2. Foreword by the Chair of the Nomination & Compensation Committee
On behalf of the Nomination and Compensation Committee (NCC), I am pleased to present the 2022 Remuneration Report.
An extremely challenging year is now behind us. The effects of the COVID-19-induced home improvement trend and the outbreak of war in Ukraine, as well as the sharp increase in inflation worldwide, led to strongly fluctuating volumes at Geberit during the course of the year. In turn, this placed some very high demands in terms of flexibility on Purchasing, Production, Logistics and Sales. Following an unprecedented rise, the costs of raw materials and energy reached new records in the reporting year, which put margins under enormous pressure. The higher prices for raw material and energy alone resulted in additional costs of CHF 244 million, with exchange rate developments also having an extremely negative impact on our results. Taking into account these challenging conditions and the records set in the previous year, we were nonetheless able to post good results in 2022. The comparison with pre-COVID results remains very positive, which is reference to our structural and financial strength as well as our prudent crisis management right from the start of the pandemic. This enabled us to further consolidate our position as leading supplier of sanitary products and gain market shares.
In the reporting year, the NCC reviewed the Group Executive Board organizational setup in anticipation of strategic developments. To provide further strategic focus, the Board of Directors decided to separate Product Development from Operations. On 1 October 2022, Andreas Lange was appointed to the Group Executive Board as Head of Products. Martin Ziegler, Head of Group Executive Area Products & Operations until 30 September 2022, continues in his capacity as Head of Group Operations and member of the Group Executive Board.
The NCC performed its regular activities on remuneration matters throughout the year, such as the annual review of the remuneration programmes, the performance goal setting of the Group Executive Board at the beginning of the year and their performance assessment at year end, the determination of the remuneration of the members of the Board of Directors and the Group Executive Board, as well as the preparation of the Remuneration Report and of the say-on-pay votes at the Annual General Meeting.
Furthermore, the NCC reviewed the variable compensation programmes and decided on a small adjustment. The payout curve under the Long-Term Incentive plan is made more challenging to ensure full vesting rewards outstanding performance. In order to guarantee an economically equivalent solution, a corresponding adjustment is made by increasing the number of matching share options. The NCC established that the remuneration design is well aligned with the business strategy and shareholders’ interests. There were no other changes to the remuneration programmes for the Group Executive Board for 2022.
There were no changes to the remuneration system of the Board of Directors in the reporting year. The remuneration system and the amount of remuneration for Geberit’s Board of Directors conform to standard market practice and the Board of Directors confirmed that no changes were necessary.
At the 2023 Annual General Meeting, we will request your approval of the total remuneration amount to be awarded to the Board of Directors for the period until the following Annual General Meeting, and the maximum aggregate remuneration awarded to the Group Executive Board for the 2024 business year. Additionally, you will have the opportunity to express your opinion on this Remuneration Report in a consultative vote. You will see in the report that the remuneration awarded to the Board of Directors for the remuneration period ending with the 2023 Annual General Meeting and the remuneration awarded to the Group Executive Board in 2022 were within the limits approved at the 2022 Annual General Meeting and 2021 Annual General Meeting respectively.
Looking ahead, we will continue to assess and review our remuneration programmes to ensure that they continue to fulfil their purpose in the evolving context in which the company operates. We will pursue an open and regular dialogue with our shareholders as we continue to enhance the remuneration system.
This report contains all relevant information on the remuneration paid to the Board of Directors and to the Group Executive Board in 2022. Our remuneration system rewards performance in a balanced and sustainable manner and aligns well with shareholders’ interests.
The NCC appreciates your ongoing input and feedback on our remuneration programmes. We look forward to the AGM in April 2023.
Chair of the Nomination & Compensation Committee