5.3 Process of determining compensation
Compensation structure and components
The compensation structure and components for the Board of Directors and the Management Board are reviewed periodically (at least every three years) to ensure they continue to be aligned with Sonovaʼs strategy as well as with market practice.
Benchmarks
Sonova conducts benchmarking analysis of the levels and structure of total compensation for the members of the Board of Directors and of the Management Board at regular intervals. A benchmark analysis was conducted in 2024/25 for the compensation of the Board of Directors and the Management Board. For the Management Board the analyses were based on two peer groups: a primary peer group of Swiss listed companies and a secondary peer group of international companies that are active in similar fields of activity.
Swiss Listed Companies
Barry Callebaut (SMIM), Bucher Industries (SPI50), Clariant (SMIM), Dormakaba (SPI50), EMS-Chemie (SMIM), Geberit (SMI), Georg Fischer (SMIM), Givaudan (SMI), Lindt + Spruengli (SMIM), Mettler Toledo (NYSE), Schindler (SMIM), SGS (SMIM), SIG Combibloc (SMIM), Sika (SMI), Straumann (SMIM), Sulzer (SPI50), Swatch (SMIM), Tecan (SMIM), VAT Group (SMIM)
International companies
Alcon, Align Technology, Amplifon, Carl Zeiss Meditec, Cochlear, Coloplast, Demant, Dentsply Sirona, Fielmann, Fresenius, GN Store Nord, Hologic, Philips, Smith & Nephew, Teleflex, WS Audiology, Zimmer Biomet
As a general outcome, the compensation structure of the Management Board continues to be more performance oriented (and less fixed) than that of the Swiss peer companies. Otherwise, the compensation levels are generally in line with Swiss market practice.
For the Board of Directors, the benchmarking analysis was based on the same peer group of Swiss listed companies as for the Management Board and confirmed that while the compensation is aligned with market practice overall, the mix of equity based compensation is a bit higher and the restriction period on the shares is longer, both of which are strengthening alignment with shareholder interests.
Performance management
The actual compensation of the members of the Management Board in a financial year depends on the performance of the Group and/or respective business unit, as well as on individual performance, which is assessed through the formal annual performance review process. Financial, business unit, ESG and individual performance objectives are approved at the beginning of the financial year and achievements against those objectives are generally assessed at the end of the financial year, according to Sonovaʼs performance appraisal process.