1.1Articles of Association

Our Articles of Association⁴ include the principles governing remuneration. The key provisions are summarized below.

In addition, our Organizational Regulations⁵, 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 CO 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 with 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, the Remuneration and Nomination Committee and the CEO is illustrated below.

Table 2:

Responsibilities regarding compensation decisions

The Board of Directors will submit two separate compensation-related resolutions for shareholder approval at the upcoming general meeting 2024 (“AGM 2024”):

• 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 general meeting in 2025); and
• The maximum overall compensation of the Executive Committee (fixed and variable components) for the financial year 2025.

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 2024

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 submit the proposals regarding compensation for retrospective approval at the next general meeting.

At the general meeting 2023 (“AGM 2023”), the Board of Directors submitted three separate compensation-related proposals, which were all approved by the shareholders:

• 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 general meeting in 2024) in the amount of CHF 1,600,000 (including all employee and employer social security contributions);
• The maximum overall compensation of the Executive Committee (fixed and variable components) for the financial year 2024 in the amount of CHF 7,000,000 (including all employee and employer social security and pension contributions); 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 meeting (i.e., until the general meeting in 2024) in the amount of CHF 200,000.

In addition, shareholders approved the Remuneration Report 2022 in a consultative vote. For a reconciliation of approved compensation for the Board of Directors versus the estimated awarded amounts until the AGM 2024, see section 4.2 “Compensation of the Board of Directors” of this Remuneration Report. For a reconciliation of approved compensation for the Executive Committee versus awarded amounts for the year ended 31 December 2023, see section 5.2.2 “Aggregate compensation of the Executive Committee” of this Remuneration Report. 

1.3Role and activities of the Remuneration and Nomination Committee

The Remuneration and Nomination Committee acts in advisory and preparatory capacities and has no decision-making authority of its own (unless provided with such authority by a special resolution of the Board of Directors). The Board of Directors remains ultimately responsible for the tasks delegated to the Remuneration and Nomination Committee by Swiss law, the Articles of Association or the Organizational Regulations.

The Remuneration and Nomination Committee is entrusted with preparing and periodically reviewing PolyPeptide’s compensation policy, compensation strategy and principles as well as the performance criteria related to compensation and the accompanying review of their implementation. The Remuneration and Nomination Committee is also responsible for 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 who 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 chair of the Remuneration and Nomination Committee is independent and is appointed by the Board of Directors. As of 31 December 2023, the Remuneration and Nomination Committee consisted of two members: Philippe Weber (chair) and Peter Wilden.⁶

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 1 January 2023, the Remuneration and Nomination Committee met six (6) times, in a combination of in-person sessions and video conferences, for an average duration of approximately one and a half (1.5) 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 chair of the Remuneration and Nomination Committee provides the full Board of Directors at their ordinary meetings with an overview of key topics discussed at the most recent Remuneration and Nomination Committee meeting. The signed minutes (together with all presentation and background materials) from each Remuneration and Nomination Committee meeting are also circulated or otherwise made available to the full Board for their review.

The Remuneration and Nomination Committee communicates periodically with and may invite to meetings the CEO, the CFO and the Chief Human Resources Officer, 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).

In 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. The Remuneration and Nomination Committee did not work with HCM International in 2022, but engaged HCM International again in 2023 to assist with the recalibration of the performance targets under the long-term incentive program. Any changes to the long-term incentive plan in 2024 will be disclosed in the Remuneration Report 2024. HCM International did not have any additional mandates at PolyPeptide in 2021, 2022 or 2023.

In 2022, the Remuneration and Nomination Committee engaged Willis Towers Watson (“WTW”) for quantitative compensation benchmark services for PolyPeptide’s management, including the Board of Directors and Executive Committee (see section 2 “Remuneration philosophy and principles” of this Remuneration Report). WTW did not provide any benchmark services in 2023. However, WTW provided additional advisory services to the Group in 2022 and 2023, specifically actuarial valuations at two of our European sites. We believe that these standard and comparatively minor additional mandates at two of our local PolyPeptide sites did not impact their objectivity or independence.

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 2023:

Review of remuneration principles, strategy and structure

• General review and assessment of the continued appropriateness of PolyPeptide’s remuneration principles, strategy and structure
• Review of compensation proposals for the Board of Directors and Executive Committee for AGM 2023
• Review and initiation of the redesign of PolyPeptide’s long-term incentive program (LTIP), with a focus on the performance targets
• Review of shareholders’ and proxy advisors’ feedback on the Remuneration Report 2022
• Review of the structure and approach to the Remuneration Report 2023, including analysis on remuneration disclosure

Compensation of the Board of Directors

• Preparation of compensation proposals for AGM 2023 for the Board of Directors
• Review of the results of the internal benchmark desk research for the Board of Directors

Compensation of the Executive Committee

• Review and preparation of proposals to the Board regarding the achievement of the 2022 variable short-term incentive for the members of the Executive Committee, including individual performance appraisal
• Review and preparation of proposals to the Board regarding individual performance targets and weighting for the 2023 variable short-term incentive for the members of the Executive Committee
• Review and preparation of proposals to the Board regarding performance targets for the 2023 variable long-term incentive award for the CEO
• Preparation of compensation proposals for AGM 2023 for the Executive Committee

Succession and governance

• Oversight of the recruitment and new appointments to the Executive Committee
• Review of succession planning at PolyPeptide
• Review of the results of the self-assessments of the Board of Directors and its Committees
• General update on corporate governance trends and best practices as well as relevant regulatory developments
• Review of shareholder analysis and outreach
• Update on human capital management, including the Group’s human resources mid- and long-term plan and an overview of key people analytics
• Review of material ESG topics assigned to the Remuneration and Nomination Committee
• Review of the Remuneration and Nomination Committee Charter

For more information, see also section 3.5.3.1 “Remuneration and Nomination Committee” of the Corporate Governance Report 2023.