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
|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|
|Albert M. Baehny5
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.