7. Group Executive Board: remuneration and share/option ownership in 2021

This section is audited by the external auditor.

7.1 Performance in 2021

In 2021, consolidated net sales rose by 15.9% to CHF 3,460 million – the strongest sales growth since going public in 1999. This development comprised an increase in local currencies of 14.7% and a positive foreign currency effect of 1.2%. The exceptional sales growth was due to the positive base effect and the home improvement trend as a result of COVID‑19, the build-up of inventories in the construction industry and market share gains. Despite the considerable challenges arising along the supply chains, we were able to safeguard product availability. When compared with 2019 – and thus with net sales before the COVID‑19 pandemic – also exceptionally strong growth after currency adjustments of 16.4% was seen across all regions.

Results saw significant double-digit increases at all levels. Operating cashflow (EBITDA) increased by 15.6% to CHF 1,069 million, which corresponds to an EBITDA margin of 30.9% (previous year 31.0%). The significant increase was largely due to the exceptional volume growth. Raw material prices, which have risen massively since the end of 2020, as well as substantially higher energy and freight costs had a negative impact on margins. However, these negative effects were partially offset by regular as well as extraordinary price increases. Results were also curtailed by the partial normalisation of marketing costs compared to the previous year. Currency effects had no significant impact on operating margins. The increase in the operating result and an improvement in the financial result led to an increase in net income of 17.7% to CHF 756 million, corresponding to a return on net sales of 21.8% (previous year 21.5%). By comparison, earnings per share saw a disproportionate increase of 18.9% to CHF 21.34 due to the positive impact of the share buyback programme.

At 27.1%, the return on invested capital (ROIC) reached a new record high since the integration of the ceramics business in 2015 (previous year 23.2%).

The variable cash remuneration (STI) of the Group Executive Board is determined on the basis of the following key performance indicators, which all have the same weighting: currency-adjusted net sales performance and EPS compared with the previous year as well as EBITDA margin and ROIC. The achievement of qualitative individual targets is also taken into consideration. The achievement of objectives exceeded the defined maximum targets for all key figures. As a result, the variable cash remuneration for the Group Executive Board – which is dependent on the company results – reached the maximum level.

7.2 Remuneration awarded in 2021

The remuneration of the Group Executive Board amounted to TCHF 10,715 in 2021 (previous year TCHF 9,791). The base salaries of all GEB members in 2021 remained unchanged compared to the previous year. The remuneration of the CEO amounted to TCHF 3,175 in the same period (previous year TCHF 3,009). The total remuneration of the Group Executive Board in 2021 was more than in the previous year. The CEO’s variable remuneration represented 100% of his fixed remuneration. For the other members of the Group Executive Board, the variable remuneration represented between 92.9% and 100% of their individual fixed remuneration (plus representation allowance).

At the 2020 Annual General Meeting, the shareholders approved a maximum aggregate amount of TCHF 11,500 for the remuneration of the Group Executive Board for the year 2021. The remuneration awarded for that period amounts to TCHF 10,715 and is therefore within the approved amount.

The total remuneration of the Group Executive Board in 2021 was more than in the previous year. The main reasons for this are in particular:

• higher variable remuneration due to the maximum achievement of the financial goals
• temporary double occupation of the CFO position
• higher contributions to social security funds

Further information on the remuneration awarded to the Group Executive Board for the business year 2021, compared with the maximum potential amount of remuneration, is provided with the invitation to the ordinary Annual General Meeting 2022.

The following table shows details of remuneration (gross) for 2021 and 2020:

The parameters taken into consideration in the option valuation model are set out in Note 17, Participation plans of the consolidated financial statements.

7.3 Shareholdings of Group Executive Board

As of the end of 2021 and 2020, the Group Executive Board held the following shares in the company:

As of 31 December 2021, and in compliance with the Articles of Incorporation of Geberit AG, there were no outstanding loans or credits between the company and the members of the Group Executive Board, closely related parties or former members of the Group Executive Board.