7. Group Executive Board: remuneration and share/option ownership in 2022

This section was audited by the external auditor.

7.1 Performance in 2022

In 2022, net sales decreased by 2.0% to CHF 3,392 million. This slight decrease was due to negative currency effects of CHF 234 million. In local currencies, net sales growth was 4.8%. This growth was driven by strong sales price increases of around 9% and continued strong volume growth in the first half of the year. Volumes reached a new record level in the first half of the year due to the build-up of inventories at wholesalers as a result of the extraordinary price increases. In the second half of the year, volumes declined sharply. This was caused by the anticipated destocking of the excess wholesale inventory, and also by the end of the COVID-19-induced home improvement trend from previous years. However, the successful launches of new products and strong growth in emerging markets outside of Europe had a positive effect on volume growth. When compared with 2019 – and thus with net sales before the COVID-19 pandemic – strong growth after currency adjustments of 22% was seen across all regions.

The massive increase in costs as well as currency developments had an extremely negative impact on results on all levels in 2022. Operating cashflow (EBITDA) decreased by 15.0% to CHF 909 million, which corresponds to an EBITDA margin of 26.8% (previous year 30.9%). In the reporting year, the currency-adjusted prices for raw materials and energy rose by 19% and 101%, respectively, compared to the previous year. Due to the multi-level distribution channel seen in the sanitary industry, adjustments to the sales price can only be implemented with a delay, meaning it was not yet possible to fully offset the higher raw material and energy prices in 2022. Tariff-related increases in personnel expenses, additional investments in digitalisation and unfavourable currency developments also had a negative impact on operating margins. The decline in the operating result, a financial result practically in line with the level seen in the previous year and a significantly lower tax rate due to a positive one-off effect led to a less than proportional decrease in net income of 6.5% to CHF 706 million. This corresponds to a return on net sales of 20.8% (previous year 21.8%). The accelerated share buyback programme had a positive effect on earnings per share, which only decreased by 4.0% to CHF 20.48 (previous year CHF 21.34). In local currencies, earnings per share increased by 4.7%. The return on invested capital (ROIC) decreased slightly to 26.5% (previous year 27.1%).

The variable 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, EBITDA margin and ROIC as well as reduction of the CO₂ emissions. The achievement varied by key performance indicator, whereas the weighted average of all key figures which is taken to calculate the variable remuneration was above target. The achievement of qualitative individual targets is also taken into consideration.

7.2 Remuneration awarded in 2022

The remuneration of the Group Executive Board amounted to TCHF 9,436 in 2022 (previous year TCHF 10,715). The remuneration of the CEO amounted to TCHF 3,148 in the same period (previous year TCHF 3,175). The total remuneration of the Group Executive Board was lower in 2022 compared to the previous year. The CEO’s variable remuneration represented 68.3% of his fixed remuneration. For the other members of the Group Executive Board, the variable remuneration represented between 61.1% and 68.3% of their individual fixed remuneration (plus representation allowance).

At the 2021 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 2022. The remuneration awarded for that period amounts to TCHF 9,436 and is within the approved amount.

The main reasons for the decrease of the total remuneration compared to the previous year are in particular:

• decrease of variable remuneration due to lower achievement of the company performance objectives
• lower contributions to social security funds
• slight decrease in aggregate base salaries due to changes in the composition of the Group Executive Board

Further information on the remuneration awarded to the Group Executive Board for the business year 2022, compared with the maximum potential amount of remuneration, is provided with the invitation to the ordinary Annual General Meeting 2023.

The following table shows details of remuneration (gross) for 2022 and 2021:

The parameters taken into consideration in the option valuation model are set out in Consolidated Financial Statements Geberit Group, Note 17.

7.3 Shareholdings of the Group Executive Board

As of the end of 2022 and 2021, the members of the Group Executive Board held the following shares in the company:

As of 31 December 2022, 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.