7. Group Executive Board: remune­ration and share/option ownership in 2020

This section is audited by the external auditor.

7.1 Performance in 2020

In 2020, consolidated net sales fell by 3.1% to CHF 2,986 million due to negative currency effects. Despite the COVID-19 crisis, which led to a historic slump in the construction industry in the second quarter, it was possible to increase net sales in local currencies by 1.3% and thus gain significant market share thanks to fast and successful crisis management. Furthermore, despite the sales decrease as a result of COVID-19, the operating and financial results in local currencies increased at all levels. Operating cashflow (EBITDA) increased by 2.4% to CHF 925 million. The EBITDA margin increased by 170 basis points to 31.0% (previous year 29.3%) and thus significantly above our medium-target range. This increase in the margin was mainly due to targeted cost savings, particularly in marketing, the targeted increased levels of flexibility in production and logistics, lower raw material prices, natural currency hedging achieved due to the deliberately balanced investment strategy, and the consequent implementation of price increases. Thanks to these measures, it was also possible to compensate for the significant tariff-related increases in personnel expenses and additional investments in digitalisation initiatives. At CHF 17.95, earnings per share practically reached the previous year’s level despite the negative currency development (2019: CHF 17.97); in local currencies, the earnings per share could be increased. The return on invested capital (ROIC) also increased to 23.2% (previous year 23.1%).

It is important to mention that the increase in results at all levels was achieved despite the COVID-19 crisis and without restructuring, dismissals, wage cuts, furlough schemes or other government financial support.

The variable cash remuneration (STI) of the Group Executive Board is determined on the basis of the following key performance indicators, which all have the same weighting: sales performance and EPS compared with the previous year as well as EBITDA margin and ROIC. The achievement of qualitative individual targets is also taken into consideration. The goals for 2020 were set taking into account the challenging conditions created by COVID-19 and the need to gain further market share during the crisis. In this connection, the weighted average of all elements used to calculate the variable cash remuneration substantially exceeded the defined targets.

7.2 Remuneration awarded in 2020

The remuneration of the Group Executive Board amounted to TCHF 9,791 in 2020 (previous year TCHF 10,278). The remuneration of the CEO amounted to TCHF 3,009 in the same period (previous year TCHF 3,058). The total remuneration of the Group Executive Board in 2020 was less than in the previous year. The first reason is the fewer number of Group Executive Board members (since April 2020), and thus lower compensation, and the second reason is the lower social security contribution.

The CEO’s variable compensation represented 88.4% of his fixed salary. For the other members of the Group Executive Board, the variable compensation represented between 74.1% and 88.4% of their individual fixed salary.

At the 2019 Annual General Meeting, the shareholders approved a maximum aggregate amount of TCHF 11,500 for the remuneration of the Group Executive Board for the year 2020. The compensation awarded for that period amounts to TCHF 9,791and is therefore within the approved amount.

Further information on the remuneration awarded to the Group Executive Board for the business year 2020, compared with the maximum potential amount of remuneration, is provided with the invitation to the ordinary Annual General Meeting 2021.

The following table shows details of remuneration (gross) for 2020 and 2019:

    2020     2019
  C. Buhl
CEO
Total   C. Buhl
CEO
Total
  CHF CHF   CHF CHF
Salary          
- Fixed salary 1,001,806 3,386,672   966,810 3,412,642
- Variable salary1 897,550 2,889,359   866,600 3,032,650
thereof in shares in 20202       865,977 2,116,632
Shares/Options          
- Call options MSOP 2020/20193 870,432 2,391,556   840,399 2,488,670
- Call options MSPP 2020/20194 31,817 77,766   52,415 119,412
Non-cash benefits          
- Private share of company vehicle5 7,056 33,751   7,056 45,646
Expenditure on pensions          
- Pension plans 96,628 511,364   90,262 524,743
- Social insurance 101,117 484,679   232,583 637,875
- Contribution health/accident insurance 2,350 15,529   2,187 16,149
Total6/7 3,008,756 9,790,676   3,058,312 10,277,787
1 The amounts to be paid (current year), and the amounts effectively paid (previous year) respectively 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 451.50 (PY CHF 406.75).
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 Stock Option Programme (MSOP); 1 option entitles to purchase 1 registered share at an exercise price of CHF 451.50 (PY CHF 406.75); definitive acquisition of the option (“vesting”) dependent on various conditions, 3-year vesting period (1 tranche at 100%); the total value of the call options is evaluated as of the grant date and afterwards measured annually according to the expected achievement of objectives. Market value of CHF 16.58 (PY CHF 39.39) 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 Programme (MSPP); 1 option entitles to purchase 1 registered share at an exercise price of CHF 451.50 (PY CHF 406.75); definitive acquisition of the option (“vesting”) dependent on various conditions, 3-year vesting period (1 tranche at 100%); the total value of the call options is evaluated as of the grant date and afterwards measured annually according to the expected achievement of objectives. Market value of CHF 16.58 (PY CHF 39.39) 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 Leaving of two members of the Group Executive Board as of March 31, 2020; one new member of the Group Executive Board as of April 1, 2020.

The parameters taken into consideration in the option valuation model are set out in Note 17 Participation plans of the consolidated financial statements.

7.3 Shareholdings of Group Executive Board

As of the end of 2020 and 2019, the Group Executive Board held the following shares in the company:

  Maturity Average
exercise
price
in CHF
C. Buhl
CEO
R. Iff
CFO
R. van Triest M. Baumüller M. Ziegler C. Rapp Total
2020                  
Shareholdings Group
Executive Board
Shares     14,690 28,280 700 4,024 3,582 751 52,027
Percentage voting rights shares   < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% 0.14%
                   
Call options1         
Vesting-year:         
Lapsed 2021–2027 357.20 21,392 0 6,058 4,107 1,781 1,617 34,955
2021 2024–2028 409.97 19,945 10,746 6,653 3,462 2,548 766 44,120
2022 2025–2028 424.97 47,421 22,641 14,498 11,294 11,377 1,775 109,006
2023 2028–2029 429.13 88,457 40,603 29,627 23,711 32,109 24,436 238,943
Total options   177,215 73,990 56,836 42,574 47,815 28,594 427,024
Percentage potential share of voting rights options 0.48% 0.20% 0.15% 0.11% 0.13% < 0.1% 1.15%
1 Purchase ratio 1 share for 1 option. The unvested options are subject to a performance-based vesting condition.
  Maturity Average
exercise
price
in CHF
C. Buhl
CEO
R. Iff
CFO
K. Spachmann E. Renfordt-
Sasse
R. van Triest M. Baumüller M. Ziegler Total
2019                    
Shareholdings Group
Executive Board
Shares     12,772 28,316 12,000 646 400 3,408 2,908 60,450
Percentage voting rights shares   < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% < 0.1% 0.16%
                     
Call options1      
End of vesting period:          
Lapsed 2021–2026 372.20 8,041 695 119 10,240 1,431 3,228 2,316 26,070
2020 2023–2027 409.97 13,351 7,608 6,751 3,664 4,627 1,983 921 38,905
2021 2024–2028 409.97 19,945 10,746 9,684 5,161 6,653 3,462 2,548 58,199
2022 2025–2028 424.97 47,421 22,641 19,765 10,714 14,498 11,294 11,377 137,710
2023 2028 432.20 6,871 3,266 3,011 1,594 2,036 1,527 1,696 20,001
Total options   95,629 44,956 39,330 31,373 29,245 21,494 18,858 280,885
Percentage potential share of voting rights options 0.26% 0.12% 0.11% < 0.1% < 0.1% < 0.1% < 0.1% 0.76%
1 Purchase ratio 1 share for 1 option. The unvested options are subject to a performance-based vesting condition.
  

As of 31 December 2020, 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.

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