Remuneration Report
1 INTRODUCTION
Content and basis of the Remuneration Report
This remuneration report explains the authority and definition of the remuneration of the members of the Board of Directors and the Group Executive Board as well as Autoneum’s remuneration system and how it was applied in the reporting period. Disclosures are made in accordance with the applicable provisions of Swiss law, the Directive on Information relating to Corporate Governance of the SIX Swiss Exchange and the Swiss Code of Best Practice for Corporate Governance from economiesuisse. The remuneration tables listed under items 4 and 5 have been audited by the statutory auditors. In addition, this remuneration report will be submitted to the shareholders at the Annual General Meeting on April 09, 2024 for a consultative vote so that they can express their opinion on the remuneration policy and remuneration system.
Rules on Remuneration in the Articles of Association
The Articles of Association of Autoneum Holding Ltd contain provisions on the remuneration principles applicable to the members of the Board of Directors and the Group Executive Board:
- Resolutions and powers of the Annual General Meeting (§12/13);
- Approval of the remuneration of the members of the Board of Directors and the Group Executive Board as well as an additional amount for payments to new members of the Group Executive Board appointed by the Board of Directors after the approval of the remuneration (§14);
- Contracts of office and employment of the members of the Board of Directors and the Group Executive Board (§19);
- Number of permissible mandates (§20);
- Election and duties of the Compensation Committee (§23);
- Principles applicable to the fixed and variable performance-related remuneration and to the allocation of shares to the members of the Board of Directors and the Group Executive Board (§24);
- Loans, credit facilities and retirement benefits for members of the Group Executive Board (§25).
The full text of the Articles of Association is available online at https://www.autoneum.com/investor-relations/corporate-governance/#articles-of-association.
The maximum aggregate total compensation of the members of the Board of Directors and the Group Executive Board as proposed by the Board of Directors is submitted to the shareholders for approval at the Annual General Meeting each year separately and prospectively for the coming financial year (§14 of the Articles of Association).
2 AUTHORITY AND DEFINITION PROCESS
The basic features of the remuneration policy, the remuneration system and the share-based payment plans are elaborated by the Compensation Committee, reviewed annually and approved by the Board of Directors. No third-party consultants have been engaged for the elaboration of the salary policy or the compensation programs.
The Board of Directors fixes annually the remuneration of the members of the Board of Directors and the Group Executive Board, approves the fixed portion of the remuneration and defines the targets, parameters and other details for the executive bonus and the long-term incentive plans, based on the suggestions of the Compensation Committee and within the limits approved by the shareholders. The members of the Board of Directors, whose remuneration is decided on, also participate in the meeting. The amount of remuneration for the members of the Board of Directors and the Group Executive Board is determined at the discretion of the Board of Directors. In doing so, the Board of Directors takes into consideration function and responsibility, in the case of the Group Executive Board also experience, and incorporates information which is publicly available or known from their own experience.
3 REMUNERATION SYSTEM
Remuneration of the Board of Directors
The members of the Board of Directors receive a fixed annual remuneration for their entire board activities as well as an annual lump sum payment for representation expenses. They receive no variable remuneration. The members of the Board of Directors may opt to obtain all or part of their remuneration in cash or in Autoneum shares. The cash component is paid out in December of the related financial year. The shares are allocated in the respective financial year and blocked for three years. The share price applicable for the conversion of the remuneration into shares is based on the average closing price of the ten trading days following the dividend payment or the Annual General Meeting, if no dividend is paid, discounted to reflect a three-year blocking period.
Remuneration of the Group Executive Board
The remuneration structure for the Group’s senior management consists of several components and, within a market-based remuneration framework, takes into account the individual performance and the Group’s performance in the financial year as well as the creation of long-term, sustainable added value. The remuneration of the Group’s senior management including the members of the Group Executive Board consists of a basic salary (fixed remuneration), a variable, performance-related bonus according to the executive bonus plan and the participation in the long-term incentive plan (LTI). To ensure a consistent focus on the long-term interests of the shareholders, a part of the variable remuneration is paid in the form of blocked shares. Due to the three-year blocking period of the allocated shares, this remuneration is linked to the long-term development of the company value of Autoneum.
Basic salary
The basic salary of the members of the Group Executive Board consists of a fixed annual remuneration. The Board of Directors may define a portion of the basic salary to be paid in Autoneum shares. The number of shares is calculated based on the average closing price during the first ten trading days of the respective year. The shares are allocated in December of the respective year and are blocked for three years.
Bonus
The members of the Group Executive Board may reach a variable, performance-related remuneration of up to 80% of their basic salary in the form of a bonus, subject to the achievement or exceeding of defined minimum profitability and liquidity targets of the Group or of the Business Groups as well as to the achievement of annually agreed individual targets. Additionally, for sustainability as well as for social and environmental matters, the following ESG target criteria are applied:
- Scope-11 emissions (direct greenhouse gas emissions from consumption of fossil fuels);
- Scope-21 emissions (indirect greenhouse gas emissions from purchased electricity, excluding renewable electricity);
- Non-hazardous waste (reduce non-hazardous waste);
- Accident Frequency Rate (AFR) (no accidents).
- 1 According to the definition of the Greenhouse Gas Protocol.
The targets set for the CEO and CFO are composed of the Group net result margin (weighting 52.5%), Group RONA (22.5%), individual targets (15%) and ESG targets at Group level (10%). For the Heads of the Business Groups, the targets are composed of the Group net result margin (17.5%), Group RONA (7.5%), EBIT margin of the Business Group (35%), free cash flow of the Business Group (15%), individual targets (15%) and ESG targets at Business Group level (10%).
Minimum and maximum limits are defined for the weighted targets. In general, the achievement of the minimum limit is a condition for the performance-related bonus, while the maximum bonus is achieved at the maximum limit. However, for ESG criteria the principle of “the lower, the better” applies. For all targets, the performance-related bonus increases linearly between the two defined limits, with the exception of the Accident Frequency Rate (AFR), where 100% is achieved if the result is equal or smaller than the defined lower limit, 50% is achieved if the result is between the lower and/or equal to the higher limit, and 0% is reached, if the result exceeds the higher limit.
Irrespective of the other targets, a bonus is only paid if the Group net result is positive. At least 40% of the bonus is paid in Autoneum shares. Each member of the Group Executive Board can opt to receive up to 100% of the bonus in shares and to receive either restricted shares with a blocking period of three years or an entitlement to shares with a deferred transfer after a period of three years. The calculated bonus is multiplied by 1.4 and then converted into shares using the average closing price of the first ten trading days in January of the following year.
Long-term incentive plan (LTI)
The LTI allows the Board of Directors to allocate a part of the Group’s net result to predefined beneficiaries. Beneficiaries are the members of the Group’s senior management including the Group Executive Board. An allocation is only made if the Group’s net result is positive and exceeds a defined threshold. The total amount of the Group’s net result dedicated to the LTI is converted into Autoneum shares and the shares are allocated to the beneficiaries at fixed percentage rates corresponding to the internal function levels. The shares become property of the beneficiaries after a vesting period of 35 months, if the beneficiaries are then still employed by an Autoneum company. Due to the 35-month vesting period, the value of the LTI at vesting date is in strong correlation to the performance of the Autoneum share price. Immediate vesting occurs in case of death or retirement of a beneficiary. In case of employment termination, shares not yet vested lapse without compensation. Exceptions are possible at the discretion of the Compensation Committee.
Share options and share purchase plans
There are no share options or share purchase plans.
Permissible activities outside the Autoneum Group
The Board of Directors decides on mandates of members of the Group Executive Board or the Group’s senior management at other companies. If the mandates are exercised outside the contractual working time, the remunerations received must not be surrendered to Autoneum.
4 INFORMATION REGARDING MEMBERS OF THE BOARD OF DIRECTORS
External mandates of the members of the Board of Directors (in accordance with art. 734e CO)
The following table lists all external mandates numerically that the members of the Board of Directors hold in comparable functions at other companies with an economic purpose (including companies belonging to the same group). Mandates without an economic purpose are shown separately at the end.
- * Listed company
Shares held by the members of the Board of Directors including related parties (in accordance with art. 734d CO)
The following table provides information on the registered Autoneum shares held by the members of the Board of Directors as of December 31, 2023 (in comparison to December 31, 2022):
Remuneration of the members of the Board of Directors
The total remuneration paid to the current members of the Board of Directors in the 2023 financial year amounts to CHF 1314 424. There has been no remuneration to former members of the Board of Directors.
At the 2022 Annual General Meeting a maximum total remuneration to the Board of Directors of CHF 1.75 million was awarded for the 2023 financial year, thus the remuneration for 2023 is within the approved limit.
No loans, credit facilities, additional fees, or remuneration not in line with the market have been paid to current and former members of the Board of Directors or parties related to them. In the 2023 financial year, fees in the amount of CHF 39 670.95 (2022: CHF 39 816.10) were paid for legal services to the law firm for which the Chairman of the Board of Directors acts as senior partner.
The total of all remuneration paid to the members of the Board of Directors is composed as follows:
- 1 Other remuneration includes the employer’s portion of social insurance contributions.
- 2 The fixed remuneration in shares is calculated by the number of shares granted multiplied by the average closing price for the ten days following the 2023 Annual General Meeting (CHF 129.98). The transfer took place after deduction of social security contributions and withholding taxes.
- 4 Member of the Board of Directors and Vice Chairman until 23.03.2023.
- 3 Vice Chairman of the Board of Directors from 23.03.2023.
- 5 The fixed remuneration in shares is calculated by the number of shares granted multiplied by the average closing price for the ten days following the 2022 dividend payment (CHF 121.47). The transfer took place after deduction of social security contributions and withholding taxes.
- 6 Member of the Board of Directors until 23.03.2022.
The change in the Board of Directors’ remuneration compared to the previous year is mainly caused by the fact that the Board of Directors was reduced by one member at the Annual General Meeting 2023.
5 INFORMATION REGARDING MEMBERS OF THE GROUP EXECUTIVE BOARD
External mandates of the members of the Group Executive Board (in accordance with art. 734e CO)
The following table lists all external mandates that the members of the Group Executive Board hold in comparable functions at other companies with an economic purpose (including companies belonging to the same group):
- 1 CEO from 27.03.2023.
- 2 Member of the Group Executive Board from 01.07.2023.
Shares and rights to shares held by the members of the Group Executive Board including related parties (in accordance with art. 734d CO)
The following table provides information on the registered Autoneum shares and rights to shares held by the members of the Group Executive Board as of December 31, 2023 (in comparison to December 31, 2022):
Remuneration of the members of the Group Executive Board
In the 2023 financial year, the total remuneration paid to the members of the Group Executive Board amounts to CHF 7 330 186, thereof CHF 1 701 062 to the CEO, who receives a part of his basic salary in shares. There has been no remuneration to former members of the Group Executive Board.
At the 2022 Annual General Meeting a maximum total remuneration to the Group Executive Board of CHF 8.5 million was awarded for the 2023 financial year, thus the remuneration for 2023 is within the approved limit.
No loans, credit facilities, additional fees or remuneration not in line with the market have been paid to current and former members of the Group Executive Board or parties related to them.
The total remuneration paid to the members of the Group Executive Board is composed as follows:
- 1 For the 2023 financial year, 2.5% of the Group net profit has been allocated. The rights allocated in April 2024 will vest beginning of March 2027. For the 2022 financial year, not all criteria for allocation of the LTI 2022 were met.
- 2 Other remuneration includes remuneration to replace entitlements forfeited from previous employer as a result of joining Autoneum, the employer's portion of social security contributions, the employer’s portion of contributions to pension funds and other fringe benefits.
- 3 The applicable share price during the defined period was CHF 114.84.
- 4 The part of the bonus opted to be paid out in shares (at least 40%) is multiplied by the factor 1.4 and then converted into shares using the average trading price for the first ten days in January 2024 (CHF 124.88).
- 5 CEO from 27.03.2023.
- 6 The applicable share price during the defined period was CHF 184.12.
- 7 The part of the bonus opted to be paid out in shares (at least 40%) is multiplied by the factor 1.4 and then converted into shares using the average trading price for the first ten days in January 2023 (CHF 114.84).
- 8 CEO until 27.03.2023.
The change in the remuneration of the Group Executive Board members compared to the previous year is mainly based on the fact that the company result for 2023 is significantly better and therefore the performance criteria for the 2023 bonus were achieved in almost all areas. In addition, there was an overlap in the change of the CEO and the change of the Head of Business Group Europe.