Tecan’s aim is to improve quality of life and to make the world a healthier and safer place. To achieve this, the contribution of our employees is key. Our values and success strongly depend on the dedication of our employees. To create continuous, sustainable shareholder value and to be the employer of choice in our industry, we aim to attract and retain the best available talent in a very competitive global employment market. Trust, highest standards and ambition are our defined company values, guiding us on the path to making our mission a reality. We take our responsibility to uphold a transparent and sustainable approach to compensation seriously.
This Compensation Report describes Tecan's compensation principles and system, and provides information about the method of determining compensation for the members of the Board of Directors and the Management Board. It further discloses the compensation awarded to the members of the Board of Directors and the Management Board of Tecan Group Ltd. (Tecan) during the reporting year. It complies with the Ordinance against Excessive Compensation in Listed Stock Companies (OeEC), the standard relating to information on Corporate Governance of the SIX Swiss Exchange, and the principles of the Swiss Code of Best Practice for Corporate Governance of the Swiss national federation economiesuisse.
MESSAGE FROM THE CHAIRWOMAN OF THE COMPENSATION COMMITTEE
As the Chairwoman of Tecan’s Compensation Committee I am pleased to share with you Tecan’s Compensation Report for the financial year 2020.
The purpose of our compensation system is to attract, engage and retain highly talented employees; to inspire best-in-class performance; and to encourage behavior aligned with our values. We are keen to ensure that our compensation principles and system properly reward performance and are in line with the market and the interests of our shareholders.
2020 was an exceptional year for the entire world, including Tecan. Tecan’s contribution to the fight against Covid made our purpose tangible to everyone. Customer demand patterns changed completely. While the market demand for certain Tecan products increased significantly, demand for others collapsed. The organization faced many challenges that were overcome thanks to the dedication and commitment of our employees. Our entire workforce put in extraordinary efforts through the whole of 2020 and the situation is expected to continue well into 2021. Therefore, as an expression of our gratitude, we decided to grant employees not eligible for variable pay a special compensation payment. This amounted to an average of CHF 2,800 per employee.
Despite the market turmoil and the challenges associated with managing a workforce implementing drastic changes in production mix in the midst of a pandemic, our revenue grew by 18.7% in local currencies and we recorded a substantial increase in the reported EBITDA margin to 21.8% of sales. This report explains how the company results impacted the compensation payments awarded to the members of the Management Board under the incentive plans.
At the end of 2019, the Compensation Committee decided to harmonize the performance objectives under the short-term incentive plan for 2020 in order to foster collaboration across the company: the individual performance objectives have been replaced by group-wide strategic targets for Tecan’s senior management. Therefore, the entire short-term incentive depends on collective performance. This decision has proved to be an important vehicle to manage the challenges of this very exceptional and demanding year. The adjustment has also had an important and positive impact on Tecan’s culture.
The Compensation Committee performed its regular activities during 2020, such as the performance goal setting at the beginning of the year and the corresponding performance assessment of the Management Board at year end, the determination of the compensation for the members of the Management Board and for the Board of Directors, as well as the preparation of the Compensation Report and the "say-on-pay" vote for the Annual General Meeting of Shareholders (Annual General Meeting).
Building on additional disclosures introduced in the 2019 Compensation Report, we remain committed to sharing detailed information regarding the compensation system and the compensation awarded to the Board of Directors and the Management Board. Specifically, we provide details around:
Specifically, we provide details around:
- governance: compensation decisions, including the role of the shareholders, the Compensation Committee and external advisors
- the compensation model of the Board of Directors: the split between the fixed basic fee and the committee fees
- the compensation model of the Management Board: a description of the performance criteria in the incentive plans, their weightings and a performance assessment at the end of the respective performance period
- the compensation table of the Management Board: including the compensation granted (and the compensation realized) in the reporting year
This Compensation Report will be submitted to an advisory vote at the upcoming Annual General Meeting. Shareholders will also be asked to vote on the maximum aggregate amount of compensation for the Board of Directors for the term of office from the 2021 until the 2022 Annual General Meeting, and on the maximum aggregate amount of compensation for the Management Board for the financial year 2022.
On behalf of the Board of Directors, I would like to thank you for your continued support. We hope that you find this Compensation Report informative. We are confident that our compensation system rewards performance in a balanced and sustainable manner, in line with shareholders’ interests.
Dr. Christa Kreuzburg
Chairwoman of the Compensation Committee
ARTICLES OF INCORPORATION
As described in the Corporate Governance Report on page 76 of this Annual Report, the Articles of Incorporation of Tecan include the following provisions on compensation:
- tasks and responsibilities of the Compensation Committee (Art. 17)
- compensation principles applicable to the Board of Directors and the Management Board (Art. 18 and 23)
- shareholders’ voting modalities on compensation motions at the Annual General Meeting, including the additional amount for members of the Management Board who were nominated after the shareholders’ approval on the maximum compensation amount (Art. 18)
- provisions around credits and loans to the Board of Directors and the Management Board (Art. 20)
- maximum permissible number of external mandates for members of the Board of Directors and the Management Board (Art. 21)
- provisions related to contractual agreements with members of the Management Board and the Board of Directors (Art. 22)
The full Articles of Incorporation are available on the corporate website: www.tecan.com/tecan-corporate-policies
ROLE OF SHAREHOLDERS ON COMPENSATION
The Ordinance against Excessive Compensation in Listed Companies (OeEC) took effect on January 1, 2014. The compensation and approval mechanism at Tecan was amended accordingly in 2015 and is set out in the company’s Articles of Incorporation.
Each year, the Board of Directors proposes to the shareholders at the Annual General Meeting for its approval the maximum aggregate amount of compensation to be paid to the Board of Directors for the period up to the next Annual General Meeting and to the Management Board for the following fiscal year. In addition, the Board of Directors presents the Compensation Report at the Annual General Meeting for its retrospective, advisory approval, by the shareholders as shown in illustration . For further details on the compensation votes at the upcoming 2021 Annual General Meeting, please refer to the section “Outlook and Motions on Compensation at the Annual General Meeting”.
ILLUSTRATION : COMPENSATION AND APPROVAL MECHANISM
The Compensation Committee supports the Board of Directors and acts as preparatory body on all relevant compensation matters related to the Board of Directors and the Management Board. In accordance with the Articles of Incorporation and the Organizational Regulations of Tecan, the Compensation Committee is composed of at least two members of the Board of Directors who are elected individually by the Annual General Meeting for a period of one year. At the 2020 Annual General Meeting, the shareholders re-elected Dr. Christa Kreuzburg (Chairwoman), Dr. Oliver Fetzer and Dr. Dan Marshak as members of the Compensation Committee.
The Compensation Committee meets as often as business requires. In the year under review, the Compensation Committee held three meetings in total and a formal decision was taken by circular resolution. All members attended all meetings and took part in the circular resolution by email. The CEO, CFO and Chief People Officer (CPO) may be invited to attend the meetings in an advisory capacity. Invited members of the Management Board do not take part in discussions on agenda items concerning their own performance or compensation. The Chairwoman of the Compensation Committee reports to the Board of Directors regularly on the activities of the Committee. Minutes are kept of the meetings and are available to all members of the Board of Directors.
The Compensation Committee acts in a preparatory capacity and proposes motions to the Board of Directors for approval. The Board of Directors approves the compensation policies for the entire Group as well as the general conditions of employment for members of the Management Board. The Compensation Committee benchmarks every other year the compensation of the Management Board and the Board of Directors with the help of independent external consultants. The Compensation Committee proposes and submits compensation amounts to the Board of Directors for approval. The Board of Directors reviews and approves the performance achievement of the members of the Management Board and the actual variable cash compensation to be paid out. The approval and authority levels of the different bodies on compensation matters are detailed in illustration  below.
ILLUSTRATION : DECISION AUTHORITIES IN COMPENSATION MATTERS
Board of Directors
Annual General Meeting
Group compensation policy and principles
Maximum aggregate amount of compensation for the Board of Directors
Individual compensation of Board members
Maximum aggregate amount of compensation for the Management Board
Performance target setting and assessment of CEO
Performance target setting and assessment of other members of the Management Board
Individual compensation of other members of the Management Board
BENCHMARKING AND EXTERNAL CONSULTANTS
Tecan periodically reviews the total compensation for the members of the Management Board and Board of Directors, comparing data from executive compensation surveys and published benchmarks from companies of similar size in terms of market capitalization, revenue, number of employees, geographic reach, etc., and/or which are operating in related industries. Every two years, alternately, the compensation for the Board of Directors and for the Management Board is benchmarked against prevalent market practice by independent external consultants and, if necessary, adjustments are proposed.
In 2020 and 2019, two external consulting companies provided benchmarking services to the Compensation Committee as described below. These companies do not have other mandates with Tecan.
In 2020 a benchmarking analysis of the compensation of the Management Board was conducted by an independent external consultant. The compensation levels and structure were evaluated in comparison with two different peer groups: 1. a Swiss Peer Group1 – selected firms with similar size in terms of revenue and number of employees with Tecan being positioned between the 25th percentile and median of the peer group; financial services and heavy industry companies were excluded; 2. a life science and diagnostics peer group2 comprising similar companies found within Tecan’s other operating markets in Europe and the US. The EU/US peer group represented a 65%/35% split. Companies in the peer group operate in the same industry and target similar candidates and therefore compete with Tecan in the recruitment market. As a general outcome and compared to both peer groups, the cash compensation paid to individual members of the Management Board was slightly below market practice. If the long-term incentive targets are achieved (and only then), the total compensation may increase to levels above the market median. Consistent with earlier benchmarking exercises conducted in the past, the analysis showed that the compensation system at Tecan is more weighted towards the long-term incentive, while short-term compensation is positioned below market levels.
In 2019 a benchmarking analysis of the structure and level of the Board compensation was conducted by an independent external consultant. For this purpose, a peer group of Swiss companies3 listed on the SIX Swiss Exchange, excluding financial services, was selected. The peer group was well balanced in terms of market capitalization, revenue size, and headcount. This analysis showed that while the compensation structure was broadly in line with prevalent market practice, the compensation levels at Tecan were slightly below market. Based on this analysis and after several years with no adjustments, the compensation levels for the members of the Board of Directors were adjusted from the 2020 Annual General Meeting onwards to achieve market median compensation levels, see details in table below.
Tecan applies a set of uniform compensation policies, which are systematic, transparent and focused on the long-term perspective.
In line with good corporate governance, the compensation for the Board of Directors is fixed and does not contain any performance-based elements. This strengthens the Board’s independence in exercising its supervisory duties towards executive management. The fixed compensation is delivered in cash and in shares to strengthen the alignment with shareholders’ interests.
The compensation for the members of the Management Board is based on the following factors: financial performance of the Company, achievement of strategic goals, position held and labor market situation. The ultimate goal of the compensation system is to attract and retain highly qualified and motivated talents, to ensure their long-term loyalty to the Company, incentivize performance and to align their interests with those of the shareholders. The fixed and variable cash compensation programs are designed to cover the basic requirements, while the long-term incentive plan aligns total compensation with the long-term financial success of the Group and the value creation for shareholders of the Company.
- Sulzer, Georg Fischer, Schmolz + Bickenbach, Geberit, ViforPharma, Sonova, Landis+Gyr, Conzzeta, Stäubli Holding, Kongsberg Automotive, SIX Group, Zehnder Group, Belimo Holding, Burckhardt Compression, Burkhalter Holding, Basilea.
- Abbott Laboratories, Danaher Corporation, Lonza, Eurofins, Smith & Nephew, Beckman Coulter, PerkinElmer, Eppendorf Group, Jenoptik, Biotronik, Promega, Groupe LFB, Hamilton, Vectura, Sebia, Quotient Sciences, Biotage.
- Also, Bachem, Belimo, Bell, Bucher Industries, Conzzeta, Dätwyler, Dormakaba, Forbo, Galenica, Idorsia, Landis+Gyr, SFS, Siegfried, Sulzer, VAT, Ypsomed.
COMPENSATION SYSTEM OF THE BOARD OF DIRECTORS
There is no performance-based compensation and members of the Board of Directors are not insured in the Company pension plan. The fixed compensation consists of a fee for services paid in cash and in Restricted Share Units (RSUs), as well as additional committee fees paid in cash. The cash compensation is paid in two settlements in May and November, while the RSUs are allocated annually at the beginning of the term of office on the basis of the Tecan share’s average closing price on the SIX Swiss Exchange during the first four months of the relevant financial year. The RSUs fully vest and are converted into Tecan shares upon completion of the annual term, or pro rata in the event of an early exit.
As mentioned above in the section “Benchmarking and External Consultant”, the structure and level of compensation for the Board of Directors was benchmarked against market practice in 2019. The outcome of the analysis showed that, while the structure of compensation was broadly in line with the market, the compensation levels and in particular the committee fees, unchanged for several years, were below market levels. Therefore, the Compensation Committee proposed to adjust the compensation levels, which was approved by the Board of Directors, as of the 2020 Annual General Meeting, as described illustration  below:
ILLUSTRATION : COMPENSATION OF THE BOARD OF DIRECTORS
Until 2020 Annual General Meeting
Since 2020 Annual General Meeting
In CHF per year (gross)
of the Board
of the Board
of the Board
of the Board
of the Board
of the Board
Fixed basic fee (cash)
Fixed basic fee (shares)
Until 2020 Annual General Meeting
Since 2020 Annual General Meeting
In addition, members of the Board of Directors receive committee fees for ad-hoc committee meeting participation. They receive reimbursement for business travel expenditures incurred, and a travel fee (for members located in the US only).
COMPENSATION SYSTEM OF THE MANAGEMENT BOARD
The compensation system for members of the Management Board (including the CEO) did not change compared to the previous year. It is defined in several regulations adopted by the Board of Directors and comprises:
- fixed base salary
- employee benefits, such as pension benefits, Company car and expense allowance
- short-term variable cash compensation
- long-term equity incentive award, as a fixed monetary amount which is converted into shares and serves as initial grant for the Performance Share Matching Plan (PSMP)
ILLUSTRATION : COMPENSATION OF THE MANAGEMENT BOARD
Fixed base salary
Monthly salary in cash
Attract and retain
Attract and retain
Short-term variable cash
Annual bonus in cash
Reward annual performance
sales growth EBITDA margin strategic corporate goals achievement
Long-term equity incentive award – PSMP
Grant of initial shares
Reward long-term performance Align with shareholders’ interests
sales growth EBITDA margin
STRUCTURE OF THE COMPENSATION SYSTEM
STRUCTURE OF THE COMPENSATION SYSTEM
The compensation structure is based on a variable pay policy adopted by the Board of Directors, which provide for a total target cash compensation determined individually, consisting of a fixed base salary and a short-term variable cash compensation component. The total target cash compensation (assuming 100% target performance achievement under the short-term variable cash compensation) is weighted as following:
- CEO: 60% fixed base salary and 40% short-term variable cash compensation
- other members of the Management Board: 70% fixed base salary and 30% short-term variable cash compensation
In addition, members of the Management Board are eligible to an annual grant under the long-term equity incentive plan (PSMP).
The compensation is subject to mandatory employer social security contributions (AHV/ALV). These contributions are paid by Tecan and are disclosed in the compensation report in compliance with Tecan’s reporting obligations.
FIXED BASE SALARY AND BENEFITS
The fixed base salary is a component of compensation paid in cash, typically monthly. It reflects the scope and key responsibilities of the role as well as the qualification and skills required to perform the role, along with the employee’s skill set and experience.
Fixed base salaries of the Management Board are reviewed annually, taking into consideration the benchmark information, market movement, economic environment, and individual performance.
In addition, the members of the Management Board participate in the pension and insurance plan of Tecan which is also offered to all employees in Switzerland. Benefits consist mainly of contributions to the retirement and insurance plan which is designed to provide a reasonable level of protection for employees and their dependents with respect to the risk of retirement, disability, death, and illness. Management Board members are also provided with a company car and are eligible to an expense allowance in line with the expense regulation, which is approved by the Swiss tax authorities.
The monetary value of that and other elements of compensation is evaluated at fair value and is included in the compensation table in illustration .
SHORT-TERM VARIABLE CASH COMPENSATION
The short-term variable cash compensation is an annual variable incentive designed to reward the performance of the Group over a time horizon of one year.
The short-term variable cash compensation target (i.e. at 100% target achievement of the performance objectives) is expressed as a proportion of the total target cash compensation, as explained above, i.e. 40% of the total target cash compensation for the CEO and 30% for the other members of the Management Board.
As mentioned in the Message from the Chairwoman of the Compensation Committee, the performance objectives for the Management Board have been harmonized for 2020. Therefore, the performance measurement in the short-term variable cash compensation does no longer include any individual goals and is solely based on Group financial performance objectives and corporate sustainability goals. The ambitious growth and profitability targets are set annually before the beginning of the financial year by the Board of Directors. For 2020, the financial performance indicators were the same as in previous years: sales growth and EBITDA margin of the Group. They are equally weighted and account for 80% of the short-term variable cash compensation. The sustainability goals amount to 20% of the short-term variable cash compensation and are defined at Group level based on the strategic sustainability priorities of the Company. For 2020, they were related to social aspects, specifically to customer satisfaction and the company culture. For each performance objective, the Board of Directors determines a threshold level of performance below which the payout is 0%, a target level of performance corresponding to a 100% payout and a maximum level of performance, above which the payout is capped at 200%. The payout level between those points is calculated by linear interpolation.
In addition, the Articles of Incorporation stipulate that the short-term variable cash compensation may not exceed 150% of the fixed salary for the CEO and 100% for the other Management Board members.
The respective weightings of the performance objectives are included in illustration .
ILLUSTRATION : PERFORMANCE OBJECTIVES FOR THE SHORT-TERM VARIABLE CASH COMPENSATION
Sales growth (Group)
To drive the top-line growth of Tecan
EBITDA margin (Group)
To drive the bottom-line profitability of Tecan
Strategic corporate objectives
To drive strategic initiatives that foster growth, product quality, customer satisfaction, compliance, corporate culture and talent management
LONG-TERM EQUITY INCENTIVE AWARD - PERFORMANCE SHARE MATCHING PLAN (PSMP)
In addition to the cash compensation, the members of the Management Board participate in a long-term equity incentive award, the Performance Share Matching Plan. The PSMP consists of an initial grant of registered shares and a potential subsequent allocation of matching shares based on the achievement of performance objectives during the three-year plan period.
The target amount of the initial grant is expressed as a fixed monetary amount, which is converted into shares based on the Tecan share’s average closing price on the SIX Swiss Exchange during the first four months of the relevant financial year. The shares allocated are blocked for three years – starting in the grant year as “year 1”. For each granted share, participants are eligible to receive additional shares (“matching shares”) at the end of the three-year measurement cycle if certain performance objectives are reached. This mechanism ensures that the interests of the Management Board are aligned with those of the shareholders and it also ensures a permanent minimum level of share ownership of the CEO and of each member of the Management Board that is equivalent to the initial grants of three years.
Depending on the performance achievement during the three-year period, Management Board members may receive from 0 up to 2.5 matching shares for each share granted initially. The performance is assessed using a payout matrix based on two performance criteria: sales growth in local currencies and EBITDA margin. The matrix combines the performance of each of the criteria to calculate the payout, thus providing for a balanced focus on both top-line and bottom-line achievements. Every year, Tecan’s Board of Director reviews and approves a rolling five-year mid-term business plan presented by the Management Board, including targets for sales growth in local currencies and EBITDA margin. In case the mid-term targets are achieved for the three years covering a specific PSMP, an additional 1.25 matching shares for each initial share will be allocated to participants. A payout factor of 2.5 would require an achievement significantly above the defined mid-term targets on the two performance criteria. An achievement level below a certain threshold on any of the criteria results in no additional matching shares. Different combinations of sales growth and EBITDA margin achievements within those ranges lead to payouts between a factor of 0 and a factor of 2.5. The parameter grid is specified each year on a forward-looking basis for the coming three-year period (i.e. financial objectives are pre-determined upfront). In case of voluntary resignation (other than for retirement), the entitlement to any matching shares forfeit. The initial shares granted are subject to a regular blocking period. In case of death, invalidity or change of control, the initially granted shares deblock immediately with an allocation of matching shares as soon as possible after such occurrence.
ILLUSTRATION : PERFORMANCE OBJECTIVES FOR THE PERFORMANCE MATCHING SHARES (EXAMPLES)
To drive top-line growth of the company
To drive the bottom-line profitability of the company
(actual examples of sales growth and EBITDA margin combination for a payout factor of 0.6)
Sales growth (CAGR)
(actual examples of sales growth and EBITDA margin combination for a payout factor of 1.3)
Sales growth (CAGR)
(actual examples of sales growth and EBITDA margin combination for a payout factor of 2.5)
Sales growth (CAGR)
The above chart illustrates that the design of the PSMP is effective: in line with Tecan’s ambitious target–setting, substantial progress needs to be made to reach the maximum payout factor of 2.5 upon expiry of the performance cycle.
Members of the Management Board are employed under employment contracts of unlimited duration. The employment contract of the CEO is subject to a notice period of 12 months, while all other employment contracts of the Members of the Management Board are subject to a notice period of 6 months. They are not contractually entitled to any severance payments, or any change of control provisions. Their contracts do not contain non-competition provisions.
COMPENSATION TO THE BOARD OF DIRECTORS (AUDITED)
ILLUSTRATION : COMPENSATION TO THE BOARD OF DIRECTORS IN 2020 AND 2019
Total cash compensation
Share award plan: shares granted
Fair value of shares granted3
Dr. Lukas Braunschweiler
Dr. Oliver S. Fetzer
Dr. Karen Hübscher
Dr. Christa Kreuzburg
Daniel R. Marshak
- Employer’s contribution to social security.
- Vesting condition: Graded vesting from May 1, 2019 to April 30, 2020 (Share Plan BoD 2019) and from May 1, 2020 to April 30, 2021 (Share Plan BoD 2020). Vested shares are transferred at the end of the service period (April 30, 2020 and April 30, 2021, respectively). The shares are fully included in the amount of fair value of shares granted.
- Formula for 2019: Shares granted in 2019 * fair value at grant (CHF 228.40) and formula for 2020: Shares granted in 2020 * fair value at grant (CHF 316.40).
At the 2019 Annual General Meeting, shareholders approved a maximum aggregate compensation amount of CHF 1,450,000 for the Board of Directors for the compensation period from the 2019 Annual General Meeting until the 2020 Annual General Meeting. The actual compensation paid to the Board of Directors for this term was CHF 1,295,000 and is therefore within the approved limits.
At the 2020 Annual General Meeting, shareholders approved a maximum aggregate compensation amount of CHF 1,450,000 for the Board of Directors for the term from the 2020 Annual General Meeting until the 2021 Annual General Meeting. This compensation period is not completed yet and a conclusive assessment will be provided in the 2021 Compensation Report.
COMPENSATION TO THE MANAGEMENT BOARD (AUDITED)
COMPENSATION AT GRANT VALUE
The illustration  shows the compensation of the CEO and the other members of the Management Board granted in the reporting year.
ILLUSTRATION : GRANTED COMPENSATION
Number of granted / awarded shares
CHF 1,000 (gross amounts)
Fixed Base Salary
Taxable fringe benefits1
Short-term variable compen-sation3
Fair value of PSMP initial shares (in the year of grant)4
Fair value of PSMP matching shares (in the year of grant)5
PSMP: number of shares initial grant
PSMP: number of matching shares (at factor 1.25)
PSMP: number of matching shares (at maximum)
Dr. Achim von Leoprechting6
(CEO, since April 1, 2019)
(CFO, since Feb. 17, 2020)
Other members of the Management Board8
Dr. David Martyr (former CEO until March 31, 2019)6
Dr. Rudolf Eugster (former CFO, until Feb. 29, 2020)7
- 2019: Including the third third of the special payment to a new MB member for lost LTI as well as the relocation costs for a new MB member | 2020: Including payout of accrued vacation of the former CFO at the end of the contract
- Employer's contribution to social security and contributions to post-employment benefit plans (including social security on shares transferred during the reporting period)
- Payment will be made in the following year
- Formula for 2019: Shares granted in 2019 * fair value at grant (CHF 228.40) | Formula for 2020: Shares granted in 2020 * fair value at grant (CHF 316.40) and additional grant for new CPO with a fair value at grant (CHF 390.60)Formula for 2019: Shares granted in 2019 * fair value at grant (CHF 228.40) * 1.25 Formula for 2020: Shares granted in 2020 * fair value at grant (CHF 316.40) * 1.25. The disclosed amount corresponds to the fair value of the matching shares at the time of grant (e.g. based on performance achievement at target). This value may differ from the value of the accruals disclosed under IFRS reporting, as those are based on a best-estimate at the end of the reporting year
- 2019: Member of the Management Board with the highest compensation in 2019 | 2020: Member of the Management Board with the highest compensation in 2020
- 2019: Member of the Management Board with the second highest compensation in 2019
- 2019: Total six members (entry of a member August, 3; one member becomes CEO on April, 1) | 2020: Total seven members (entry of a member April 1 [Head PB] and August 1 [CPO] and leaving of the former CPO, September 30)
Explanatory comments on the compensation table:
- The achievement of targets for short-term variable cash compensation was higher in 2020 than in 2019, details of which are given below.
- The allotment CHF value of the long-term equity award (PSMP) decreased slightly compared to the previous year, although the number of members of the Management Board increased from eight to nine. The slight decrease is the result of three new appointments within the Management Board in the financial year and the replacement of the CEO in the previous year.
ILLUSTRATION : COMPENSATION MIX
At the 2019 Annual General Meeting, shareholders approved a maximum aggregate compensation amount of CHF 18,500,000 for the Management Board for the fiscal year 2020. The actual compensation awarded to the Management Board in 2020 was CHF 15,196,000 and is therefore within the approved limits.
SALARY STRUCTURE MANAGEMENT BOARD
SALARY STRUCTURE CEO
PERFORMANCE IN 2020
In the year under review, the Group sales growth and reported EBITDA margin, as well as the corporate strategic objectives exceeded the pre-set targets. Considering the broader context in 2020, where Tecan did not apply for any kind of state support and followed the regular dividend payment policy (and will continue to do so for 2020), the Board of Directors decided that the incentive plan rules can be applied without adjustments for the business year 2020 and that it was not justified or necessary to apply discretion in the compensation decisions. Specifically, the original performance objectives were not amended and no adjustments were made in the performance assessment at year end. Consequently, the overall short-term variable cash compensation payout amounted to 196% of target for the CEO and all other members of the Management Board. In the year under review, the 2018 to 2020 PSMP cycle came to an end. The performance achievement over the performance period resulted in a matching share factor of 2.5.
COMPENSATION TO FORMER MEMBERS OF GOVERNING BODIES
No compensation was paid to former members of the Board of Directors or the Management Board in 2020 after the end of their term of office or contract with Tecan, respectively.
RELATED PARTY COMPENSATION
No compensation was paid in 2020 or the previous year to parties related to present or former members of the Board of Directors or the Management Board.
LOANS AND CREDITS
CURRENT AND FORMER MEMBERS OF GOVERNING BODIES
Neither in 2020 nor in the previous year were any loans or credits extended to current or former members of the Board or the Management Board that remained outstanding at the end of the year.
Neither in 2020 nor in the previous year were any loans or credits extended to related parties of current or former members of the Board of Directors or the Management Board that remained outstanding at the end of the year.
SHAREHOLDINGS OF THE MEMBERS OF THE BOARD OF DIRECTORS AND THE MANAGEMENT BOARD IN 2020
Information regarding participations of the Board of Directors and Group Management in Tecan Group Ltd. can be found in the Notes to the financial statements of Tecan Group Ltd. (Note 12.2 on pages 178-179 of the Annual Report).
EQUITY OVERHANG AND DILUTION AS OF DECEMBER 31, 2019
In total as of December 31, 2019, the equity overhang granted to all Board of Directors and Management Board Members, defined as the total number of blocked shares and matching shares outstanding divided by the total number of outstanding shares ( 11’870’912 registered shares) amounts to 226’757 shares, which corresponds to 1.91% equity overhang.
The number of equities (shares and matching shares) granted in 2019 (83191 shares) divided by the total number of common shares outstanding equals 0.70%.
OUTLOOK AND MOTIONS ON COMPENSATION AT THE ANNUAL GENERAL MEETING
At the 2021 Annual General Meeting, the Board of Directors will propose:
- the maximum aggregate compensation amount for the Board of Directors, for the next term of office (binding vote);
- the maximum aggregate compensation amount for the Management Board, for the fiscal year 2022 (binding vote);
- the 2020 Compensation Report (retrospective advisory vote).
MAXIMUM AGGREGATE COMPENSATION AMOUNT FOR THE BOARD OF DIRECTORS
The maximum aggregate compensation amount to the Board of Directors for the term of office between the 2021 and the 2022 Annual General Meeting submitted to vote is based on the following elements:
- seven members of the Board of Directors;
- fixed basic fee paid in cash and restricted share unit;
- committee fees paid in cash;
- additional committee fees for ad-hoc committees and travel fee (for members located in the US only).
MAXIMUM AGGREGATE COMPENSATION AMOUNT FOR THE MANAGEMENT BOARD
The maximum aggregate compensation amount to the Management Board for the fiscal year 2022 submitted to vote is based on the following elements:
- nine members of the Management Board;
- short-term variable compensation: the maximum amount assumes that the defined performance targets are significantly exceeded and that the short-term variable compensation payout amounts to 200% (maximum);
- long-term stock ownership plan (PSMP): the maximum amount is based on a matching share factor of 2.5 (maximum). A possible share price appreciation during the three-year vesting period is not considered.
Illustration  below shows a comparison between the maximum aggregate compensation amounts approved and the compensation effectively awarded in recent years.
ILLUSTRATION : COMPENSATION APPROVED VERSUS AWARDED (MANAGEMENT BOARD)
In CHF per year (gross)
Fiscal year 2022
Fiscal year 2021
Fiscal year 2020
Fiscal year 2019
Approved compensation amount
- to be proposed to the 2021 Annual General Meeting
- compensation period not yet completed
Note: The approved compensation amount is based on the assumption that all performance indicators under both the short-term variable compensation and the PSMP will be significantly over-achieved and that the payout factor will be at the maximum possible level. The approved compensation amount does not account for any share price appreciation over the three-year period of the PSMP. The awarded compensation amount is based on the short-term variable compensation effectively paid and on the fair value of the initial shares and of the matching shares granted under the PSMP in the respective year.