1. Introduction by the Chair of the Nomination and Compensation Committee
Dear Shareholders,
The Nomination and Compensation Committee (NCC) focused on its regular activities throughout the year, including the determination of compensation for members of the Board of Directors and the Management Board, the succession planning for positions on the Board of Directors and the Management Board, and the preparation of the compensation report as well as of the say-on-pay votes at the Annual General Shareholders’ Meeting (AGM).
I am pleased to share with you Sonova’s 2021/22 compensation report. Our compensation system is strongly aligned with the company’s strategy, our business results, and the interests of our shareholders. Transparency is key for us and we continuously work to improve the clarity of our disclosures. We have therefore further enhanced the information provided on the compensation framework and particularly on the link between performance and compensation.
Review of compensation framework
To ensure that our compensation framework continues to be attractive, effective, and sustainable, the NCC again dedicated substantial time to its respective tasks during the reporting year. Adaptations to the compensation framework are made only when and if deemed appropriate, also taking into consideration the ongoing dialogue with our shareholders and with proxy advisors.
The NCC carried out its periodical review of the market alignment of compensation for the members of the Board of Directors and of the Management Board. The analysis confirmed that Sonovaʼs compensation structure and levels are broadly in line with prevalent market practice. It also re-confirmed Sonova’s Management Board compensation is more performance-oriented (and less fixed) than at other companies. The NCC concluded that both the compensation framework of the members of the Board of Directors and of the Management Board are appropriate and do not need to be amended.
Environmental, social and governance (ESG)
To support Sonovaʼs corporate social responsibility and sustainable business approach and ongoing efforts, relevant environmental, social, and governance (ESG) targets are reflected in the Variable Cash Compensation (VCC) of the Management Board.
As part of our ESG strategy, we strongly believe that a more balanced gender representation on the Board of Directors and in the Management Board is in the best interests of the Sonova Group. We will have achieved a proportion of 30% women on the Board of Directors, assuming that Julie Tay is elected to the Board of Directors at the 2022 AGM, and 25% on the Management Board. At the end of fiscal year 2021/22, women represented 35.2% of key positions across the global Sonova organization, up from 33.5% a year ago.
Changes in the Board of Directors
As of the 2021 AGM, we welcomed two new members of the Board of Directors: Gregory Behar and Roland Diggelmann. Roland Diggelmann and myself were also newly elected to the NCC. Julie Tay is proposed for election to the Board of Directors at the 2022 AGM.
The NCC and the Board of Directors had several sessions focusing on succession planning. An assessment matrix was used encompassing the breadth and depth of competencies and experience required by Sonova to support our business and strategies. To ensure a balanced overall board composition and long-term planning, these criteria include, among others: executive management experience and acumen, international experience, expertise on the areas of finance, M&A, and human resources, industry affinity, as well as diversity in terms of background, industry, functional knowledge, nationalities, gender, and age.
Julie Tay, the new member of the Board of Directors proposed for election at the 2022 AGM has an outstanding executive track record in successfully leading sizeable businesses, particularly in Asia. She brings extensive and invaluable experience in medical technology industries and in growing businesses through healthcare professional and direct-to-consumer models.
Changes in the Management Board
Birgit Conix was appointed as CFO on May 1, 2021. We also announced the appointment of Robert Woolley to the Management Board as GVP Hearing Instruments and the appointment of Martin Grieder within the Management Board as GVP Consumer Hearing. Both appointments are effective April 1, 2022.
2022 AGM
The total compensation awarded to the members of the Board of Directors for the actual term of office is well within the limit approved by the 2021 AGM. The compensation awarded to the members of the Management Board for the reporting year is also within the limit approved by the 2020 AGM.
At the 2022 AGM, you will have the opportunity to express your opinion on our compensation principles and system by way of a consultative vote on this compensation report. We will also ask for your approval of the maximum aggregate compensation amounts for the Board of Directors for the next term of office, which ends at the 2023 AGM, and for the Management Board for the 2023/24 financial year. No changes to the compensation system of the Board of Directors and the Management Board are foreseen.
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, and we remain confident that our compensation system rewards for performance in a balanced and sustainable manner, that aligns well with our shareholder interests. We look forward to our continued dialogue.
Yours sincerely,
Chair of the NCC
