1 Remuneration governance
1.1Articles of Association
Our Articles of Association1 include the principles governing remuneration. The key provisions are summarized below.
Table 1:Articles of Association
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Votes on compensation Article 13 |
The general meeting approves, separately and bindingly, the aggregate amounts of: (i) the maximum compensation of the Board of Directors for the term of office until the next general meeting that may be paid or allocated; and (ii) the maximum overall compensation of the Executive Committee (fixed and variable based components) that may be paid or allocated in the subsequent business year. |
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Principles of compensation Board of Directors Article 25 para. 1 |
The compensation of the members of the Board of Directors consists of fixed compensation elements and may comprise variable compensation elements; the fixed compensation comprises a fixed base fee and fixed fees for chairmanship and memberships in Board committees or for roles of the Board of Directors as well as a lump sum compensation for expenses; the variable compensation (if applicable) comprises performance-related compensation elements and financial instruments (e.g., performance stock units (PSU)) and depends on the achievement of strategic and/or financial targets set in advance by the Board of Directors over the course of a performance period defined by the Board of Directors. The compensation is awarded in cash, in form of shares in the Company and other benefits. |
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Additional services by Directors Article 25 para. 3 |
Members of the Board of Directors providing consulting services to PolyPeptide in a function other than as members of the Board of Directors may be compensated in cash according to standard market rates subject to approval by the general meeting. |
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Principles of compensation Executive Committee Article 26 para. 1 |
Compensation for members of the Executive Committee consists of fixed base compensation in cash as well as variable compensation. The fixed compensation comprises the base compensation and may comprise additional compensation elements and benefits. The variable compensation may comprise short-term and long-term compensation components. Compensation to members of the Executive Committee may be awarded in cash, in form of shares in the Company and other benefits. |
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Short-term and long-term variable compensation Article 26 paras 2-4 |
Short-term variable compensation of the Executive Committee depends on the achievement of targets set in advance by the Board of Directors over the course of a one-year performance period; the long-term variable compensation of the Executive Committee shall take into account the sustainable long-term performance and strategic objectives of PolyPeptide and achievements are generally measured based on a period of several years. |
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Agreements related to compensation and maximum contract terms of the Executive Committee Article 24 |
The employment agreements of the members of the Executive Committee shall in principle be concluded for an indefinite period. If the Board of Directors considers a fixed term appropriate, such fixed term shall not exceed one year. Employment agreements for an indefinite term may have a termination notice period of maximum 12 months; non-competition obligations for the time following termination of an employment contract with members of the Executive Committee and the associated compensation are permitted to the extent that this is justified from a business perspective. The compensation for such a non-competition undertaking shall not exceed the last paid fixed annual compensation of such member. |
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Additional compensation for new members of the Executive Committee Article 29 |
If newly appointed or promoted members of the Executive Committee take office after the general meeting has approved the aggregate maximum amount of compensation of the members of the Executive Committee for the next business year, such newly appointed or promoted members may receive a compensation in each case of up to 50% of the last aggregate maximum amount of compensation for the Executive Committee approved by the general meeting. |
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Loans and credits Article 28 para. 1 |
The Company shall not grant loans, credits, pension benefits (other than in the context of occupational pension) or securities to the members of the Board of Directors or the Executive Committee. Advance payments of fees for lawyers, court fees and similar costs relating to the defense against corporate liability claims up to a maximum amount of CHF 1,000,000 are permitted. |
In addition, our Organizational Regulations2, including the Charter of the Remuneration and Nomination Committee, further describe and define the roles and responsibilities of the Remuneration and Nomination Committee and the Board of Directors.
1.2Role and activities of the Board of Directors and shareholders
As provided for in the OaEC and our Articles of Association, our shareholders have significant influence on the compensation of PolyPeptide’s governing bodies and annually approve the maximum aggregate compensation for the members of our Board of Directors and Executive Committee for the applicable periods.
At PolyPeptide, the approach to remuneration is mainly structured by the Remuneration and Nomination Committee, with our Board of Directors being ultimately responsible for ensuring that we comply and implement our shareholders’ resolutions on compensation matters as well as adhere to statutory compensation provisions and the compensation principles set out in our Articles of Association.
The decision-making relationship between our shareholders, the Board of Directors and the Remuneration and Nomination Committee is illustrated below.
Table 2:Responsibilities regarding compensation decisions
The Board of Directors will submit three separate compensation-related resolutions for shareholder approval at the upcoming general meeting 2022:
- The maximum aggregate amount of compensation of the Board of Directors for the term of office ending at the conclusion of the next general meeting (i.e., until the next general meeting in 2023);
- The maximum overall compensation of the Executive Committee (fixed and variable based components) for the financial year 2023; and
- The aggregate amount of compensation to members of the Board of Directors for consulting services to PolyPeptide in a function other than as members of the Board of Directors for the term of office ending at the conclusion of the next general (i.e., until the next general meeting in 2023).
In addition, the Board of Directors will submit this Remuneration Report to shareholders for a separate consultative vote.
Table 3:Structure of shareholder voting on compensation at the AGM 2022
The Board of Directors may divide the maximum overall compensation of the Executive Committee to be proposed for approval into a maximum fixed and maximum variable compensation and submit the respective proposals for separate approval by the general meeting. Further, the Board of Directors may present to the general meeting deviating or additional proposals for approval in relation to the same or different time periods.
If the general meeting does not approve the amount of the proposed fixed and variable compensation, as the case may be, the Board of Directors may either submit new proposals at the same general meeting, convene a new extraordinary general meeting and make new proposals for approval or may submit the proposals regarding compensation for retrospective approval at the next general meeting.
1.3Role and activities of the Remuneration and Nomination Committee
The Remuneration and Nomination Committee is entrusted with preparing and periodically reviewing PolyPeptide’s compensation policy, compensation strategy and principles and the performance criteria related to compensation and periodical review of their implementation as well as submitting proposals and recommendations to the Board of Directors regarding compensation matters. The Remuneration and Nomination Committee further supports the Board of Directors in preparing the compensation proposals for the general meeting. In addition, the Remuneration and Nomination Committee assists the Board of Directors in relation to the succession planning for and nomination of the members of the Board of Directors and the Executive Committee as well as the corporate governance of the Company and the Group. In furtherance of this, the Remuneration and Nomination Committee, for example, regularly assesses the set of competencies as well as each Director’s contributions to ensure that an appropriate mix of skills, expertise and diversity is represented on the Board of Directors and its Committees. The specific responsibilities and competencies of the Remuneration and Nomination Committee are set forth in art. 19 of the Articles of Association, section 5.3 of the Organizational Regulations as well as the Remuneration and Nomination Committee Charter.
The Remuneration and Nomination Committee consists of at least two members of the Board of Directors that are elected individually and annually by the general meeting. The term of office of the members of the Remuneration and Nomination Committee is one year. In this context, one year means the time period between one general meeting and the next or, if a member is elected at an extraordinary shareholders' meeting between such extraordinary shareholders' meeting and the next general meeting. Re-election is possible. The chairman of the Remuneration and Nomination Committee is independent and is appointed by the Board of Directors. As of 31 December 2021, the Remuneration and Nomination Committee consisted of two members (Peter Wilden and Philippe Weber) and was chaired by Philippe Weber.
The Remuneration and Nomination Committee meets at such frequency as it deems necessary to fulfill its duties, normally ahead of ordinary Board meetings, which are expected to take place at least four (4) times per year. Additional meetings may be held and may be convened at the request of either the Board of Directors or any Remuneration and Nomination Committee member. Since PolyPeptide had its first day of trading on 29 April 2021, the Remuneration and Nomination Committee met three (3) times with all members present, in a combination of in-person sessions and video conferences, for an average duration of one and a half hours.
The Remuneration and Nomination Committee keeps the Board of Directors informed on a regular basis about all important strategic issues, transactions as well as any business situations and/or developments within its scope of responsibilities and duties. In addition, the chairman of the Remuneration and Nomination Committee provides the full Board of Directors at their meeting with an overview of key topics discussed at the most recent Remuneration and Nomination Committee meeting. The signed minutes from each Remuneration and Nomination Committee meeting are also circulated to the full Board once available for their review.
The Remuneration and Nomination Committee may invite to meetings and communicates periodically with the CEO, the CFO and the Director Global Human Resources, as well as such other persons (including external specialist advisors) as the Remuneration and Nomination Committee deems appropriate. Such individuals may attend meetings without the right to vote as guests, except where not appropriate (e.g., if particular matters relating to their performance or remuneration are discussed).
During the year ended 31 December 2021, the Remuneration and Nomination Committee worked with HCM International Ltd., Zurich (“HCM International”) as external independent advisor on remuneration matters, in particular with regards to the development of the long-term incentive program. HCM International did / does not have any additional mandates at PolyPeptide.
In accordance with art. 19 of the Articles of Association and the Remuneration and Nomination Committee Charter, the Remuneration and Nomination Committee discussed the following topics at its meetings in 2021:
- Review of remuneration principles, strategy and structure
- Establishment of rules for the long-term incentive program
- Individual performance targets and weighting for the 2021 variable short-term incentive for the members of the Executive Committee
- Individual performance targets for the 2021 variable long-term incentive for the CEO
- The structure and approach to the Remuneration Report 2021, including analysis on remuneration disclosure
- Succession planning at PolyPeptide
- Review results of reference group benchmarking in relation to the long-term incentive program as well as Board and Executive Committee remuneration
For more information, see also section 3.5.3.1 “Remuneration and Nomination Committee” of the Corporate Governance Report 2021.