4. Compensation policy and principles

At Sonova, our mission is to improve and grow the company for all our stakeholders drives us to attract and hire the best talent essential for our continued success. We are committed to fostering a culture of excellence, where our competitive compensation systems reflect our dedication to recognizing and rewarding the contributions of our exceptional team members. By bringing together individuals with diverse backgrounds and experiences, we empower our workforce to innovate and excel, ensuring that we remain at the forefront of the medical device industry. Sonovaʼs competitive compensation systems are based on the following principles:

We are committed to the principle of equal pay for equal work and are taking all necessary steps in our job evaluation and leveling processes to ensure a fair compensation system. We regularly review compensation in terms of relevant local legal and regulatory equal pay requirements as they continue to evolve. Internally, we analyze whether we pay female and male employees equally for the same job or an equally valued role and take corrective actions if necessary.

The compensation of the Board of Directors consists of fixed compensation only, paid partly in cash and partly in restricted shares. The independence of the Board of Directors in its supervisory function is reinforced by the practice that no performance-related compensation is awarded.

The compensation of the Management Board consists of fixed and variable, performance-based, compensation components. The base salary and benefits form the fixed components are determined based on the reference peer group. The performance-based compensation includes a short-term cash incentive and a long-term equity incentive. Performance targets for the VCC and EEAP are defined at the beginning of the performance period and assessed at the end.

To avoid compensation for inappropriate risk taking or short-term profit maximization at the expense of the long-term health of the company, a cap and claw-back provision apply to both the short-term and the long-term variable compensation components.