ANNUAL REPORT 2019
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 comparative group includes companies of a comparable size in the automotive industry which do business with their own manufacturing plants in the most important markets. The Compensation and Nomination Committee consults external advisers if required. The remuneration is based on the contractual agreements.
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 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. The current bonus payments in 2019 reflect the business performance in the year under review.
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)
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 222 683 (previous year CHF 278 728). 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.
5) Fixed salary for 2019 includes CHF 30 000 for strategy consulting.
6) The General Meeting on April 24, 2018, elected Norbert Indlekofer to the Board of Directors. The compensation involves the period from April 24, 2018 to December 31, 2018.
7) Dr. Rolf-Dieter Kempis and Dr. Thomas Muhr, previously members of the Board of Directors, waived further candidacy on April 24, 2018. The compensation refers to the period from January 1, 2018 to April 23, 2018.
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 Knut Zimmer, CEO (previous year Knut Zimmer, 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.
1) Contractually agreed salary (excluding tax-allowable expenses).
2) Bonus in accordance with individual contractual agreements. Payment in each case is made in the new financial year.
3) Fixed entitlement in Swiss francs. Remuneration is in the form of shares. The number of shares depends on the average price of the two preceding months before disbursement. They have a staggered lock-in period of 1 to 4 years. Disbursement took place in August/December. The taxable value of the shares, which includes the discount for the lock-in period, is for Knut Zimmer CHF 103 903 (previous year CHF 103 914) and Thomas F. Bögli CHF 134 209 (previous year CHF 30 263).
4) Provision of company cars, etc.
5) Payments made by the employer to the state pension schemes (AHV/IV) and the occupational pension scheme
The highest compensation was paid to Knut Zimmer, CEO (previous year Knut Zimmer, CEO). No securities or loans were provided to members of Group Management in the reporting years.
4 Compensation for former members of governing bodies
The remuneration below refers to the period after departure of the members of Board of directors and Group Management from January 1 until December 31, 2019 respectively from January 1 until December 31, 2018.
1) Contractually agreed salary (excluding tax-allowable expenses).
2) Provision of company cars, etc.
3) Payments made by the employer to the state pension schemes (AHV/IV) and the occupational pension scheme.
4) This includes the individual employment contract agreements in favor of the retired CEO (notice period until December 31, 2018). In accordance with Art. 18c of Feintool’s Articles of Association, these are included in the additional amount of 50 % of the sum approved by the General Meeting for such cases.