3. Compensation of the Board of Directors Audited

3.1 Principles

Objective and Benchmarks
  

The NCC determined that they would again in 2017 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.  The NCC and Board of Directors recently amended the peer group to reflect Lonza’s inclusion in the SMI (Swiss Market Index for the Twenty Largest Listed Swiss Companies).  The amended peer group more directly reflects our strategic business direction along the healthcare continuum as well as the transformational organic and inorganic growth of the Company.

Overall Structure and Level of Compensation
  

The position and the associated compensation of Vice-Chairperson of the Board of Directors was approved by the 2017 AGM. All other levels of compensation of the Board of Directors remained unchanged between 2016 and 2017.

3.2 Compensation Components

 

For the period from the Annual General Meeting (AGM) 2017 to the AGM 2018, 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 in the table below.  

Compensation for Board of Directors AGM 2017 to AGM 20181

CHF Annual fee Additional committee membership fee Additional committee chairperson fee
       
Board of Directors Member  200,000 40,000 80,000
Vice-Chairperson of the Board of Directors 300,000    
Chairperson of the Board of Directors 450,000    

The compensation of the Chairperson of the Board of Directors includes his remuneration as a member of the Innovation and Technology Committee of the Board of Directors.  The compensation of the Vice-Chairman of the Board of Directors includes remuneration for guest participation in any Committee meetings.

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

Board of Directors’ compensation for 2017 is paid quarterly; 50% of the compensation is paid in cash and 50% in Lonza restricted 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

  2017 2016
  Net cash payment Number of shares  Value of shares2  Social security and taxes3  Total4  Net cash payment Number of shares  Value of shares2  Social security and taxes3 Total4
  CHF   CHF CHF CHF CHF   CHF CHF CHF
Rolf Soiron1
Chairperson
204,657 1,010 224,619 40,686 469,962 204,648 1,329 224,723 40,704 470,075
Albert M. Baehny5
Vice Chairperson
101,631 471 112,081 21,170 234,882          
Patrick Aebischer6 124,638 628 139,626 28,549 292,813 124,624 826 139,683 28,576 292,883
Werner Bauer  109,558 538 119,656 20,884 250,098 109,547 707 119,539 20,905 249,991
Thomas Ebeling7 26,599 161 29,901 6,229 62,729 106,693 707 119,539 24,620 250,852
Jean-Daniel Gerber6 127,674 628 139,626 24,651 291,951 127,662 826 139,683 24,677 292,022
Christoph Mäder 106,705 538 119,656 24,598 250,959 80,094 521 89,596 18,391 188,081
Barbara Richmond 60,063 538 119,656 91,454 271,173 60,011 707 119,538 93,109 272,658
Margot Scheltema6 75,674 628 139,626 64,328 279,628 75,613 826 139,684 64,386 279,683
Jürgen Steinemann 64,863 538 119,656 55,137 239,656 61,411 707 119,538 61,418 242,367
Antonio Trius8 64,863 538 119,656 55,137 239,656 64,812 707 119,538 137,515 321,865
                     
Total 1,066,925 6,216 1,383,759 432,823 2,883,507 1,015,115 7,863 1,331,061 514,301 2,860,477

The slight increase in Board compensation in 2017 was due primarily to the addition of Albert Baehny to the Board of Directors in April 2017 in the position of Vice-Chairperson of the Board of Directors and Thomas Ebeling not standing for re-election at the AGM 2017.

No loans or credits were granted to current or former members of the Board of Directors during 2017 (nor in 2016). No loans or credits were outstanding as of 31 December 2017. During 2017, 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 25 in the Lonza Financial Report.