Shareholdings Group Executive Board | ||||||||||
| Shares | 3,480 | 31,300 | 2,000 | 1,665 | 7,462 | 0 | 45,907 | |||
| Percentage voting rights shares | < 0.1% | < 0.1% | < 0.1% | < 0.1% | < 0.1% | 0% | 0.12% | |||
| Call options1 | ||||||||||
| Vesting period: | ||||||||||
| Vested | 2016–2018 | 194.50 | 0 | 0 | 0 | 1,208 | 0 | 0 | 1,208 | |
| 2016 | 2017 | 205.50 | 525 | 1,417 | 1,542 | 583 | 1,330 | 0 | 5,397 | |
| 2014–2017 | 2020 | 231.20 | 2,008 | 4,676 | 4,844 | 1,244 | 5,620 | 0 | 18,392 | |
| 2015–2018 | 2021 | 281.95 | 2,172 | 10,419 | 10,559 | 1,872 | 9,592 | 0 | 34,614 | |
| 2016–2019 | 2022 | 349.15 | 13,696 | 10,029 | 10,474 | 5,860 | 9,040 | 0 | 49,099 | |
| Total options | 18,401 | 26,541 | 27,419 | 10,767 | 25,582 | 0 | 108,710 | |||
| Percentage potential share of voting rights options |
< 0.1% | < 0.1% | < 0.1% | < 0.1% | < 0.1% | 0% | 0.29% | |||
1 Purchase ratio 1 share for 1 option
| Maturity | Average exercise price in CHF |
A. Baehny CEO |
R. Iff CFO |
M. Reinhard | K. Spachmann | Total | |
|---|---|---|---|---|---|---|---|
| 2014 | |||||||
| Shareholdings Group Executive Board | |||||||
| Shares | 46,969 | 31,280 | 2,000 | 5,000 | 85,249 | ||
| Percentage voting rights shares | 0.12% | < 0.1% | < 0.1% | < 0.1% | 0.23% | ||
| Call options1 | |||||||
| Vesting period: | |||||||
| Vested | 2015–2017 | 207.40 | 0 | 0 | 0 | 1,038 | 1,038 |
| 2015 | 2016–2018 | 228.00 | 1,792 | 957 | 1,017 | 483 | 4,249 |
| 2016 | 2017 | 205.50 | 6,665 | 1,417 | 1,542 | 1,330 | 10,954 |
| 2014–2017 | 2020 | 231.20 | 24,471 | 7,014 | 7,016 | 5,620 | 44,121 |
| 2015–2018 | 2021 | 281.95 | 30,760 | 10,810 | 10,559 | 9,592 | 61,721 |
| Total options | 63,688 | 20,198 | 20,134 | 18,063 | 122,083 | ||
| Percentage potential share of voting rights options |
0.17% | < 0.1% | < 0.1% | < 0.1% | 0.32% | ||
1 Purchase ratio 1 share for 1 option
As of 31 December 2015, there were no outstanding loans or credits between the company and the members of the Group Executive Board, closely related parties or former members of the Group Executive Board.