3 – Compensation of the Board of Directors
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.
Board of Directors' Compensation
|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|
|Patrick Aebischer 7||124,624||826||139,683||28,576||292,883||126,510||1,101||145,926||29,114||301,550|
|Jean-Daniel Gerber 7||127,662||826||139,683||24,677||292,022||128,935||1,105||146,414||25,519||300,868|
|Margot Scheltema 7||75,613||826||139,684||64,386||279,683||82,960||1,032||137,502||65,791||286,253|
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.