Chart

Compensation Report

Tecan’s aim is to be the employer of choice in the life science industry and offer employees the possibility to help improve people’s lives and health. To continuously create sustainable shareholder value and to keep being an employer of choice, Tecan seeks to attract and hire the best talent and retain key talent. The competition around talent has grown and needs a focused strategic and tactical approach. Guided by the company values trust, highest standards, and ambition, combined with the leadership principles courage, curiosity, respect and brutal honesty, Tecan is driven to make its mission a reality. To highlight, Tecan conducted in 2021 two important assessments: an analysis to measure gender salary gaps for equal work and an employee engagement survey. With regards to the gender salary gap analysis, which was validated by an independent auditor in compliance with Swiss Law, Tecan has demonstrated there are no relevant pay equity gaps between men and women at Tecan in Switzerland, which reflects Tecan’s values. Tecan is committed to uphold a transparent and sustainable approach to compensation. The results of the second consecutive employee survey confirmed a continued positive impact of Tecan’s culture activities on employees’ engagement and trust. 

 

This Compensation Report describes Tecan's compensation principles and system. It provides information about the method of determining compensation and discloses the compensation awarded during 2021 to the members of the Board of Directors and the Management Board. 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

 

DR. CHRISTA KREUZBURG

Dr. Christa Kreuzburg

Chairwoman of the Compensation Committee 

DEAR SHAREHOLDERS

I am delighted to present you Tecan’s Compensation Report for the financial year 2021.

 

This report describes our compensation principles and system which have a clear purpose. We want to be the employer of choice in our industry and attract and retain the most talented individuals. Our compensation system is designed to encourage the highest performance aligned with behaviors consistent with our values: trust, highest standards and ambition. We want to ensure that our compensation principles and system reward performance, are competitive, and in the interests of our shareholders.

 

2021 was again an exceptional year for the world and Tecan. Similar to 2020, the contribution Tecan made to the fight against Covid was visible and tangible. Some patterns in customer demand continued from 2020, but we have also seen some return to pre-pandemic market conditions. While the market demand for certain Covid-19 product lines continued to be very high, we saw some rebound in other areas. The organization learned a lot in 2020 and overcame the challenges again in 2021. In addition, we face in our industry a high demand for talent and have a clear focus on retaining our employees and attracting new talent. I am proud that the team not only successfully navigated through the challenging environment, but also conducted a transformational acquisition, the largest Tecan has ever made. On August 1, 2021, we acquired Paramit. The post-merger integration process has started and will be an important focus this year. The journey with Paramit, with the addition of roughly 50% of employees to our existing base and new sites in the US and Asia, provides Tecan a much broader global footprint with new and exciting growth and career opportunities around the globe. 

 

As in 2020, during 2021 our workforce needed to demonstrate extraordinary effort. We have observed that in these difficult times we grew even closer together. The commitment and engagement from everyone at Tecan to make the world a healthier place was probably never more tangible than during the times of the Covid pandemic. Our demonstrated impact was extraordinary and the engagement and passion of our employees who make this possible was confirmed by the results of our recent employee survey.

 

Fueled by strong demand and despite a demanding labour market, we were able to grow our revenue organically by 14.1% in local currencies and by 29.6% in local currencies including Paramit. As a result, we recorded a substantial increase in the reported EBITDA margin to 23.1% of sales for Tecan (excluding Paramit, acquisition and integration costs and one off pension adjustments) and 21.6% including Paramit. This report explains how the company results drove the compensation awarded to members of the Management Board under the incentive plans.

 

We continued our path with a harmonized short term incentive plan with a standard set of group-wide strategic targets for all our senior management. It has proven to be a great vehicle to foster collaboration and to incentivize high performance across the entire company while creating a healthy and open work culture.

 

The Compensation Committee performed its regular activities during 2021. It included performance goal setting at the beginning of the year, 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).

 

We are committed to share detailed information regarding the compensation system and the compensation awarded to the Board of Directors and the Management Board. Specifically, we provide details around:

 

  • Governance: compensation decisions, including the role of the shareholders, the Compensation Committee and external advisors

  • Compensation model of the Board of Directors: the split between the fixed basic fee and the committee fees

  • Compensation model of the Management Board: a description of the incentive plan performance criteria, their weights and a performance assessment at the end of the respective performance period

  • 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 2022 until the 2023 Annual General Meeting, and on the maximum aggregate amount of compensation for the Management Board for the financial year 2023.

 

On behalf of the Board of Directors, I would like to thank you for your continued support. We hope that you find this report informative. We are confident that our compensation system rewards performance in a balanced and sustainable manner, and is aligned with shareholders’ interests.

 

GOVERNANCE

ARTICLES OF INCORPORATION

As described in the Corporate Governance Report on page 86 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 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 the Board of Directors for the period until the next Annual General Meeting and to the Management Board for the following financial year. In addition, the Board of Directors presents the Compensation Report for a retrospective, advisory shareholder vote. The voting mechanism on the compensation motions is shown in illustration [1]. For further details on the compensation votes at the upcoming 2022 Annual General Meeting, please refer to the section “Outlook and Motions on Compensation at the Annual General Meeting”.

 

 

ILLUSTRATION [1]: COMPENSATION AND APPROVAL MECHANISM

 

 

COMPENSATION COMMITTEE

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 2021 Annual General Meeting, the shareholders re-elected Dr. Christa Kreuzburg (Chair), 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 four meetings in total, which all members attended. 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 Chair 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 has taken the decision in 2021 due to high volatility in salary changes and due to Tecan’s growth strategy to benchmark every year the compensation of the Management Board. The compensation of the Board of Directors is more stable and will therefore be benchmarked from 2021 onwards only every three years. Both benchmarking exercises are executed 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 [2] below.

 

 

ILLUSTRATION [2]: DECISION AUTHORITIES IN COMPENSATION MATTERS

 

 

CEO

Compensation 
Committee

Board of 
Directors

Annual General Meeting

Group compensation policy and principles

 

Proposes

Approves

 

Maximum aggregate amount of compensation 
of members of the Board of Directors

 

Proposes

Reviews

Approves

Individual compensation of members 
of the Board of Directors

 

Proposes 

Approves

 

Maximum aggregate amount of compensation 
of the Management Board

 

Proposes

Reviews

Approves

Performance target setting and assessment 
of the CEO

 

Proposes

Approves

 

Performance target setting and assessment of

other members of the Management Board

Proposes

Approves

Reviews

 

CEO compensation

 

Proposes

Approves

 

Individual compensation of other members 
of the Management Board

Proposes

Reviews

Approves

 

Compensation report

Proposes

Reviews

Approves

Advisory vote

BENCHMARKING SUPPORTED BY 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. 

 

In 2021 two external consulting companies provided benchmarking services to the Compensation Committee as described below. These companies do not have other mandates with Tecan.

 

As in the previous year, a benchmarking analysis of the compensation of the Management Board was conducted in 2021 by an independent external consultant. A demanding labor market combined with an increased volatility in compensation in the target industry as well as Tecan’s growth trajectory brought the Compensation Committee to the conclusion to perform from 2021 onwards an annual benchmarking analysis. In addition, considering Tecan’s increased global footprint the decision was taken to evaluate the compensation levels and structure in comparison to only one transnational peer group: The peer group1 consists of listed companies only within life sciences and diagnostics comprising similar companies found within Tecan’s operating markets in Europe and the US. It is therefore more focused and homogenous and allows for more stability in the peer group in the coming years. With the current positioning, it allows Tecan to grow within the peer group as is currently anticipated. The EU/US peer group represented a 67%/33% 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 the peer group, the cash compensation paid to individual members of the Management Board was once more slightly below market practice. If the long-term incentive targets are achieved at maximum (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.

Based on the analysis, adjustments to the total cash components might need to be considered for specific roles in the Management Board.

 

In 2021 Tecan has also performed a benchmarking analysis of the structure and level of the Board compensation, which was conducted by an independent external consultant. For this purpose, a peer group2 of Swiss companies listed on the SIX Swiss Exchange, excluding financial services and real estate, 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. As the compensation levels for the members of the Board of Directors were adjusted from the 2020 Annual General Meeting the decision was taken not to propose additional changes to the compensation of the Board of Directors. 

 

COMPENSATION PRINCIPLES

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 and corporate sustainability goals, position within the Management Board and labor market situation. The ultimate goal of the compensation system is to attract and retain highly qualified and motivated talent, 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.

 

1 European Companies: Lonza Group AG, Mettler-Toledo International Inc, Eurofins Scientific SE, Smith & Nephew PLC, Carl Zeiss Meditec AG, Qiagen NV, GN Store Nord A/S, Evotec SE, Elekta AB, LivaNova PLC, Siegfried Holding AG, Bachem Holding AG; US Companies: PerkinElmer Inc, Bio-Techne Corp, Bruker Corp, Sotera Health Co, Neogenomics Inc, Medpace Holdings Inc 

2 Bachem Holding AG, BELIMO Automation AG, Clariant AG, Dätwyler Holding AG, Forbo Holding AG, Galenica Group, Idorsia Ltd, Logitech International S.A., Medacta Group SA, SFS Group AG, Siegfried Holding AG, Sonova Holding AG, Sulzer AG, Temenos Group AG, VAT Group AG, Vifor Pharma AG, Ypsomed Holding AG, Zur Rose Group

 

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 2021. 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, continue to be slightly below market levels. However, the Compensation Committee does not see the necessity to propose adjustments to the compensation levels at the upcoming Annual General Meeting. The compensation of the Board of Directors was approved by the Board of Directors, and at the 2021 Annual General Meeting, as described in illustration [3] below:

 

 

ILLUSTRATION [3]:

 

 

Until 2021 Annual General Meeting

Since 2021 Annual General Meeting

In CHF per year (gross)

Chair 

of the Board

Vice-chair 

of the Board

Member 

of the Board

Chair 

of the Board

Vice-chair 

of the Board

Member 

of the Board

Fixed basic fee (cash)

200,000

90,000

80,000

200,000

90,000

80,000

Fixed basic fee (shares)

100,000

55,000

45,000

100,000

55,000

45,000

 

 

Until 2021 Annual General Meeting

Since 2021 Annual General Meeting

 

Committee 

Chair

Committee 

Member

Committee 

Chair

Committee 

Member

Audit Committee

30,000

10,000

30,000

10,000

Compensation Committee

30,000

10,000

30,000

10,000

Nomination Committee

30,000

10,000

30,000

10,000

 

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 [4]: COMPENSATION OF THE MANAGEMENT BOARD

 

 

Vehicle

Purpose

Plan period

Performance measured

Fixed base salary

Monthly salary in cash

Attract and retain

Continuous

 

Benefits

Monthly benefits

Attract and retain

Continuous

 

Short-term variable cash 

compensation

Annual bonus in cash

Reward annual performance

1 year

sales growth EBITDA margin strategic corporate sustainability goals achievement

Long-term equity incentive award – PSMP

Grant of initial shares 
and matching shares

Reward long-term performance Align with shareholders’ interests

3 year

sales growth EBITDA margin

 

STRUCTURE OF THE COMPENSATION SYSTEM
STRUCTURE OF THE COMPENSATION SYSTEM
MANAGEMENT BOARD

The compensation structure is based on a variable pay policy adopted by the Board of Directors, which provides 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 follows:

 

  • 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 long-term illness. Members of the Management Board 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 [8].

 

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 Chair of the Compensation Committee, in 2021 Tecan has chosen again to offer to all members of the Management Board a harmonized set of performance objectives. Hence, there are no individual performance goals in the short-term variable cash compensation and it 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 and assessed at the year end. For 2021, 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 corporate 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 2021, they were related to social and governance aspects. For social aspects the focus was set on employee engagement and cultural improvements and for governance the focus was on compliance to the new implemented delegation of authority guidelines. For each performance objective, the Board of Directors determines a threshold level of performance below where the payout percentage 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%. Payout levels between the threshold, the target and the maximum are 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 members of the Management Board.

 

The respective weightings of the performance objectives are included in illustration [5].

 

ILLUSTRATION [5]: PERFORMANCE OBJECTIVES FOR THE SHORT-TERM VARIABLE CASH COMPENSATION

 

 

 

2021 objectives

Rationale/driver

Weighting

Sales growth (Group)

To drive the top-line growth of Tecan

40%

EBITDA margin (Group)

To drive the bottom-line profitability of Tecan

40%

Corporate sustainability goals

To drive strategic initiatives that foster the sustainability of Tecan in environment, social, corporate governance and talent management

20%

Total

 

100%

LONG-TERM EQUITY INCENTIVE AWARD – PERFORMANCE SHARE MACHTING 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 a 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, members of the Management Board 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, members of the Management Board may receive from 0 up to 2.5 matching shares for each share granted in year one. 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 members of the Management Board. 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 is 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. In case of a termination for cause of the employment contract by the employer, any entitlement to matching shares is forfeited and any initial grants of each running cycle have to be returned by the employee. 

 

ILLUSTRATION [6]: PERFORMANCE OBJECTIVES FOR THE PERFORMANCE MATCHING SHARES (EXAMPLES)

 

Performance objectives

 

Sales growth

EBITDA

Driver/rationale

 

To drive top-line growth of the company

To drive the bottom-line profitability of the company

Weighting

 

Two-thirds

One-third

Payout matrix 

(illustrative)

 

 

 

 

 

Payout matrix

(actual examples of sales growth and 

EBITDA margin combination for 

a payout factor of 0.5) 

 

Sales growth (CAGR)

EBITDA margin

1.5%

19.5%

2.0%

19.25%

7.0%

17.5%

Payout matrix

(actual examples of sales growth and 

EBITDA margin combination for 

a payout factor of 1.2)

 

Sales growth (CAGR)

EBITDA margin

0.5%

20.75%

6.5%

18.5%

9.5%

17.5%

Payout matrix

(actual examples of sales growth and 

EBITDA margin combination for 

a payout factor of 2.5)

 

Sales growth (CAGR)

EBITDA margin

0.5%

22.5%

6.0%

20.25%

10.0%

18.75%

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.

EMPLOYMENT CONTRACTS

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 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 other than those under the PSMP termination provisions. Their contracts do not contain non-competition provisions.

 

COMPENSATION TO THE BOARD OF DIRECTORS (AUDITED)

ILLUSTRATION [7]: COMPENSATION TO THE BOARD OF DIRECTORS IN 2021 AND 2020

 

CHF 1,000

Year

Fixed 

fee

Committee fee

Total cash compensation

Social benefits1

Share award plan: shares granted

(number)2

Fair value of shares granted3

Total 
compensation

Dr. Lukas Braunschweiler 
(Chairman)

2021

200

8

208

23

237

104

335

2020

200

3

203

27

352

111

341

Heinrich Fischer

(Vice Chairman) 

2021

90

26

116

4

130

57

177

2020

89

18

107

5

194

61

173

Dr. Oliver S. Fetzer

2021

80

33

113

-

107

47

160

2020

79

20

99

-

159

50

149

Lars Holmqvist 

2021

27

3

30

-

-

-

30

2020

79

10

89

-

159

50

139

Dr. Karen Hübscher

2021

80

37

117

14

107

47

178

2020

79

26

105

13

159

50

168

Dr. Christa Kreuzburg 

2021

80

42

122

14

107

47

183

2020

79

33

112

14

159

50

176

Dr. Daniel R. Marshak

2021

80

26

106

-

107

47

153

2020

79

20

99

 - 

159

50

149

 

 

 

 

 

 

 

 

 

Total

2021

637

175

812

55

795

349

1,216

2020

684

130

814

59

1,341

422

1,295

1  Employer’s contribution to social security

2  Vesting condition: Graded vesting from May 1, 2020 to April 30, 2021 (Share Plan BoD 2020) and from May 1, 2021 to April 30, 2022 (Share Plan BoD 2021). Vested shares are transferred at the end of the service period (April 30, 2021 and April 30, 2022, respectively). The shares are fully included in the amount of fair value of shares granted

3  Formula for 2020: Shares granted in 2020 * fair value at grant (CHF 316.40) and formula for 2021: Shares granted in 2021 * fair value at grant (CHF437.60)

 

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 compensation period from the 2020 Annual General Meeting until the 2021 Annual General Meeting. The actual compensation paid to the Board of Directors for this term was CHF 1,214,508 and is therefore within the approved limits.

At the 2021 Annual General Meeting, shareholders approved a maximum aggregate compensation amount of CHF 1,300,000 for the Board of Directors for the term from the 2021 Annual General Meeting until the 2022 Annual General Meeting. This compensation period is not completed yet and a conclusive assessment will be provided in the 2022 Compensation Report.

 

COMPENSATION TO THE MANAGEMENT BOARD (AUDITED)

COMPENSATION AT GRANT VALUE

The illustration [8] shows the compensation of the CEO and the other members of the Management Board granted in the reporting year.

 

ILLUSTRATION [8]: GRANTED COMPENSATION

 

 

 

 

 

 

 

 

 

 

Number of granted / awarded shares

CHF 1,000 (gross amounts)

Year

Fixed Base Salary

Taxable fringe benefits

Social 
benefits1

Short-term variable compen-­sation2

Fair value of PSMP initial shares (in the year of grant)3

Fair value of PSMP matching shares (in the year of grant)4

Total compen-sation 

(granted)

 

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 Leoprechting5

(CEO, since April 1, 2019)

2021

660

12

351

858

560

700

3,141

 

1,280

1,600

3,200

2020

645

12

316

843

557

696

3,069

 

1,761

2,202

4,403

Tania Micki6

(CFO, since Feb. 17, 2020)

2021

363

9

132

304

353

441

1,602

 

806

1,008

2,015

2020

305

8

114

257

334

418

1,436

 

1,057

1,322

2,643

Other members of the ­Management Board7

2021

2,048

58

1,162

1,714

2,085

2,606

9,673

 

4,765

5,957

11,913

2020

1,967

60

1,034

1,652

2,252

2,815

9,780

 

7,043

8,804

17,608

Dr. David Martyr9 (former CEO, until March 31, 2019)

2021

-

-

-

-

-

-

-

 

-

-

-

2020

58

1

227

-

-

-

286

 

-

-

-

Dr. Rudolf Eugster8/9 (former CFO, until Feb. 29, 2020)

2021

-

-

-

-

-

-

-

 

-

-

-

2020

61

239

122

50

68

85

625

 

214

268

535

 

 

 

 

 

 

 

 

 

 

 

 

 

Total 

2021

3,071

79

1,645

2,876

2,998

3,747

14,416

 

6,851

8,565

17,128

2020

3,036

320

1,813

2,802

3,211

4,014

15,196

 

10,075

12,596

25,189

1  Employer's contribution to social security and contributions to post-employment benefit plans (including social security on shares transferred during the reporting period)

2  Payment will be made in the following year

3  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)

3  Formula for 2021: Shares granted in 2021 * fair value at grant (CHF 437.60)

4  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            

4  Formula for 2021: Shares granted in 2021 * fair value at grant (CHF 437.60) * 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      

5  Member of the Management Board with the highest compensation in 2020 and 2021        

6  Member of the Management Board with the second highest compensation in 2020 and 2021          

7  2020: Total seven members, entry of a member April 1 (Head PB ) and August 1 (CPO) and leaving of the former CPO, September 30)  

7  2021: Total seven members            

8  2020: Including under taxable fringe benefits payout of accrued vacation of the former CFO at the end of the contract      

9  2021: Excluding employer's contribution to social security to matching shares granted in 2021 under the PSMP 2018-2020 plan to David Martyr, Rudolf Eugster and Markus Schmid (CHF 374,413)                        

 

Explanatory comments on the compensation table:

  • The achievement of targets for short-term variable cash compensation in 2021 was similar to 2020 details of which are given below.

 

At the 2020 Annual General Meeting, shareholders approved a maximum aggregate compensation amount of CHF 18,500,000 for the Management Board for the financial year 2021. The actual compensation awarded to the Management Board in 2021 was CHF 14,416,093 and is therefore within the approved limits.

 

ILLUSTRATION [9]: COMPENSATION MIX

 

SALARY STRUCTURE MANAGEMENT BOARD
(WITHOUT CEO)
SALARY STRUCTURE CEO
PERFORMANCE IN 2021

In the year under review, the Group sales growth and reported EBITDA margin, as well as the corporate sustainability objectives exceeded the pre-set targets. The volatility in customer demands, the difficult overall pandemic situation worldwide plus the difficulties in supply chain were handled by Tecan in an exceptional way. Therefore, the performance assessment at year end resulted in the following: the overall short-term variable cash compensation payout amounted to 195% of target for the CEO and all other members of the Management Board. In 2021, important ESG-related milestones were achieved regarding employee and company culture as well as corporate governance. In the year under review, the 2019 to 2021 PSMP cycle came to an end. The performance achievement over the performance period resulted in a matching share factor of 2.5. This reflects for the cycle 2019 to 2021 an average growth rate of 18.66% and an average EBITDA margin of 20.55%, therefore significantly outperforming the defined mid-term targets on the two performance criteria.

 

COMPENSATION TO FORMER MEMBERS OF GOVERNING BODIES

No compensation was paid to former members of the Board of Directors or the Management Board in 2021 after the end of their term of office or contract with Tecan, respectively. Former members of the Management Board received matching shares out of the PSMP 2018-2020 plan.

COMPENSATION TO RELATED PARTIES

No compensation was paid in 2021 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 2021 nor in the previous year were any loans or credits extended to current or former members of the Board of Directors or the Management Board that remained outstanding at the end of the year.

RELATED PARTIES

Neither in 2021 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 2021

Information regarding participations of the Board of Directors and Management Board in Tecan Group Ltd. can be found in the Notes to the financial statements of Tecan Group Ltd. (Note 13.2 on pages 180 of this Annual Report).

 

OUTLOOK AND MOTIONS ON COMPENSATION AT THE ANNUAL GENERAL MEETING

At the 2022 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 financial year 2023 (binding vote)
  • the 2021 Compensation Report (retrospective advisory vote)
MAXIMUM AGGREGATE COMPENSATION AMOUNT FOR THE BOARD OF DIRECTORS

The maximum aggregate compensation amount for the Board of Directors for the term of office between the 2022 and the 2023 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 Units
  • committee fees paid in cash
  • additional committee fees for ad-hoc committees and a travel fee (for members of the Board of Directors located in the US only)

MAXIMUM AGGREGATE COMPENSATION AMOUNT FOR THE MANAGEMENT BOARD

The maximum aggregate compensation amount to the Management Board for the financial year 2023 submitted to vote is based on the following elements:

  • nine members of the Management Board
  • short-term variable cash compensation: the maximum amount assumes that the defined performance objectives are significantly exceeded and that the short-term variable cash compensation payout amounts to 200% (maximum)
  • long-term equity incentive award (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 [10] below shows a comparison between the maximum aggregate compensation amounts approved and the compensation effectively awarded in recent years.

 

ILLUSTRATION [10]: COMPENSATION APPROVED VERSUS AWARDED (MANAGEMENT BOARD)

 

In CHF per year (gross)

Fiscal year 20231

Fiscal year 2022

Fiscal year 2021

Fiscal year 2020

Approved compensation amount

n.a.

18,500,000

18,500,000

18,500,000

Compensation awarded

n.a.

n.a.2

14,416,000

15,196,000

1  to be proposed to the 2022 Annual General Meeting

2  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 cash compensation and the PSMP will be significantly overachieved 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 cash 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.

EN DE