We believe that a corporate culture offering employees dynamic and stimulating working conditions with great opportunities to grow and contribute to the shared objective of creating customer satisfaction and fostering long-term customer loyalty through excellence in peptide and oligonucleotide technology, quality, value, service and customer support is key for safeguarding PolyPeptide’s long-standing success.

In order to attract, motivate and retain talented individuals who drive performance, the Remuneration and Nomination Committee gives careful consideration to PolyPeptide’s remuneration framework, which aims to be simple, clear and transparent. The Remuneration and Nomination Committee is guided by the following key principles:

• the remuneration framework should be competitive, commensurate with market conditions and drive sustainable long-term value creation
• the remuneration framework should reward individual performance and align the interests of the Board of Directors and Executive Committee with the interests of PolyPeptide and its shareholders
• the remuneration framework should be traceable
• the remuneration framework should contain a balance of both fixed and variable components to create sustainable value
• short-term variable components should be based on clear criteria and performance targets tied to PolyPeptide’s strategic objectives and values, with consideration given to qualitative factors, including the individual’s commitment to PolyPeptide’s values through demonstrated behaviors
• long-term variable components should be evaluated and only awarded on the basis of PolyPeptide’s long-term performance to promote the creation of shareholder value
• the remuneration framework should avoid creating unintended, undesirable or conflicting incentives or behaviors

As a basis for this work and to support compensation recommendations to the Board of Directors, the Remuneration and Nomination Committee undertook a comprehensive benchmark review of the compensation of the Board of Directors and the Executive Committee in 2022. For the Board of Directors, the Remuneration and Nomination Committee initially conducted an internal desktop review of board compensation for thirteen similarly sized Swiss SIX-listed peers (e.g., considering sector, employee base, revenue and market capitalization).⁷ Within this Swiss peer group at the time of the internal review, PolyPeptide was positioned between the twenty-fifth and fiftieth percentile. This internal review was complemented by an analysis from Willis Towers Watson (“WTW”), which analyzed the board compensation of companies listed in the SMIM.⁸ Within the SMIM peer group at the time of the analysis in 2022, PolyPeptide was positioned between the tenth and twenty-fifth percentile. The combined benchmarking analyses showed that PolyPeptide was positioned comparably to its peers with regards to level and structure of the Board of Directors’ compensation package.

In 2023, the Remuneration and Nomination Committee conducted an updated internal desktop review of board compensation of similarly sized Swiss SIX-listed peers comparable to its 2022 review (e.g., considering sector, employee base, revenue and market capitalization).⁹ This updated internal review showed that PolyPeptide was positioned between the tenth and twenty-fifth percentile within this Swiss peer group. Driven in large part by the decline in PolyPeptide’s market capitalization, the Remuneration and Nomination Committee acknowledged the corresponding decline in peer group positioning as well as the comparably higher positioning of PolyPeptide’s aggregate Board remuneration. At the same time, the Remuneration and Nomination Committee remained focused on the Group’s strategic ambitions and the need to retain and attract highly qualified Directors to drive PolyPeptide’s transformation and future growth. In addition, at least half of the Board’s remuneration is paid in shares, thus closely aligning the Board’s interest with that of the Company’s shareholders to drive PolyPeptide’s success (see also section 4.1 “Remuneration approach” of this Remuneration Report). As a result, the Remuneration and Nomination Committee concluded that no proposed changes to the remuneration of the Board of Directors were currently warranted.

To ensure competitiveness with the market, the compensation of the Executive Committee was also benchmarked in 2022. The Remuneration and Nomination Committee engaged WTW, which reviewed the compensation practices of an agreed peer group of twenty-two European health science companies.¹⁰ This peer group was selected by considering factors such as industry, revenue, employee base, geographic footprint, etc. The benchmark focused on appropriate functions within the peer group by applying the WTW grading. WTW uses a position evaluation methodology to size each role so that in all cases positions were compared with similar positions in terms of scope. Within this European health science peer group at the time of the analysis in 2022 and based on data from WTW’s existing database, PolyPeptide was positioned around the twenty-fifth percentile. The Remuneration and Nomination Committee reviewed this benchmark analysis again in 2023 and found that Polypeptide was still positioned around the twenty-fifth percentile within this peer group at the time of the review. The Remuneration and Nomination therefore concluded that the benchmark analysis of the Executive Committee from 2022 remained valid and did not carry out an updated assessment in 2023.

The Remuneration and Nomination Committee will continue to conduct benchmark assessments for the compensation of the members of the Board of Directors and the Executive Committee every two or three years (or more often as required) against the compensation of comparable companies to ensure that PolyPeptide’s remuneration continues to be guided by its established principles and that remuneration levels remain competitive to support the retention and attraction of talent. For these purposes, the Remuneration and Nomination Committee will consider whether it is appropriate or necessary to continue engaging external advisors as well as whether the identified peer groups from the most recent benchmark studies remain valid. The Remuneration and Nomination Committee will also consider PolyPeptide’s overall internal compensation structure, the individual’s profile (e.g., skill set, experience, seniority), PolyPeptide’s global activities, the growing complexity of its industry as well as the Group’s expanding human capital management responsibilities in light of an increasing number of employees. Following such assessments, the Remuneration and Nomination Committee may propose to the Board of Directors compensation adjustments (e.g., increases / decreases in base salaries or changes in the proportion of the compensation components) for proposal to the general meeting.