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Annual Report 2016

Remuneration Report

1 PRINCIPLES OF THE COMPENSATION SYSTEM

1.1 Board of Directors

Based on a proposal from the Compensation and Nomination Committee, the Board of Directors determines once a year at its year-end meeting the level of compensation paid to its members on the basis of their activities and responsibilities, while taking due account of prevailing market and industry levels. The peer group comprises internationally active industrial companies of a similar structure and size, with a focus on automotive suppliers as well as plant construction and mechanical engineering.

The Compensation and Nomination Committee consults external advisers if required.

1.2 Group Management

The Compensation and Nomination Committee determines all components of the compensation paid to the CEO on the basis of the contractual agreement. For the other members of Group Management, the Compensation and Nomination Committee makes its decision following proposals submitted by the CEO on the basis of the respective contractual agreements. This is reported to the Board of Directors at its regular meeting at the end of each year. If required, external advisers are consulted when determining the compensation and stock option plans for Group Management.

Every two to three years, Feintool commissions an external consulting firm to review Group Management's compensation as compared against the external labor market. The peer group comprises internationally active industrial companies of a similar structure and size, with a focus on automotive suppliers as well as plant construction and mechanical engineering. The comparison includes basic, overall and direct compensation as well as selected fringe benefits (occupational pension, company car and lump-sum expenses).

2 Elements of the compensation system

2.1 Board of Directors

The compensation paid to members of the Board of Directors consists of a fixed component plus a lump-sum reimbursement of expenses and an attendance fee. Members of the various committees are paid a separate fixed component and attendance fee. Where meetings of the Board of Directors and the various committees are held immediately after one another, the attendance fee is paid once only.

The compensation paid to the Chairman of the Board of Directors is based on a fixed proportion of his salary (fixed component).Depending on the company's financial performance, the Chairman also receives a bonus (variable component) and/or free shares in Feintool International Holding AG. These shares are locked in for five years.

2.2 Group Management

The compensation paid to Group Management is based on a fixed proportion of each individual's salary (fixed component).In addition, the amount of compensation is determined directly by the attainment of targets and performance of each member of Group Management, as well as the financial performance of the company (variable component).The performance-related bonus is determined on the basis of operating results (EBIT) and the degree to which annually agreed individual objectives have been achieved. It is based on a ratio of approximately 70:30 operating to personal targets, and is very similar for all members of Group Management except the CEO. The bonus for the CEO is calculated entirely according to the EBIT of the Feintool Group. The variable compensation component paid to the members of Group Management is between 30 % and 70 % of the fixed salary component.

Members of Group Management receive part of their fixed compensation in the form of shares, which are locked in on a staggered basis for up to four years. Details are set out in the "Regulations for the issue of employee shares and options to members of the Board of Directors and Senior Executives", as issued by the Board of Directors in 2005.

Members of Group Management also receive customary fringe benefits (company car, risk insurance and retirement, management insurance cover and voluntary insurance).

3 Compensation for acting members of governing bodies

The following compensation was paid during the compensation period. These figures relate to the period from January 1 to December 31. 1)

3.1 Current members of the Board of Directors (including related parties) in CHF Fixed salary 2) Shares/ options 3) Contributions to pension plans 4) Total
In the 2016 financial year          
Alexander von Witzleben, Chairman   274 000 565 000 130 926 969 926
Dr. Michael Soormann, Deputy Chairman   137 500 137 500
Thomas A. Erb, Member   57 500 3 857 61 357
Wolfgang Feil, Member   85 000 6 828 91 828
Dr. Rolf-Dieter Kempis, Member   42 500 5 145 47 645
Dr. Thomas Muhr, Member   50 000 5 974 55 974
Dr. Kurt E. Stirnemann, Member   95 000 7 908 102 908
Total Board of Directors   741 500 565 000 160 638 1 467 138
           
In the 2015 financial year          
Alexander von Witzleben, Chairman   274 000 429 250 133 329 836 579
Dr. Michael Soormann, Deputy Chairman   137 500 137 500
Thomas A. Erb, Member   55 000 3 587 58 587
Wolfgang Feil, Member   80 000 6 288 86 288
Dr. Thomas Muhr, Member   50 000 5 974 55 974
Dr. Kurt E. Stirnemann, Member   92 500 7 638 100 138
Total Board of Directors   689 000 429 250 156 816 1 275 066

1)The compensation paid to the Board of Directors is determined for the period between the ordinary General Meeting at which the individual member is elected and the following ordinary General Meeting. In this report, the compensation paid relates to the financial year (January 1 to December 31) and is accrued accordingly.

2)Fixed compensation including attendance fee.

3)Allocation of a predefined number of shares. The shares are locked in for five years. The valuation corresponds to the price at the time of allocation. The value of the shares for tax purposes is CHF 422 202 (previous year CHF 320 761). This includes a discount for the lock-in period.

4)Payments made by the employer to the state pension schemes (AHV/IV) and the occupational pension scheme.

The Chairman of the Board of Directors is in each case granted a loan equivalent to the withholding tax on his shares; this is offset against the fixed salary on a straight-line basis in the same year. There were no loans at the end of the year. With the above exception, no loans or securities were granted to members of the Board of Directors in the reporting years. The highest compensation was paid to Mr. Alexander von Witzleben, Chairman of the Board of Directors (previous year Mr. Heinz Loosli, CEO).

3.2 Group Management

According to ERCO (the Ordinance against Excessive Remuneration in Listed Companies Limited by Shares), Group Management consists of the roles of CEO and CFO.

3.2.1 Current members of Group Management (including related parties) in CHF Fixed salary 2) Variable salary 3) Shares/options 4) Benefits in kind 5) Contributions to pension plans 6) Total
In the 2016 financial year              
Heinz Loosli, CEO 1)   306 667 171 720 79 958 3 200 106 223 667 768
Bruno Malinek, CEO 1)   133 332 80 000 39 941 1 600 35 989 290 862
Dr. Thomas F. Bögli, CFO   336 000 85 860 34 963 4 800 88 607 550 230
Total Group Management   775 999 337 580 154 862 9 600 230 819 1 508 860
               
In the 2015 financial year              
Heinz Loosli, CEO   460 000 256 560 119 914 4 800 162 464 1 003 738
Dr. Thomas F. Bögli, CFO   336 000 85 520 34 982 4 800 88 524 549 826
Total Group Management   796 000 342 080 154 896 9 600 250 988 1 553 564

1)Mr. Heinz Loosli was employed as CEO until August 31, 2016. Bruno Malinek took over as CEO on September 1, 2016.

2)Contractually agreed salary (excluding tax-allowable expenses).

3)Bonus in accordance with individual contractual agreements. Payment in each case is made in the new financial year.

4)Fixed entitlement in Swiss francs. Remuneration is in the form of shares. The number of shares depends on the average price in October/November. They have a staggered lock-in period of 1 to 4 years. Disbursement took place in December. The taxable value of the shares, which includes the discount for the lock-in period, is CHF 69 266 for Mr. Heinz Loosli (previous year CHF 103 870), CHF 34 591 for Mr. Bruno Malinek and CHF 30 276 for Mr. Thomas F. Bögli (previous year CHF 30 295).

5)Provision of company cars, etc.

6)Payments made by the employer to the state pension schemes (AHV/IV) and the occupational pension scheme

The highest compensation was paid to Mr. Alexander von Witzleben, Chairman of the Board of Directors (previous year Mr. Heinz Loosli, CEO). No securities or loans were provided to members of Group Management in the reporting years.

4 Compensation for former members of governing bodies

According to ERCO (the Ordinance against Excessive Remuneration in Listed Companies Limited by Shares), Group Management of Feintool consists of the roles of CEO and CFO. The remuneration below refers to the period after departure (from September 1, 2016, to December 31, 2016):

4.1 Former members of Group Management (including related parties) in CHF Fixed salary 2) Variable salary 3) Shares/options 4) Benefits in kind 5) Contributions to pension plans 6) Total
2016 total for Heinz Loosli 1)   153 332 85 860 39 979 1 600 53 390 334 161
2015 total for members who left Group Management  

1)Mr. Heinz Loosli was employed as CEO until August 31, 2016. The remuneration refers to the period after September 1, 2016.

2)Contractually agreed salary (excluding tax-allowable expenses).

3)Likely bonus in accordance with individual contractual agreements. Payment in each case is made in the new financial year. The 2016 bonus entitlement relates to the whole financial year and was calculated on a straight-line, pro rata basis for this presentation.

4)Fixed entitlement in Swiss francs. Remuneration is in the form of shares. The number of shares depends on the average price in October/November. They have a staggered lock-in period of 1 to 4 years. Disbursement is in December. The 2016 share entitlement relates to the whole financial year and was calculated on a straight-line, pro rata basis for this presentation. The taxable value of the shares, including the discount for the lock-in period, is CHF 34 633 for the 2016 financial year.

5)Provision of company cars, etc.

6)Payments made by the employer to the state pension schemes (AHV/IV) and the occupational pension scheme.