7. Remuneration architecture for the Group Executive Board

The remuneration of the Group Executive Board is defined in a regulation adopted by the Board of Directors and consists of the following elements:

• Base salary
• Variable remuneration
  • Short-Term Participation (STP)
  • Long-Term Participation (LTP)
• Additional employee benefits, such as pension benefits and perquisites

7.1 Annual base salary

The annual base salary is a fixed remuneration paid in cash on a monthly basis. It is determined based on the scope and responsibilities of the position, the market value of the role and the qualifications and experience of the incumbent. The base salary is reviewed annually based on market salary information, considerations from the perspective of the company’s financial affordability and performance, and the evolving experience of the individual in the role.

7.2 Short-Term Participation programme (STP)

The STP is a target-based variable remuneration designed to reward the annual performance of the Group Executive Board and approximately 220 additional members of the Group management. It rewards the achievement of Group annual financial business and ESG goals, as well as of the individual objectives agreed and evaluated within the annual performance management process. The variable remuneration award is delivered in cash. Members of the Group Executive Board have the opportunity to invest part or all of their award in blocked shares of the company through the Management Share Participation Programme (MSPP). Two free performance share options are allocated for each share purchased through the programme (see Management Share Participation Programme (MSPP)).

Target and maximum payout potential for the Group Executive Board

The STP target equals 50% of the annual base salary for the CEO as well as for other members of the Group Executive Board. The maximum potential payout for the STP is capped at 100% of the annual base salary, unchanged compared to previous years.

Remuneration structure Group Executive Board

The Group financial business goals and ESG goal account for 80% of the STP and the individual performance objectives account for 20% of the STP.

Group financial business goals and ESG goal

The Group goals include equal weighting of four financial objectives and one ESG objective. Every year, based on the NCC’s recommendation, the Board of Directors determines the expected target level for each financial and ESG goal for the following year. Geberit wants to reinforce its position as market leader and consistently achieve above-average performance. As a general principle, targets are set considering the current market environment, the business situation, and the mid-term goal to grow above the market. The intention of this demanding target setting is to deliver best-in-class performance and to stay ahead of the market. In addition, a threshold level of performance, below which no variable remuneration is paid out, and a maximum level of performance, above which the short-term variable remuneration is capped, are determined. The payout level between the threshold, the target and the maximum is calculated by linear interpolation. The maximum payout potential for maximum level of performance is capped at double the target level for each goal as well as for the total.

The target levels for each financial goal are set according to budget. The budget is ambitious and reflects the actual market environment, includes the aspiration to gain market shares and takes into account the achievement of the medium-term goals.

Overview of Group financial and ESG goals

Individual performance remuneration mechanism for the business year 2024

The individual performance component constitutes 20% of the STP target. It is based on the achievement of individual objectives predefined at the beginning of the year as part of the performance management process. The individual objectives are set between the CEO and individual members of the Group Executive Board, and for the CEO, between the Board of Directors and the CEO. The individual objectives are of a more qualitative and strategic nature and are set in two categories. Objectives independent of the function are leadership-related and apply to all GEB members. Functional objectives relate to the function of each individual GEB member.

Outlook

As of the reporting year 2025, to be in line with Geberit's culture, the individual objectives will not longer be considered in the determination of the STP. The STP amount paid out will depend solely on Group results. The individual performance component is replaced by five Group performance metrics (Sales growth, EBITDA margin, EPS growth, ROIC and CO₂ emissions), weighted equally at 20% of the STP (see also 10. Outlook).

Management Share Participation Programme (MSPP)

Members of the Group Executive Board have the opportunity to invest part or all of their STP award in shares of the company through the MSPP. They may define a fixed number of shares to purchase, or a certain amount or a percentage of their STP award to be invested in shares. The shares are blocked for a period of three years. Two free share options are allocated for each share purchased through the programme. The share options are subject to the same performance-based vesting conditions as those applicable to the performance options granted under the Long-Term Participation MSOP programme (see also 7.3 Long-Term Participation programme (LTP)).

In the event of termination of employment, the following provisions apply to MSPP shares and options:

7.3 Long-Term Participation programme (LTP)

The LTP is a performance stock option programme (the Management Stock Option Programme: MSOP) vesting after three years, conditionally upon fulfilling a performance condition, the ROIC. It is designed to retain the members of the GEB and Group management participants in the long term, reward them for long-term value creation, and to align their interest with those of the shareholders.

The LTP target is reviewed annually. In 2024, the Board of Directors approved an adjustment to the target pay mix for the CEO, including an increase of the target LTP to 125% of the annual base salary (2023: 107%) and a decrease of the annual base salary of 4%. These changes were made to further emphasise the long-term focus of the CEO’s remuneration. For the other members of the GEB, the target LTP amounts to 70% of their respective annual base salary and is unchanged compared to the previous year. For some 180 additional participants of the Group management, the fair value at allocation date amounted to 5%, 10% or 15% of the base salary, depending on the level of the role.

At the beginning of the vesting period, a number of performance stock options are allocated to each participant. The target ROIC and the performance corridor is set at the beginning of the performance period by the Board of Directors on the recommendation of the NCC and is measured at the end of the performance period as the average over the three years. The target level and the cap are set at an ambitious level, well above the weighted average cost of capital. The payout curve is challenging to ensure full vesting rewards outstanding performance. For performance below the minimum threshold, no options vest, whereas for performance at the target level, 50% of the maximum options vest. Outperformance is rewarded up to a maximum of 100% vesting (cap) of the allocated options, which is equivalent to the double of the target LTP. The number of options vesting between the minimum threshold and the cap is determined by linear interpolation.

The options can be exercised between the vesting date, which is three years after the grant date, and the expiry date, which is seven years after the vesting date. The exercise price of the options corresponds to the fair market value of the Geberit shares at the time of allocating.

The elements of the 2024 MSOP are outlined below:

Termination conditions

In the event of termination of employment, the following provisions apply to MSOP options:

7.4 Disclosure of targets

Geberit does not have any publicly listed competitors that are active in all its business segments. Geberit’s segment competitors are mostly privately held and disclose very limited financial and performance information. Disclosing forward-looking targets on commercially sensitive information would place Geberit at a competitive disadvantage and ultimately not serve the best interests of our shareholders. Therefore, the decision was made not to disclose the specifics of those targets at the time of their setting, but to provide relevant performance achievements and the resulting payout factors at the end of the cycle. The targets are set in line with the ambition to achieve the medium-term goals which are regularly communicated to shareholders.

See also 9. Remuneration awarded to the Group Executive Board and share ownership in 2024.

7.5 Clawback and malus provisions

In order to ensure good Corporate Governance, Geberit has implemented a clawback policy on payments made under the Short-Term Participation programme and the Long-Term Participation programme. These provisions foresee that in case of financial restatement due to non-compliance with accounting standards and/or fraud, and/or in case of violation of the law or internal rules by a participant, the Board of Directors may deem all or part of any unpaid short-term participation award or unvested long-term share options to be forfeited (malus provision) and/or may seek reimbursement of all or part of any paid short-term participation award or vested long-term share options. The clawback and malus provisions may be enacted for a period of three years following the year subject to a financial restatement and/or the year of the fraudulent behaviour.

7.6 Share ownership guidelines

In order to bring the interests of the members of the Group Executive Board into line with those of the shareholders and to strengthen their ties to the company, the CEO and each member of the Group Executive Board must satisfy the minimum requirements with respect to the ownership of shares in Geberit. The members of the Group Executive Board are required to build up and own at least a minimum multiple of their annual base salary in Geberit shares within five years of their appointment to the Group Executive Board or introduction of this policy, as set out below.

To further reflect the importance the Board of Directors places on the alignment with shareholders’ interests, the minimum shareholding requirements for the GEB members have been defined as follows:

For this calculation, all vested shares are considered, regardless of whether they are blocked or not. However, unvested awards are excluded. The NCC reviews compliance with the share ownership guideline on an annual basis.

As of year-end 2024, the GEB members comply with the respective ownership guidelines. The CEO holds the equivalent of 12.1 times his annual base salary in Geberit shares, and the other GEB members hold on average 3.7 times their annual base salary in Geberit shares.

The shareholding of the Group Executive Board is presented in 12. Summary of shares and options held by the Board of Directors, Group Executive Board and Employees.

7.7 Pension and benefits

Members of the Group Executive Board participate in the regular employee pension fund applicable to all employees in Switzerland. The retirement plan consists of a basic plan covering annual earnings up to TCHF 154, with age-related contribution rates equally shared between the company and the individual, and a supplementary plan (collective foundation in accordance with Art. 1e BVV 2 [Ordinance on Occupational Retirement, Surviving Dependants’ and Disability Pension Plans]) in which income in excess of TCHF 154 is insured (including actual variable remuneration), up to the maximum amount permitted by law.

Furthermore, each member of the Group Executive Board is entitled to a company car and a representation allowance in line with the expense regulations applicable to all members of management in Switzerland and approved by the tax authorities.

7.8 Employment terms and conditions

All members of the Group Executive Board have permanent employment contracts with notice periods of a maximum of one year. Members of the Group Executive Board are not entitled to any severance payment.

The employment contracts of the GEB members may include post-employment non-competition clauses for a duration of eighteen months. In case the company decides to activate the post-employment non-competition provisions, the compensation paid may not exceed 50% of the last annual cash compensation (annual base salary and STP).