4.7 – Compensation in Case of Termination1

 

All executive agreements comply with the Swiss Ordinance Against Excessive Pay for Stock-Exchange-Listed Companies. The following outlines the specific termination-related topics included in the agreements of the Executive Committee members and the STIP and LTIP rules and administrative guidelines and practices.

Notice Period

 

All members of the Executive Committee are subject to a 12-month notice period.

Base Pay and Benefits

 

All members of the Executive Committee who terminate their employment will receive their base pay during the 12-month notice period and will be eligible for the benefits relating to the 12-month notice period, such as lump-sum expenses, pension fund plans, health and accident insurance, company car, family/children allowances according to their respective employment agreement.

STIP Payouts in the Event of Termination2

Resignation by the Executive
 

Subject to applicable law, if a member of the Executive Committee resigns at any time prior to distribution of STIP awards such member will not be entitled to any award with respect to the plan year in which their employment is terminated, except if (i) the termination as a result of such resignation occurs after 31 December of the plan year and (ii) the executive was not released from his obligation to work.

Termination by the Company Without Cause  

 

Any member of the Executive Committee whose employment is terminated by the Company without cause will be entitled to a prorated STIP payment relating to the notice period.

Termination by the Company for Cause  
 

Any member of the Executive Committee whose employment is terminated by the Company for cause will not be entitled to the STIP payment relating to the current year (year of termination).

STIP in Change of Control
 

Any member of the Executive Committee whose employment is terminated by the Company without cause or who terminates the employment due to good reason (such as his function/duties/responsibilities being altered or the Company or the successor to Lonza Group Ltd failing to confirm to the executive in writing that no such alteration is intended) within 18 months following a change in control will be entitled to a STIP payment during the termination notice period (pro-rata) based on actual (to the extent it may be determined) or presumed achievement and, if and to the extent the executive is released from an obligation to work, based on assumed target achievement (100%).

LTIP Payouts in the Event of Termination

Resignation by the Executive  

 

Any member of the Executive Committee who resigns will forfeit the right to receive a transfer of any unvested LTIP awards.

Termination by the Company Without Cause

 

Any member of the Executive Committee whose employment is terminated by the Company without cause have unvested shares vest on a pro rata basis based on the number of months worked (including the notice period) during the 36-month performance period for grants 2016 and 2017.

Termination by the Company for Cause
  

Any member of the Executive Committee whose employment is terminated by the Company for cause will forfeit the right to receive a transfer of any unvested LTIP shares.

LTIP in Change of Control  

 

Under the LTIP rules, if a Change of Control occurs, all unvested granted shares shall vest immediately and the granted price shall be the price at which the shares are sold in the transaction resulting in the Change of Control.

Non-Compete Clause

 

Under the terms of the employment agreement of the Executive Committee, members whose employment is terminated agrees that he will not for a period of 6 months following the end of the notice period, be partially or fully employed by any entity that materially competes with the Company or any of its business segments. In case of a breach of the non-competition clause, the executive shall pay damages to the Company. As compensation for the period of non-competition, the executive will receive a monthly consideration equal to the executive’s last monthly base salary minus any new income the executive earns in the relevant month.

The Company may elect to fully or partially release the departing Executive Committee member from this non-competition obligation no later than ten (10) months prior to the end of the notice period.

Claw-Back

 

Any compensation (including fringe benefits) under the employment agreement of the Executive Committee members is subject to claw-back or forfeiture if the compensation is not approved at the AGM.