4. Determination of remuneration

4.1 Nomination and Compensation Committee (NCC)

Pursuant to the Articles of Incorporation and the Organisational Regulations of Geberit AG (see also Articles of Incorporation), the NCC supports the Board of Directors (BoD) in the fulfilment of its duties and responsibilities in the area of remuneration and personnel policy, including:

• Establishment and periodical review of the Group’s remuneration policy and principles
• Pre-determine annual expected short-term financial and ESG targets for the CEO and the other members of the Group Executive Board and pre-define the annual performance target for the Long-Term Incentive plan for the approval of the Board of Directors
• Yearly review of the individual remuneration of the CEO and of the other members of the Group Executive Board (GEB)
• Yearly performance assessment of the CEO and of the other members of the Group Executive Board
• Preparation of the Remuneration Report
• Personnel development of the Group Executive Board
• Succession planning and nomination for positions on the Group Executive Board
• Pre-selection of candidates for election or re-election to the Board of Directors

Approval and authority levels on remuneration matters:

The NCC meets at least three times per year and consists exclusively of independent and non-executive members of the Board of Directors, who are elected annually by the shareholders at the Annual General Meeting. In 2021, Hartmut Reuter stepped down from his mandate as board member and the chair of the NCC. Thereafter, the NCC has consisted of Eunice Zehnder-Lai as Chair as well as Werner Karlen and Thomas Bachmann as members. Thomas Bachmann was elected as a new member of the Board of Directors and NCC at the Annual General Meeting 2021. In 2021, the NCC held four meetings covering the predefined recurring agenda items illustrated below. The participation rate for the NCC meetings was 100%.

As a general rule, the Chair of the Board of Directors, the CEO and the Head of Corporate Human Resources participate in the meetings of the NCC. The Chair of the NCC may invite other executives as appropriate. However, the Chair of the Board of Directors and the executives do not take part in the section of the meetings where their own performance and/or remuneration are discussed. At the end of each meeting, a closed session takes place among the members of the NCC only.

After each meeting, the Chair of the NCC reports to the Board of Directors on its activities and recommendations. The minutes of the NCC meetings are available to the full Board of Directors.

4.2 Process of determination of remuneration

Benchmarks and external consultants

Geberit reviews the remuneration of its executives, including that of the members of the Group Executive Board, every two to three years. This includes regular participation in benchmark studies on comparable functions in other industrial companies. In the year under review, external remuneration specialists provided detailed analysis and advice on the remuneration of the CEO and the other members of the Group Executive Board. This company has no other mandates with Geberit. The remuneration analysis was conducted based on the following industrial companies of similar scale in terms of market capitalisation, sales and headcount, with headquarters in Switzerland: Barry Callebaut, Bucher Industries, Dormakaba, Ems-Chemie, Georg Fischer, Givaudan, Holcim, Lonza, Mettler-Toledo, OC Oerlikon, Schindler, SFS Group, Sika, Sonova, and Sulzer. While many different factors (such as the individual role, experience in the role and contribution, company performance and affordability) are considered to determine remuneration levels, the policy of Geberit is to provide a target remuneration that is in principle positioned around the market median.

With regard to the remuneration of the Board of Directors, the system and amount are reviewed every two to three years by the NCC. This includes regular participation in comparative studies. In 2019, a consulting company performed such a review on the basis of a comparative analysis of 19 Swiss industrial companies traded on the SIX Swiss Exchange. The remuneration analysis was conducted based on the following industrial companies with comparable market capitalisation, sales and employee numbers: ABB, AMS, Aryzta, Barry Callebaut, Clariant, Dätwyler, Dormakaba, Forbo, Georg Fischer, Givaudan, Holcim, Logitech, Lonza, OC Oerlikon, Schindler, Sika, Sonova, Straumann and Sulzer. This consulting company also advises the NCC on other matters of relevance for remuneration. It has no other consulting mandates from Geberit.

Performance management

The actual remuneration effectively paid out in a given year to the Group Executive Board members depends on the corporate results and on individual performance. The individual performance is assessed through the formal annual performance management process: company and individual performance objectives are approved at the beginning of the business year and achievement against those objectives is assessed after year end. The performance appraisal is the basis for the determination of the actual remuneration.

4.3 Shareholder involvement

In the last few years, based on the feedback received from shareholders and shareholder representatives, Geberit has made efforts to improve the remuneration disclosure in terms of both transparency and of the level of detail provided about the remuneration principles and programmes. Further, Geberit submits the Remuneration Report to a consultative shareholder vote at the Annual General Meeting, so that shareholders have an opportunity to express their opinion about the remuneration system.

4.4 Articles of Incorporation

As required by the Ordinance, the Articles of Incorporation of Geberit include the following provisions on remuneration:

• Principles applicable to performance-related pay (Article 21): The members of the Group Executive Board may be paid variable remuneration which may include short- and long-term elements and which is linked to the achievement of one or several performance criteria.
• Binding votes on maximum aggregate remuneration amounts of the Board of Directors and Group Executive Board (Article 22): Shareholders vote prospectively on the maximum aggregate remuneration amount for the Board of Directors until the next ordinary Annual General Meeting and for the maximum aggregate remuneration amount for the Group Executive Board for the following business year. Further, shareholders can express their opinion on the remuneration principles and structure through a consultative vote on the Remuneration Report.
• Additional amount for payments to members of the Group Executive Board appointed after the vote on remuneration at the Annual General Meeting (Article 23): For the remuneration of members of the Group Executive Board who have been appointed after the approval of the maximum aggregate remuneration amount by the Annual General Meeting, and to the extent that the maximum aggregate remuneration amount as approved does not suffice, an amount of up to 40% of the maximum aggregate remuneration amount approved for the Group Executive Board is available without further approval of the Annual General Meeting.
• Loans, credit facilities and post-employment benefits for members of the Board of Directors and the Group Executive Board (Article 26): No loans or credits shall be granted to members of the Board of Directors or the Group Executive Board.

The provisions of the Articles of Incorporation have been kept broad so that the Board of Directors has sufficient flexibility to make any necessary amendments to the remuneration programmes. The remuneration principles currently in place are more restrictive than the provisions of the Articles of Incorporation and are aligned with best practice in Corporate Governance; for example, the independent members of the Board of Directors are not eligible for any variable remuneration or retirement benefits (see also 5. Remuneration architecture, 5.1 Board of Directors).