6.2 Board of Directors compensation system
Role, responsibility and commitment
Sonova needs to be able to attract and retain members of the Board of Directors who are highly experienced and motivated to contribute their specific business expertise and perform a critical role in the strategic oversight of the company
Requirements – the terms of qualifications, skills, and experience – for directors of international listed companies are becoming ever more stringent. Sonovaʼs Board of Directors has the relevant and necessary skill set to ensure proper professional supervision, including international, industry, and subject specific experience.
The compensation structure reflects varying responsibilities, committee memberships, workloads and time commitments, so individual compensation levels are not the same. The Chair of the Board of Directors, for example, devotes a substantial amount of his time to mandated duties, including leading the Board of Directors, coordinating Board and committee meeting agendas and topics with committee chairs, and contributing to and participating in committee meetings as guest.
The Chair of the Board of Directors is also responsible for the continued development and adaptation of Sonovaʼs governance to meet regulatory and corporate requirements, preparing for and conducting the AGM, and overseeing the Annual Report, as well as advising the CEO on key strategic, financial, HR, and operational matters. His role also encompasses third party interactions such as shareholder inquiries and requests about corporate governance and corporate responsibility as well as meetings with proxy advisors. His sound understanding of the company, is a unique and valuable qualification that we believe provides a substantial benefit to Sonova and its shareholders.
More details on the Board of Directorsʼ composition, diversity, competencies, evaluation, risk and compliance management, as well as corporate responsibility, can be found in the corporate governance report.
Compensation structure
It is important that compensation components are structured to create a strong alignment with the interests of our shareholders. In line with best practice, a significant portion of the compensation of the Board of Directors consists of restricted shares; members of the Board of Directors receive no variable or performance-based compensation and are not eligible to participate in the occupational pension plan.
The compensation of members of the Board of Directors is defined in a regulation adopted by the Board of Directors. It consists of fixed compensation: a cash retainer and shares with a restriction period of five years and four months (Chair of the Board of Directors) or four years and four months (all other members). In addition, members of the Board of Directors receive committee fees in cash (if applicable).
Compensation structure 2024 AGM to 2025 AGM
Annual fees in cash in CHF | Chair1) | Board members excl. Chair | ||
Cash retainer | 430,000 | 100,000 | ||
Vice-Chair | n.a. | 15,000 | ||
Chair of AC/NCC | n.a. | 40,000 | ||
Member of NCC/AC | n.a. | 20,000 |
1)Including attendance as guest in the NCC and the AC.
Restricted shares in CHF | Chair | Board members excl. Chair | ||
Market value at grant | 370,000 | 160,000 |
The annual fees in cash are paid shortly after the end of the respective term of office. The restricted shares are granted in February following the start of the term of office. The compensation of members of the Board of Directors is subject to mandatory employer social security contributions (AHV/ALV). The contributions paid by the Company are disclosed in the compensation report in compliance with Sonovaʼs reporting obligations.
Sonova does not grant contractual severance payments to members of the Board of Directors, nor does Sonova make advance payments or grant loans to them.
Sonova Share Ownership Guidelines
To further align the interests of the Board of Directors with those of our shareholders, the Sonova share ownership guidelines require the members to hold a fixed monetary value in shares.
Members of the Board of Directors are required to maintain a minimum shareholding equivalent to CHF 200,000. They have two months from the first grant of restricted shares to achieve 80% of the required shareholdings, and one year and two months from the same point in time to achieve the full required shareholdings. The requirements of the guidelines can be met through shareholdings in the form of the restricted shares awarded as part of compensation and, if applicable, through share purchases on the open market. Compliance with the shareholding requirement is reviewed annually by the NCC with an effective date March 31.