4.1 – Principles 

Objective and Benchmarks  

Lonza’s objective is to pay the members of the Executive Committee (EC) a base salary in line with the median for the market as described below, with the potential for executives to earn above-median compensation through a combination of competitive short-term and long-term incentive programs if the company outperforms its financial targets. These incentive plans are designed to align the Executive Committee’s objectives with the interests of our shareholders. The total compensation (base salary, variable elements and fringe benefits) of the members of the Executive Committee is benchmarked on a regular basis against the relevant industry.

The following peer groups continued to be used in 2016 to assess total compensation for the Executive Committee.

Peer Groups

Primary peer group Secondary peer groups
European pharmaceutical / chemical sector businesses (all data adjusted to reflect differences in revenue and market value)1 Swiss companies similar in size to Lonza in other sectors 2
US pharmaceutical 3 or chemical 4 companies similar in size to Lonza

The overall structure of compensation for the Executive Committee remained largely unchanged in 2016. For the alignments made to the base salary of the EC and the CEO please refer to the applicable charts in Section 4.3 and Section 4.4.