Compensation Report

The Compensation Report provides an overview of the compensation programs and the method for determining compensation at Conzzeta. It documents the compensation awarded to the Board of Directors and the Executive Committee for the financial year 2019.

The report conforms to the relevant provisions of the Ordinance against excessive pay in stock listed companies (“VegüV”), the standards relating to information on corporate governance issued by SIX Swiss Exchange, and the principles of the economiesuisse “Swiss Code of Best Practice for Corporate Governance”.

1 Compensation Governance

1.1 Shareholder involvement

At the last Annual General Meeting (AGM) on April 16, 2019, the shareholders elected the members of the Compensation Committee, which was established in 2014. They also adopted the 2018 compensation report presented for a consultative vote and approved the maximum total compensation for the Board of Directors for the 2019/2020 term of office (CHF 1.5 million) and for the Executive Committee for the 2020 financial year (CHF 8.4 million).

At the upcoming AGM on April 22, 2020, shareholders will be able to adopt a binding vote on the prospective total compensation to be awarded to the Board of Directors and to the Executive Committee, respectively. They will also be able to voice their opinion retrospectively on this Compensation Report in a consultative vote.

1.2 Duties of the Board of Directors

At the request of the Compensation Committee, the Board of Directors approves the personnel and compensation policy for the Group, and the general terms of employment of the members of the Executive Committee.

At the AGM, the Board of Directors puts forward its own total compensation amount and that of the Executive Committee for approval. It also approves the compensation to be awarded individually to the members of the Board of Directors and Executive Committee, based on the proposal of the Compensation Committee and with reference to the total compensation amounts agreed at the AGM.

1.3 Duties of the Compensation Committee

As determined in the Articles of Association and in the Organizational Regulations of Conzzeta AG, the Compensation Committee, which also performs additional tasks in its role as the Human Resources Committee (HR Committee), is responsible for preparing proposals for the attention of the Board of Directors in relation to nomination and compensation matters:

Structure of shareholder voting on compensation at the 2020 AGM

Nomination:

• Development of the selection criteria for positions on the Board of Directors and on the Executive Committee
• Succession planning for positions on the Board of Directors and on the Executive Committee
• Assessment and encouragement of executives and talents
• Supervision of the human resources policy and personnel development plans
• Responsibility for the guideline on permissible external mandates for the members of the Executive Committee and preparation of the respective requests to the Board of Directors

Compensation:

• Motion to the Board of Directors on the compensation policy for members of the Board of Directors and of the Executive Committee
• Review of compensation system and related payments, and of their compliance with the provisions of the Articles of Association
• Preparation of motions to the AGM on the maximum total compensation for the Board of Directors and Executive Committee
• Proposal on the compensation of the individual members of the Board of Directors and of the Executive Committee
• Review and assessment of pension plans
• Preparation of the Compensation Report

The final decision on the compensation of the Board of Directors and the Executive Committee within the maximum compensation agreed at the AGM remains with the Board of Directors.

The Compensation Committee consists of three members of the Board of Directors who are elected individually and annually by the Annual General Meeting for a period of one year. At the 2019 AGM, Philip Mosimann (Chairman, existing member), Urs Riedener (new member) and Robert F. Spoerry (existing member) were elected as members of the Compensation Committee.

The Compensation Committee meets as often as business requires, but at least three times a year. At the start of the year, the Compensation Committee proposes to the Board of Directors the variable compensation of the Group CEO and the other members of the Executive Committee for the previous financial year based on the assessment of business and individual performance. The Committee also proposes the compensation of the members of the Board of Directors for the term of office completed and submits the Compensation Report to the Board of Directors for approval. The meeting at year-end deals with nomination matters such as the succession planning for positions on the Board of Directors and on the Executive Committee, the definition of appropriate selection criteria for such positions and the review of personal development plans. At the same meeting, the (target) compensation amounts for the Group CEO and the other Executive Committee members for the following year are established.

Responsibilities

As a general rule, the Chairman of the Board of Directors, the Group CEO and the Head of Corporate Human Resources are invited to join the meetings of the Compensation Committee in an advisory capacity. The Compensation Committee Chairman may invite other members of the Executive Committee as appropriate.

The Compensation Committee Chairman reports to the Board of Directors on the activities of the Committee after each meeting. The minutes of the Compensation Committee meetings are made available to all members of the Board of Directors.