5.2 Nomination and Compensation Committee
As determined in the Articles of Association, the Organizational Regulations, and the NCC Charter of Sonova Holding AG, the NCC supports the Board of Directors in the fulfillment of its duties and responsibilities in the areas of compensation and in personnel related matters. Its tasks and responsibilities include, among others:
- Periodical review of Sonovaʼs compensation principles
- Periodical benchmark reviews covering the compensation of the members of the Board of Directors (including the Chair of the Board of Directors), the CEO, and the other members of the Management Board
- A yearly review of the individual compensation of the CEO and of the other members of the Management Board, including the VCC and the EEAP
- Review and amendment of the target setting and related performance appraisal of the members of the Management Board (prepared by the CEO) and of the CEO (prepared by the Chair of the Board of Directors)
- Preparation of the compensation report
- Succession planning of the Management Board and the Board of Directors
- Selection and nomination of candidates for the role of the CEO, for nomination to the Management Board as proposed by the CEO, as well as pre-selection of suitable candidates for the Board of Directors
- Periodical review of the employment terms and policies
Decision on | CEO | NCC | Board of Directors | AGM | ||||
Compensation principles and system for the Board of Directors and the Management Board | proposes | approves | ||||||
Maximum aggregate amount of compensation for the Board of Directors and the Management Board to be submitted to shareholders’ vote | proposes | reviews and proposes to AGM | binding vote | |||||
Individual compensation, including cash components and shares, to be granted to the members of the Board of Directors 1) | proposes | approves | ||||||
Individual compensation, including fixed base salary, variable cash compensation and long-term equity incentives, of the CEO 1) | proposes | approves | ||||||
Employment terms of the CEO 1) | proposes | approves | ||||||
Individual compensation, including fixed base salary, variable cash compensation and long-term equity incentives, of the Management Board (excluding CEO) 1) | recommends | proposes | approves | |||||
Annual total amount of long-term equity incentives to be granted to all other eligible employees | recommends | proposes | approves | |||||
Compensation report | proposes | approves | consultative vote |
1)Within the framework of the Articles of Association and the maximum aggregate amount of compensation approved by the AGM.
The NCC consists exclusively of independent and non-executive members of the Board of Directors, who are elected individually and annually by the AGM. For the period under review, the NCC consisted of Roland Diggelmann (Chair of the NCC), Lukas Braunschweiler, Stacy Enxing Seng, and Julie Tay.
The NCC meets as often as business requires but at least four times per year. In the 2024/25 financial year, it held four meetings covering, among others, the following pre-defined recurring agenda items:
Item | May | September | November | January | ||||
Beginning of the financial year | ||||||||
Compensation policy& process | – Approval of MB compensation benchmark peer group | – Update on feedback from key investors and proxy advisors following AGM vote – Information on top executives compensation review process | – Preview of group wide salary review for the following financial year | – Approval of group wide EEAP grant size – Approval of EEAP plan regulations | ||||
Management Board (MB) & Board of Directors (BoD) matters | – Approval of payout of VCC for the previous financial year and vesting of EEAP for the previous EEAP cycle | – Review of MB and BoD compensation benchmark | – Preview of target compensation review for the following financial year (incl. EEAP grant) | – Review of target compensation for the following financial year (incl. EEAP grant) – Approval of VCC performance scheme for following financial year – Setting of EEAP performance targets for the next EEAP cycle | ||||
Governance | – Approval of corporate governance and compensation report as well as compensation part of the AGM invitation – Proposal of maximum aggregate amount of compensation of MB and BoD to be submitted to AGM vote – Share ownership status review of the MB and BoD – Review and approval of NCC charter | – Review of proxy advisor/shareholder feedback on compensation report – Board evaluation | – Review of first draft of compensation report – Approval of EEAP pool for yearly grant | – Approval of draft compensation report 2024/25 without financials | ||||
Nomination | – Succession planning for the MB | |||||||
Special ad hoc items such as personnel changes at executive level are covered as and when appropriate.
As a general rule, the Chair of the Board of Directors, the CEO, and the GVP Corporate Human Resource Management & Communications (HRM) participate in the NCC meetings. However, they do not participate during the sections of the meetings where their own performance and/or compensation is discussed.
There is a closed session (without the participation of any executive or guest) after each NCC meeting. The Chair of the NCC reports to the Board of Directors on its activities and recom¬mendations after each meeting. The minutes of the NCC meetings are available to the Board of Directors.
External advisors
The NCC may decide to consult external advisors for specific compensation matters. In the 2024/25 reporting year, Aon was tasked with the performance share unit (PSU) valuation and performance measurement under the EEAP; Algofin performed the option valuation. PwC and Willis Towers Watson provided support in the context of the market review of compensation for the Board of Directors and the Management Board. PwC provided also support in the preparation of the compensation report and CSRD. The above mentioned external advisors have no other mandates within Sonova.