3 – Compensation of the Board of Directors 

3.1 Principles

Objective and Benchmarks  

The NCC determined that they would again use benchmark data of Swiss companies (various sectors) that are comparable in type of business, complexity, size and global presence to Lonza in determining competitive Board of Directors’ Compensation. Lonza’s objective is to pay the members of the Board of Directors at the median of this benchmark group in accordance with their respective duties and responsibilities 1.

Overall Structure and Level of Compensation  

The overall structure and level of compensation of the Board of Directors remained unchanged between 2015 and 2016.

3.2 Compensation Components

For the period from the Annual General Meeting (AGM) 2016 to the AGM 2017, the members of the Board of Directors receive fixed gross compensation for Board of Directors membership and additional compensation for committee chairperson and committee memberships as described below:

Compensation Board of Directors AGM 2016 to AGM 2017 2

CHF Annual fee Additional committee membership fee Additional committee chairperson fee
       
Board of Directors Member  200,000 40,000 80,000
Chairman of the Board of Directors 450,000    

The compensation of the Chairman of the Board of Directors includes his remuneration as a member of the Innovation and Technology Committee of the Board of Directors.

The total compensation of the Committee chairpersons amounts to CHF 280,000 and includes the Committee membership fee.

Board of Directors’ compensation for 2016 is paid quarterly; 50% of the compensation is paid in cash and 50% in performance shares. The number of shares granted for Board of Directors’ compensation is based on the average closing share price of the last five business days of each quarter. Share restrictions lapse after three years from the grant date. Shares are eligible for a dividend. This structure of Board of Directors compensation is closely aligned with our shareholders’ interests.

The members of the Board of Directors do not receive variable compensation. The members of the Board of Directors are reimbursed for travel and other related expenses associated with their responsibilities as members of the Board of Directors of Lonza.

3.3 Aggregate Compensation of the Board of Directors

Board of Directors' Compensation

  2016 2015
  Net cash payment Number of shares  Value of shares4  Social security and taxes5  Total6  Net cash payment Number of shares  Value of shares4  Social security and taxes5 Total6
  CHF   CHF CHF CHF CHF   CHF CHF CHF
Rolf Soiron
Chairman 3
204,648 1,329 224,723 40,704 470,075 206,801 1,776 235,316 41,976 484,093
Patrick Aebischer 7  124,624 826 139,683 28,576 292,883 126,510 1,101 145,926 29,114 301,550
Werner Bauer  109,547 707 119,539 20,905 249,991 108,352 943 124,997 25,054 258,403
Thomas Ebeling   106,693 707 119,539 24,620 250,852 108,352 943 124,997 25,054 258,403
Jean-Daniel Gerber 7  127,662 826 139,683 24,677 292,022 128,935 1,105 146,414 25,519 300,868
Christoph Mäder 80,094 521 89,596 18,391 188,081          
Barbara Richmond 60,011 707 119,538 93,109 272,658 68,770 898 119,503 81,147 269,420
Margot Scheltema 7  75,613 826 139,684 64,386 279,683 82,960 1,032 137,502 65,791 286,253
Jürgen Steinemann8 61,411 707 119,538 61,418 242,367 44,775 581 80,160 128,168 253,103
Antonio Trius9 64,812 707 119,538 137,515 321,865 71,109 885 117,916 56,391 245,416
                     
Total 1,015,115 7,863 1,331,061 514,301 2,860,477 946,564 9,264 1,232,731 478,214 2,657,509

The increase in Board of Directors compensation in 2016 was due primarily to the addition of Christoph Mäder to the Board of Directors in April 2016.

No loans or credits were granted to current or former members of the Board of Directors during 2016 (nor in 2015). No loans or credits were outstanding as of 31 December 2016. During 2016, no payments (or waiver of claims) were made to current or former Board members nor to persons closely linked to them. No member of the Board of Directors benefits materially from any contract between a Lonza company and a third party.

For a full review of the historical development of compensation for the Board of Directors, see note 24 in the Lonza Financial Report.