1. Introduction by the Chair of the Nomination and Compensation Committee
Dear Shareholders,
I am pleased to share with you Sonovaʼs 2022/23 compensation report.
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 Shareholdersʼ Meeting (AGM).
Further enhancing transparency and clarity of disclosures
Our compensation system is strongly aligned with the companyʼs 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.
Supporting the corporate strategy implementation
Closely aligned with and in strong support of the Sonova strategy the NCC put special emphasis on the following three corporate initiatives in fiscal year 2022/23:
To support Sonovaʼs corporate sustainability 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. The ESG targets are based on IntACT, our ESG strategy outlined in Sonovaʼs corporate sustainability report. IntACT operates in four key areas: serving society, advancing our people, acting with integrity, and protecting the planet. – As part of our ESG strategy, we strongly believe that a balanced gender representation on the Board of Directors and in the Management Board is in the best interests of the Sonova Group. We have achieved a proportion of 30% women on the Board of Directors, and 25% on the Management Board in fiscal year 2022/23.
The continuous improvement strategy and approach pursued across all Sonova businesses and functions is particularly important in the search for and development of talent, and thus in our comprehensive and continuous recruitment process. The company has invested substantial time, effort, and resources in the development of the middle management for the last three years in order to strengthen the Sonova top management pipeline. – As a result, 67% of all people managers have been recruited internally for 3 years in a row. In a strategic effort to further enhance retention of key talent the eligibility to participate in the EEAP program was expanded to the Sonova middle management, adding 40 managers (increase of participants by 6%) to this successful long-term incentive program.
We strive for diversity and inclusion and have put significant effort into improving our workplace over the past few years. Based on the annual global employee survey we are perceived as best in class in the eyes of our employees. We have further improved our gender team composition. 54.4% of all people managers roles and 34.5% of key positions were filled with female talent at the end of fiscal year 2022/23. In comparison, women represented 51.2% of all people manager roles and 35.2% of key positions across the global Sonova organization at the end of fiscal year 2021/22.
Changes in the Board of Directors
The NCC and the Board of Directors have continued to focus on succession planning to ensure a balanced overall board composition long-term. Relevant criteria include the breadth and depth of competencies and experiences required to govern the Sonova business and support the implementation of our strategies.
We welcomed Julie Tay as a new member of the Board of Directors at the AGM 2022. Following the election of three new members of the Board of Directors in the last two AGMs, there will be no new additions to the Board proposed at the AGM 2023. Julie Tay is proposed for election to the NCC. As announced earlier, Jinlong Wang will step down as a member of the Board of Directors after 10 years of highly valued service.
Changes in the Management Board
Robert Woolley was appointed to the Management Board as GVP Hearing Instruments and Martin Grieder within the Management Board as GVP Consumer Hearing effective on April 1, 2022.
2023 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 2022 AGM. The compensation awarded to the members of the Management Board for the reporting year is also well within the limit approved by the 2021 AGM.
At the 2023 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 2024 AGM, and for the Management Board for the 2024/25 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
