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4 Remuneration paid to the Group Executive Board
- Total remuneration is competitive and is in an appropriate relation to the market as well as the internal salary structure.
- Remuneration is based on performance in line with the results achieved by Swisscom and the contribution made to results by the area for which the member of the Group Executive Board is responsible.
- Through direct financial participation in the performance of Swisscom’s shares, the interests of management are aligned with the interests of shareholders.
The basic principles regarding the performance-related remuneration and the profit and participation plans of the Group Executive Board are set out in the Articles of Incorporation (Article 8.1), which can be accessed on the Swisscom website under “Basic principles”.See
For the purpose of assessing market values, Swisscom regularly takes part in market comparisons carried out by renowned consultancy firms. In the year under review, Swisscom referred to two comparative studies: the “Swiss Headquarters Executive Total Compensation Measurement Study” by Aon Hewitt covers 78 Swiss companies and international groups in all sectors with global or regional headquarters in Switzerland, average revenues of CHF 2.4 billion and an average workforce of 6,500. The international “European Executive Survey”, also produced by Aon Hewitt, covers 37 European groups, mainly telecommunications companies, with average revenues of around CHF 30 billion and an average workforce of 73,000 (FTEs). Due to their numerous reference companies, both studies provide the basis for a representative comparison. In the evaluation of these studies, Swisscom takes into account the sector as well as the extent of responsibility in terms of revenue, number of employees and international scope. During the reporting year, Swisscom adjusted the remuneration of two Group Executive Board members to reflect these benchmarks, to take account of the performance of these members in partially extended functions and to ensure a salary that is in line with the market. The second stage in a salary increase granted to one member in the prior year as of 1 April 2014 and 1 April 2015 was also implemented.
4.2 Remuneration components
The base salary is the remuneration paid according to the function, qualifications and performance of the individual member of the Group Executive Board. It is determined based on a discretionary decision taking into account the external market value for the function and the salary structure for the Group’s executive management. The base salary is paid in cash.
Performance-related salary component
The members of the Group Executive Board are entitled to a variable, performance-related salary component which represents 70% of the base salary if objectives are achieved (target bonus). The amount of the performance-related component paid out depends on the extent to which the targets are achieved, as set by the Compensation Committee, taking into account the performance evaluation by the CEO. If targets are exceeded, up to 130% of the target bonus may be paid. The maximum performance-related salary component is thus limited to 91% of the base salary. This ensures that the maximum performance-related salary component does not exceed the annual base salary, even taking account of the market value of the component paid in shares.
Targets for the variable performance-related component
All members of the Group Executive Board are measured against targets at the levels “Group”, “Customers” and “Segments”. Group targets consist of financial targets. Customer targets for the reporting year are measured using the Net Promoter Score – a recognised indicator of customer loyalty – taking into consideration the customer group for which the Group Executive Board member is responsible. Further information on customer satisfaction can be found in the Management Commentary.See report
The following table illustrates the target structure valid for the CEO and other Group Executive Board members in the year under review, showing the three target levels, individual targets and the respective weighting.
Weighting of targets level
|Weighting of targets level
of other members of the
Group Executive Board
|Operating free cash flow||24%||16–24%|
|Customers||Net promoter score||30%||25%|
Achievement of targets
In the year under review, the financial Group targets were met. Depending on the segment, the customer objectives were in some cases not fully achieved and in some cases exceeded. The other targets of the segments were largely achieved and partially exceeded. The resulting payment of the performance-related component is 99% for the CEO and between 95% and 104% of the target bonus for the other members of the Group Executive Board.
Payment of the variable performance-related component
The variable performance-related component is paid in April of the following year, with 25% being paid in the form of Swisscom shares, in accordance with the Management Incentive Plan. Group Executive Board members have an option to increase this share up to a maximum of 50%. The remaining portion of the performance-related component is settled in cash. In the event of a departure during the course of the year, the payment of the performance-related component for the current year is generally made in full in cash. The decision of what percentage of the variable performance-related salary component is to be drawn in the form of shares must be communicated prior to the end of the reporting year, but no later than in November following publication of the third-quarter results. In the year under review, two members of the Group Executive Board opted for a higher share component. The shares are allocated on the basis of their tax value, rounded up to whole numbers of shares, and are subject to a three-year blocking period. The share-based remuneration disclosed in the year under review is augmented by a factor of 1.19 in order to take account of the difference between the market value and the tax value. The market value is determined as of the date of allocation. Shares in respect of the current year are allocated in April 2016. Further information on the Management Incentive Plan can be found in Note 11 to the consolidated financial statements.See report
In April 2015, a total of 1,268 shares (2013: 1,599 shares) with a tax value of CHF 473 (prior year: CHF 449) per share and a market value of CHF 563 (prior year: CHF 534.50) per share were allocated for the 2014 financial year to the members of the Group Executive Board.
Restricted share plan
Swisscom has so far not allocated any restricted share units to members of the Group Executive Board.
Pension fund and fringe benefits
With regards to the disclosure of services rendered and non-cash benefits and expenses, these are dealt with from a tax point of view. The members of the Group Executive Board are entitled to the use of a company car. The disclosed services rendered and non-cash benefits therefore include an amount for private use of the company car. Out-of-pocket expenses are reimbursed on a lump-sum basis in accordance with expense reimbursement rules approved by the tax authorities, and other expenses are reimbursed on an actual cost basis. They are not included in the reported remuneration.
4.3 Total remuneration
The following table shows total remuneration paid to the members of the Group Executive Board for the 2015 and 2014 financial years, broken down into individual components and including the highest amount paid to one member. In the year under review, the variable performance-related salary component (CHF 2,810 thousand in total) was 74.4% of the base salary (CHF 3,775 thousand in total). The total remuneration paid to the highest-earning member of the Group Executive Board (CEO, Urs Schaeppi) increased by 3.3% compared to the prior year. This is primarily attributable to higher age-related occupational pension plan contributions as well as the choice of a higher proportion of shares in the performance-related component. The increase in total remuneration paid to the Group Executive Board is primarily attributable to the salary increases granted for three members of the Group Executive Board in the year under review as well as the age-related increase in the level of retirement provision contributions for three members of the Group Executive Board.
In CHF thousand
|Fixed base salary paid in cash||3,775||3,622||882||882|
|Variable earnings-related remuneration paid in cash||1,792||1,969||336||463|
|Variable earnings-related remuneration paid in shares 1||1,018||712||327||184|
|Service-related and non-cash benefits||85||60||17||18|
|Employer contributions to social security 2||538||481||126||116|
|Total remuneration to members of the Group Executive Board||8,024||7,540||1,832||1,773|
|Benefits paid following retirement from Group Executive Board 3||–||252||–||–|
|Total remuneration to members of the Group Executive Board including benefits paid following retirement from Group Executive Board||8,024||7,792||1,832||1,773|
1 The shares are reported at market value and are blocked from sale for three years.
2 Employer contributions to social security (AHV, IV, EO and FAK, incl. administration costs, and daily sickness benefits and accident insurance) are included in the total remuneration.
3 “Benefits paid following departure from the Group Executive Board” indicates the contractually stipulated remuneration paid to those stepping down from the Group Executive Board in the respective year under review that were paid during the notice period up to the date of departure This amount includes the social security contributions made by the employer as well as retirement benefits.
4.4 Minimum shareholding requirement
Since 2013, the members of the Group Executive Board have been required to hold a minimum amount of Swisscom shares. The minimum shareholding to be held by the CEO shall be equivalent to two years’ basic salary. The remaining members shall maintain a shareholding equivalent to one year’s basic salary. The members of the Group Executive Board have four years to build up the required minimum shareholding in the form of the blocked shares paid as part of remuneration and, if applicable, through share purchases on the open market. Compliance with the shareholding requirement is reviewed annually by the Compensation Committee. If a member’s shareholding falls below the minimum requirement due to a drop in the share price or a salary adjustment, the difference must be made up by no later than the time of the next review. In justified cases such as personal hardship or legal obligations, the Chairman of the Board of Directors can approve individual exceptions at his discretion.
4.5 Shareholdings of the members of the Group Executive Board
Blocked and non-blocked shares held by members of the Group Executive Board or related parties as at 31 December 2015 and 2014 are listed in the table below:
|Urs Schaeppi (CEO)||2,602||2,275|
|Hans C. Werner||571||421|
|Marc Werner 1||211||106|
|Christian Petit 2||1,525||1,332|
|Roger Wüthrich-Hasenböhler 3||1,032||879|
|Heinz Herren 3||1,098||1,122|
|Total shares of the members of the Board of Directors||7,860||6,769|
1 Joined the Group Executive Board as of 1 January 2014.
2 Rejoined the Group Executive Board as of 1 April 2014.
3 Rejoined the Group Executive Board as of 1 January 2014.
No share of the voting rights of any person required to make disclosure thereof exceeds 0.1% of the share capital.
4.6 Employment contracts
The employment contracts of the members of the Group Executive Board are subject to a twelve-month notice period. No termination benefits are payable in addition to the salary payable for a maximum of twelve months. The employment contracts stipulate that Swisscom may allow wrongfully awarded or paid remuneration to expire or reclaim such remuneration. They do not contain a clause on change of control.