This Compensation Report sets out the compensation system and the compensa- tion paid to the members of the Board of Directors and the Management Board of Tecan Group Ltd. It will be put to the Annual General Meeting on April 16, 2015 retrospectively for the year under review, for an advisory vote. The report is based on Section 5 of the Annex to the SIX Swiss Exchange Directive on Information Relating to Corporate Governance and the Ordinance Against Excessive Compensation in Listed Companies (OeEC).

The Tecan Group has a set of uniform compensation policies, which are systematic, transparent and have a long-term focus. Compensation is determined on the basis of four factors: the Company’s success, individual performance, function and the labor market. The ultimate goal of the compensation system is to attract highly qualified and motivated specialists and man- agers to join the Company and commit to it for the long term, and to reconcile the interests of employees and shareholders. The variable performance component is a complementary man- agement tool designed to promote the achievement of over- riding objectives. In addition, the Performance Share Matching Plan (PSMP) – the share plan in place for all members of the Management Board (since 2010) – guarantees direct financial participation in the long-term performance of Tecan shares. In 2013, the compensation of the Board of Directors was adapted in line with the current corporate governance recommenda- tions for compensation systems, which stipulate only a fixed fee. Since then, the members of the Board of Directors there- fore no longer participate in the Performance Share Matching Plan (PSMP) and instead receive only a fixed allotment of shares. The total compensation for the Board of Directors accordingly consists of a cash component and a share component, which vests fully upon completion of their term and pro rata in the event of an early exit. The total amounts for the individual mem- bers are nominally determined in Swiss francs, from which the cash component is deducted and the remainder converted into shares. As is the case with the PSMP, the share value is deter- mined on the basis of the average closing exchange rates of the Tecan share on the SIX Swiss Exchange in the first four months of the respective fiscal year. The amount and composition of the compensation paid to both the Board of Directors and the Management Board is assessed and determined by the Com- pensation Committee. In 2013, both the amount and the com- position of the compensation paid to the Board of Directors was reviewed by a consultancy firm (The Hay Group) and adapted in line with its recommendations. In the year under review, the Compensation Committee comprised Oliver Fetzer (Chairman) and Christa Kreuzburg (member). The members were formerly nominated by the Board of Directors, but have been elected by the Annual General Meeting since 2014. The CEO, CFO and Cor- porate Head of Human Resources participate in the meetings regularly in an advisory capacity. Invited members of the Man- agement Board do not take part in discussions on agenda items concerning themselves. Minutes are kept of the meetings. The Compensation Committee proposes motions to the Board of Directors, which in turn must approve the HR and salary poli- cies for the entire Group as well as the general conditions of employment for the members of the Management Board.

he Compensation Committee defines the compensation amounts to be paid to the members of the Management Board. The Board of Directors then reviews and approves the target achievement of the CEO and of all members of the Manage- ment Board and defines the actual bonus to be paid. The amount and type of compensation to be paid to the Board of Directors is reviewed annually by the Compensation Committee and put before the Board of Directors. Every two to three years, the com- pensation of the Board of Directors is benchmarked by an external specialist and, if necessary, adjustments are proposed. Each year, the Board of Directors submits a proposal to the Annual General Meeting on the maximum total compensation for the members of the Management Board for the fiscal year follow- ing the Annual General Meeting (January 1 to December 31).

In 2014, a comparison was made of the salaries of the Management Board members by an external specialist. Compensation at Tecan was compared with a selection of companies from the Mercer Group’s Western European Remuneration Guide. In par- ticular, the companies selected were sectors such as medical devices and suppliers, pharmaceuticals, chemicals, foodstuffs, etc. The system is based on an analytical approach, in which industry, value chain and size (turnover and employees) are weighted, as a result of which every function is converted into a relative value. Overall, the total compensation paid to the members of the Management Board is in line with that of the reference companies. Looking at the composition of total compensation, the results also show that long-term compensation at Tecan is above average and the cash component below average in comparison with the reference companies. This confirmed the fundamental results of the 2012 compensation comparison for the members of the Management Board with comparable Swiss companies carried out by AON Hewitt.

All employees of Tecan Group go through a formalized target and performance review process, which generally takes place at least once a year, shortly after the end of the fiscal year. This process forms the basis for the calculation of individual employees’ performance-based pay for the previous fiscal year. It also ensures consistent objectives are set across the Group for the fiscal year which has just begun, and promotes the development of both individual employees and the Group. Personal objectives are defined in the performance review process as part of an individual meeting with the employee’s supervisor.

The compensation system for members of the Management Board and extended Management Board of Tecan Group Ltd., introduced in 2010 and unchanged since then, is based on three central pillars: a fixed cash component (fixed or base salary), a variable cash component (bonus) and a variable long-term share plan (Performance Share Matching Plan). For members of management on level three and four and key employees at the Tecan Group, the third pillar consists of either a perfor- mance-based share plan or a performance-based option plan.

The compensation system for members of management on level one and two is primarily composed of two pillars: a base salary (fixed or base salary) and a variable component (bonus) based on the performance review. In addition, outstanding performance may be rewarded with single premiums in the form of options. Employees are paid a fixed salary and individual, performance-based, single premiums paid out periodically in cash.

For members of all management levels, the compensation structure is based on the Variable Pay Regulations, which have been approved by the Board of Directors. These provide for the definition of a target salary. For the members of the Management Board, this consists of a fixed (70% of the target salary) and a variable component (30% of the target salary). In the case of the CEO, the fixed or basic salary accounts for 60% and the variable component 40% of the target salary. The amount of the variable component is based on the degree to which the following targets are met: first, the Company’s financial targets and second, quantitative and qualitative corporate targets. The financial targets (sales and EBIT margin) are set annually by the Board of Directors in December for the following year. The distribution of the variable component differs depending on function and management responsibility. For members of the Management Board, extended Management Board and those on management level three and four, Group targets account for the majority of the variable component (up to 80%), whereas at lower management levels the percentage share falls to 40%. If the target is fully met, 100% of the variable com- pensation is paid out. In 2014, financial targets at Group level were not fully achieved and therefore the full amount was not paid out.

If the defined targets are exceeded, depending on the degree of exceedance, up to 200% of the variable component may be paid out. Instead of a cash payout, members of the Management Board and extended Management Board may invest up to three quarters of the maximum variable compensation into shares under the share plan (“voluntary purchases”).

However, as defined in the Articles of Incorporation, the CEO’s variable compensation may not exceed 150% of the fixed salary and that of the members of the Management Board may not exceed 100% of the fixed salary.

In addition to cash compensation, the members of the Management Board participated in the Performance Share Matching Plan (PSMP) in the year under review. This share plan is a long-term incentive (LTI) plan, which involves the allotment of registered shares in Tecan Group Ltd. to the Management Board and the extended Management Board. As in the previous year, participation in the PSMP was extended in the year under review to a select group of members of management level three and four as well as key employees. The shares are blocked for three years from the allotment date, and must be returned on a pro rata basis in the event that the employee terminates his/her employment before the expiration of the three-year period. A claim for additional shares (called matching shares) will exist if specific financial targets based on an economic profit of the Tecan Group are reached three years after the allotment of shares. Participants in the PSMP can only claim matching shares if an economic profit was reached. This mechanism ensures that interests are aligned with the shareholders of the Company. The economic profit target is primarily based on sales growth and EBIT margin targets that were compared with companies in the life science sector that are also active globally in the instrument business. The factor used to calculate this match- ing share portion is between 0 and 2.5, depending on the degree to which the economic profit target is attained. This means that a participant in the PSMP can claim a maximum of 2.5 matching shares per originally allotted share under the plan. Members of the Management Board and extended Management Board can also claim matching shares per potential voluntary investments on the variable component of the salary. A formula incorporating the two components of “sales growth in local currencies” and “EBIT margin” amongst other factors has been devised for the calculation of the matching share factor provided that a certain capital turnover is reached. The two parameters are linked, i.e. in order to achieve a specific factor in the case of low growth, the EBIT margin has to be higher. Likewise, if the EBIT margin is low then increased growth must be generated. The sales growth component has been given a higher weighting, and accounts for two-thirds for the purposes of calculating the matching share factor. The parameter grid is determined prospectively each year for the next three-year cycle to clearly define the financial targets in advance.

The size of the initial allotment of PSMP shares is approved annually by the Board of Directors based on a proposal by the Compensation Committee. In 2014, the members of the Management Board received on average an initial allotment of 27.3% of the total compensation.

The Annual General Meeting of April 16, 2015 will be asked to approve a maximum total amount in Swiss francs for the compensation of the Management Board for the fiscal year 2016. The estimates of the performance-based compensation and the number of members of the Management Board constitute the most significant factors in the calculation of this maximum amount. The proposal for 2016 is based on eight members of the Management Board.

The calculation of such a maximum amount for variable compensation assumes that the defined performance targets are significantly exceeded and that the threshold for the payment of 200% of the variable component is met. The highest matching share factor of 2.5 is also used as the assumption for the long-term share plan, the Performance Share Matching Plan. In recent years, the parameters for both components of the performance-based compensation have been significantly below these maximum values, and the actual amounts achieved have been nowhere near the annual maximum amounts. The actual figures in the two years of the concluded three-year cycle were less than 40% of the maximum.

In order to make the calculation of the maximum amount as transparent and comprehensible as possible, the use of complex mathematical formulae and methods was avoided. For example, future payments were not discounted. Likewise, in calculating the value of matching shares, instead of using a complex formula (e.g. the Monte Carlo model), only the value of the initial allotment of shares in Swiss francs multiplied by the maximum factor of 2.5 was used.

In table 1, the theoretical maximum amounts from 2011 and 2012 are compared with the actual amounts in order to provide a better understanding. In 2011, the actual sum was only 39% of the maximum, while in 2012 it amounted to just 36%.

It is not possible to present these figures in this way for 2013 and 2014, as the three-year cycle of the share plan has not yet come to an end. It is, however, highly likely that the actual values will also be significantly below the maximum value. For 2013, the average payment to the members of the Management Board was only around 73% of the variable component, not the maximum possible 200%. In the three-year cycle that started in 2013, the current expectation is of a matching share factor of 1.4, which is significantly below the maximum factor of 2.5. For 2014, the payment was only around 70% of the variable component. If the ambitious midterm targets are reached, the matching share factor could exceed the level of past three-year cycles.

If the proposed maximum total amount is not approved by the Annual General Meeting, the Board of Directors can submit new proposals to the same Annual General Meeting at any time or call a new General Meeting if the Board of Directors does not submit any new proposals or if the Annual General Meeting also rejects the new proposals. The Board of Directors can submit a proposal to retrospectively increase an approved total amount to the Annual General Meeting at any time.

Additional amounts for members of the Management Board

In accordance with the Articles of Incorporation, the Board of Directors may pay an additional amount as compensation in the event that new members are appointed to the Management Board following the approval of the maximum total compensation. In the case of a new CEO, this additional amount may be at most 35% above the amount of the maximum total amount of compensation for the previous CEO approved by the Annual General Meeting for the respective fiscal years, and in the case of any other new members of the Management Board, at most 25% above the average total compensation of a member of the Management Board for the respective fiscal years. The average total compensation of a member of the Management Board corresponds to the approved maximum total sum for the members of the Management Board after the deduction of the amount due to the CEO, divided by the number of members of the Management Board (excluding the CEO) on the day that the total sum is approved by the Annual General Meeting.

Comparability of the proposal to the Annual General Meeting with the disclosure of the annual compensation for members of the Management Board

As outlined, the calculation of a maximum total amount for the members of the Management Board depends on certain assumptions. The disclosures in the compensation reports of recent years and the table on page 70 of the 2014 compensation report rely on many known values, but nonetheless require the making of certain assumptions. This means that the amounts in the disclosed compensation tables will generally differ from those in the proposal to the Annual General Meeting and the values in table 1 on page 67. The deviations are mainly the result of the differing treatment of the long-term share plan. In order to increase comparability, the key differences are described below.

The disclosure of the annual compensation

• is based on the actual variable component payments.
• for the stated total compensation only takes into consideration the fair value of initial shares granted as part of the long-term share plan.
• also presents the theoretical maximum number of matching shares (assuming a matching share factor of 2.5). In the proposal to the Annual General Meeting a fair value is calculated assuming members of the Management Board can claim the maximum of 2.5 matching shares per originally allotted share. In addition, the disclosure of the annual compensation presents the fair value of matching shares effectively granted from the three-year cycle that ended in 2014.

Application for a maximum total amount for the Board of Directors

The Board of Directors proposes to the Annual General Meeting for its approval the maximum total amount for compensation to be paid to the Board of Directors consisting of a fixed cash component and a share component which is nominally determined in Swiss francs. No pension payments are intended to members of the Board of Directors.

Termination benefits

Members of the Board of Directors and the Management Board have no contractual entitlement to termination benefits.

No compensation was paid in 2014 or in the year before to former Members of the Board or of the Management Board.

Neither in 2014 nor in the year before compensation payments has been made to persons related to current or former Members of the Board or of the Management Board.

Actual and former Members of the Board or of the Management Board

Neither in 2014 nor in the year before loans or credits has been made to current or former Members of the Board or of the Management Board, which have been outstanding by the end of the year.

Neither in 2014 nor in the year before loans or credits have been made to related parties of Members of the Board or of the Management Board, which have been outstanding by the end of the year.

¹ Employer’s contribution to social security

² Vesting condition: Graded vesting from May 1, 2013 to April 30, 2014 (Share Plan BoD 2013) and from May 1, 2014 to April 30, 2015 (Share Plan BoD 2014). Vested shares are transferred at the end of the service period (April 30, 2014 and April 30, 2015 respectively). The shares are fully included in the amount of fair value of shares granted.

³ Formula for 2013: Shares granted in 2013 * fair value at grant (CHF 100.00) and formula for 2014: Shares granted in 2014 * fair value at grant (CHF 109.80)

¹Payment will be made in the following year. Up to 50% of the theoretical 100% variable part can be taken as voluntary investment for the LTIPSMP; amount for voluntary investment 2014 to be decided after the March 2015 Board of Directors Meeting

² Excluding the voluntary investment in the LTIPSMP

³ Employer’s contribution to social security,including social security on share options exercised and shares transferred during the reporting period,and contributions to post-employment benefit plans

⁴ Vesting and granting conditions: Vesting January 1, 2013 (PSMP 2013) granted May 2, 2013 and vested January 1, 2014 (PSMP 2014) granted May 2, 2014. Vested shares are blocked until the end of the performance period (December 31, 2015 and 2016 respectively).

⁵ Formula for 2013: Shares granted in 2013 * fair value at grant(CHF83.5)*[1 - estimated labor turnover rate(10%)] and formula for 2014: Shares granted in 2014* fair value at grant(CHF109.80) * [1 - estimated labor turnover rate (10%)].

⁶ Including the voluntary investment in the LTI PSMP

⁷ Member of the Management Board with the highest compensation in 2013 and 2014.

⁸ 2013:Total seven members,including one member who left and three members who joined the Management Board during the year.

⁹ 2014: Total seven members, including one member who left and one member who joined the Management Board during the year.