Compensation and Performance Overview 2017 Audited


Lonza’s compensation philosophy is designed to attract and retain talent through competitive compensation programs. Lonza's compensation programs are performance based, linking employee rewards with company and individual performance. Executive compensation is aligned with the short-­term and long-­term objectives of Lonza; results are measured based on achievement of specific goals that are aligned with the short-­term and long­-term objectives. Our performance goals are selected to achieve a balance between desired short-­term and long­-term outcomes. In this way, we encourage strategic decisions for competitive advantage and discourage executives from taking unnecessary or excessive risks that would threaten the reputation or sustainability of the Company.  The financial impact of the Capsugel integration was excluded from the CORE results which are relevant for the STIP payout and LTIP vesting. 

For 2017 Lonza’s overall financial performance vs. short-­term incentive plan (STIP) targets was as follows:

2017 STIP Payout1: Financial Targets2

million CHF Actual performance
in 20173
Target
weighting in %
Achieved
in %
Proposed 2017
payout % (weighted)
         
CORE EBIT 823.7 50.0 200 100.00
Sales (at target FX rates) 4,459.7 15.0 200 30
Operational cash flow 650.6 15.0 200 30

 

Lonza’s overall financial performance in 2017 vs. long-­term incentive plan (LTIP) targets for 2015 was determined by the Nomination and Compensation Committee (NCC) to approximate the financial performance required to meet Lonza’s challenging strategic goals and support Lonza’s three­-year plan. The 2015 LTIP performance was as follows (plan vested on 31 January 2018):

2015 LTIP Financial Performance4

  Actual performance Payout in %
     
CORE EPS (Earnings Per Share) CHF 11.1 200
CORE RONOA (Return on Net Operating Assets) 27.1% 200