3 Compensation of the Board of Directors

3.1 Principles

Objective and Benchmarks

The 2017 benchmark data which the NCC reviewed and applied for the Board of Directors’ compensation assessment was based on Swiss companies (various sectors) that are comparable in type of business, complexity, size and global presence to Lonza. 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. In 2017, the NCC and Board of Directors amended the peer group to reflect Lonza’s inclusion in the SMI (Swiss Market Index of 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 associated compensation of the Chairperson of the Board of Directors was approved by the 2018 AGM. For all other members of the Board of Directors, fees have remained unchanged since 2016, with the exception of the Vice-Chairperson, who no longer received additional fees.

3.2 Compensation Components

For the period from the AGM 2018 to the AGM 2019, the members of the Board of Directors receive fixed gross compensation for Board of Directors membership and additional compensation for committee chairpersons and committee members as described in the table below.

Compensation Board of Directors AGM 2018 to 20191

CHF

 

Annual fee

 

Additional committee membership fee

 

Additional committee
chairperson fee

 

 

 

 

 

 

 

1

Refer to section 3.3 regarding total compensation (including national employer social contributions) provided to the Board of Directors in the 2018 financial year. The table above represents the period from AGM 2018 to AGM 2019 and does not include social contributions of the employer

Board of Directors member

 

200,000

 

40,000

 

80,000

Chairperson of the Board of Directors

 

600,000

 

 

 

 

The compensation of the Chairperson of the Board of Directors includes his compensation as a member of the Innovation and Technology Committee of the Board of Directors.

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

Board of Directors’ compensation for 2018 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

CHF

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

 

 

 

2017

 

 

Net cash payment

 

Number of shares

 

2Value of shares

 

3Social security and taxes

 

4Total

 

Net cash payment

 

Number of shares

 

2Value of shares

 

3Social security and taxes

 

4Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Rolf Soiron chose not to stand for re-election at the AGM 2018

2

The fair values were calculated using the average closing share price of the last five business days of each quarter, see note 25 in the Financial Report

3

The social security amounts disclosed in this column represent the full costs of the employer and employee social security contributions and withholding tax

4

Total compensation amounts refer to gross payments, including social security and withholding tax, except where stated otherwise

5

This compensation includes Albert Baehny’s committee membership. Albert Baehny is also a member of the Innovation and Technology Committee

6

Patrick Aebischer, Christoph Mäder and Margot Scheltema are Chairpersons of a Board of Directors Committee

7

Thomas Ebeling did not stand for re-election at the AGM 2017
Jean-Daniel Gerber did not stand for re-election at the AGM 2018

8

Angelica Kohlmann and Olivier Verscheure were elected to the Board of Directors at the AGM 2018

9

Includes additional social security provision for Antonio Trius in 2018

Rolf Soiron
Chairperson1

 

51,163

 

249

 

56,234

 

10,175

 

117,572

 

204,657

 

1,010

 

224,619

 

40,686

 

469,962

Albert Baehny5
Chairperson / Vice-Chairperson

 

238,636

 

964

 

261,954

 

47,728

 

548,318

 

101,631

 

471

 

112,081

 

21,170

 

234,882

Patrick Aebischer6

 

124,651

 

526

 

139,429

 

28,524

 

292,604

 

124,638

 

628

 

139,626

 

28,549

 

292,813

Werner Bauer

 

109,566

 

451

 

119,558

 

20,868

 

249,992

 

109,558

 

538

 

119,656

 

20,884

 

250,098

Thomas Ebeling7

 

 

 

 

 

 

 

 

 

 

 

26,599

 

161

 

29,901

 

6,229

 

62,729

Jean-Daniel Gerber7

 

31,925

 

154

 

34,779

 

6,150

 

72,854

 

127,674

 

628

 

139,626

 

24,651

 

291,951

Angelica Kohlmann8

 

38,694

 

319

 

89,747

 

59,780

 

188,221

 

 

 

 

 

 

 

 

 

 

Christoph Mäder6

 

120,167

 

504

 

134,461

 

27,537

 

282,165

 

106,705

 

538

 

119,656

 

24,598

 

250,959

Barbara Richmond

 

60,104

 

451

 

119,558

 

91,412

 

271,074

 

60,063

 

538

 

119,656

 

91,454

 

271,173

Margot Scheltema6

 

75,733

 

526

 

139,429

 

64,267

 

279,429

 

75,674

 

628

 

139,626

 

64,328

 

279,628

Jürgen Steinemann

 

64,904

 

451

 

119,558

 

55,096

 

239,558

 

64,863

 

538

 

119,656

 

55,137

 

239,656

Antonio Trius

 

54,936

 

451

 

119,558

 

129,5389

 

304,032

 

64,863

 

538

 

119,656

 

55,137

 

239,656

Olivier Verscheure8

 

38,694

 

319

 

89,747

 

59,780

 

188,221

 

 

 

 

 

 

 

 

 

 

Total

 

1,009,173

 

5,365

 

1,424,012

 

600,855

 

3,034,040

 

1,066,925

 

6,216

 

1,383,759

 

432,823

 

2,883,507

The reasons for the increase in Board compensation in 2018 were the alignment of the fee for the chairperson of the Board of Directors based on the overall growth of Lonza during 2016 and 2017 (e.g. acquisition of Capsugel); the resulting increase in the complexity and obligations of the role; the inclusion of Lonza in the Swiss Market Index (SMI); and to ensure competitiveness of the chairpersonship fee versus market rates. This increase of the compensation of the Chairperson of the Board of Directors was approved by the AGM shareholders’ vote in May 2018.

No loans or credits were outstanding as of 31 December 2018. During 2018, 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.