2. Compensation system
2.1 Statutory rules
Art. 31 to 34 of the articles of association of Allreal Holding AG govern the principles of remuneration. They provide that the Board of Directors and Group Management may, in addition to a fixed remuneration, also receive results-based and performance-based compensation as well as equity securities or convertible and/or warrant bonds. Variable remuneration will be dependent on performance targets.
In the case of members of Group Management appointed after the total fixed remuneration for the current year has been approved by the annual general meeting, an additional amount of a maximum of 20% of the fixed total remuneration paid to the respective predecessor is available. This additional amount may not, however, exceed 50% of the approved total remuneration for Group Management.
The articles of association do not contain any special rules regarding loans, credits and pension benefits granted to members of the Board of Directors and Group Management. The exact wording of the articles of association can be accessed on the Allreal website: www.allreal.ch/fileadmin/user_upload/redakteure/anleger/statuten/anleger-statuten-allreal-2014.pdf
2.2 Remuneration paid to the members of the Board of Directors
The members of the Board of Directors receive fixed remuneration, which is paid out after the annual general meeting has approved the annual financial statements.
The remuneration takes account of the duties and responsibilities of individual members and is not tied to company targets. It is regularly reviewed and, subject to the approval of the annual general meeting, set by the Board of Directors. No further remuneration is paid to the Board of Directors.
2.3 Remuneration paid to the members of Group Management
In addition to their fixed basic salary (including fringe benefits and employer’s contributions to the management pension plan), members of Group Management also receive variable remuneration (target bonus), which is paid out in cash and is based on the company’s annual result (performance bonus) and the attainment of individual targets (function bonus). Over and above this, members of Group Management also receive variable remuneration geared to the company’s long-term performance in the form of share allocations.
Fixed basic salary
The amount of the fixed basic salary in cash is dependent on the individuals’ tasks and responsibilities, on their experience and on their proven track record. The basic salary is determined on joining the company or on being appointed to Group Management and is reviewed annually by the Nomination and Compensation Committee.
Target bonus
The amount of the target bonus, consisting of the performance and function bonuses, is set by the Board of Directors annually. The performance bonus is based on the budgeted net operating profit (net profit excl. revaluation effect). If the budget is achieved, the performance bonus will be paid out the following year once the annual financial statements have been approved by the annual general meeting. It will amount to between 27% and 68% of the basic salary, depending on the member of Group Management. If the net operating profit falls short of the budget by 10% or more, no performance bonus will be paid out. If the net operating profit is 10% or more above budget, 150% of the agreed performance bonus will be paid out. The performance bonus for a net operating profit which is less than 10% above or below budget will be calculated on a linear basis.
Function bonus
The function bonus is dependent on the performance of the member of Group Management in his area of responsibility and functions and hence on individual target attainment. The function bonus may make up a maximum of 40% of the target bonus and should amount to between 10% and 26% of the basic salary, depending on the member of Group Management. If the individual targets are not achieved, no bonus will be paid out.
In addition to the variable target bonus, members of Group Management may be awarded an additional variable remuneration component in the form of shares which is geared to the company’s long-term performance. The stock exchange value of the registered allocated shares of Allreal Holding AG must not exceed 10% of the individual’s fixed basic salary for the year in question. Bonus recipients will be able to access half of the shares allocated immediately and the remainder in two years’ time provided their employment contract has not been terminated.
If the budget is achieved, the variable remuneration shall, in principle, make up no more than 100% of the basic salary per member of Group Management.