The table below shows the breakout of the Executive Committee Compensation.
Executive Committee's Compensation 1
Cash payments and benefits
|Short-term incentive (cash)2||4.458||3.573|
|Post-employment benefits / other benefits 3||1.741||1.444|
|Value of STIP paid out in shares 4||1.238||0.441|
|Value of LTIP equity at market value 5
(number of equity awards 2017: 17,805 / 2016: 18,872)
|Ratio of fixed compensation to the performance-related components of compensation (without termination payment)||47.45%||50.11%|
The increase in base salary in the aggregate is due to an increase in the number of EC members in 2017 as well as salary increases to current Executive Committee members as approved by shareholders at the AGM 2017.
Throughout 2017 Lonza continued to deliver record financial results with outstanding improvements across all key performance indicators, leading to the best full-year results in Lonza’s history. The strong sales growth and high margin improvement are the result of diligent and disciplined application of Lonza’s successful strategy. Compared with the STIP target achievement for the financial year 2016, the proposed STIP payout for the financial year 2017 represents an increase of 41.9%. This increase in its entirety is due to the improved business performance and underlines the sustained overall performance of the past years and is attribuable to the increase of the number of Executive Committee members in 2017.
The number of LTIP Equity Awards decreased in 2017 (2016: 18,872 versus 2017: 17,805) due to an increase in share price on the date of grant of CHF (2016: CHF 156.30 and 2017: CHF 180.90). Note that the value of LTIP Equity Awards in CHF increased from CHF 2.950 million in 2016 to CHF 3.221 million in 2017. The 2017 LTIP Equity Award budget was approved by shareholders in April 2017.
No loans or credits were granted to current or former members of the Executive Committe 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 Executive Committee members nor to persons closely linked to them. No member of the Executive Committee benefits materially from any contract between a Lonza company and a third party.
Performance-Related vs. Fixed Compensation
As illustrated below (in million CHF), Lonza’s excellent financial performance has increased the ratio of performance-related vs. fixed compensation.