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Compensation - summary

Givaudan aims to attract, motivate and retain the highest calibre of professional and executive talent to sustain its leadership position within the flavour and fragrance industry. 

The Compensation Committee supports the Board of Directors (Board) in establishing and reviewing compensation policies. It regularly reviews Company-wide programmes in regard to base salary, pension and benefit plans. The Compensation Committee also annually reviews and approves the performance targets and related payouts under the annual incentives and share-based long-term incentives, while the applicable performance criteria are set by the Board.

The Compensation Committee is also responsible for reviewing and approving individual compensation and benefits of each Executive Committee member as well as recommending compensation for the Board.

The Compensation Committee consists of three independent members of the Board and is currently chaired by Prof. Dr-Ing. Werner Bauer. The Chief Executive Officer is regularly invited to Compensation Committee meetings. The Head of Global Human Resources acts as secretary of the Compensation Committee. The Chairman of the Compensation Committee may invite other executives as appropriate. However, executives do not participate in discussions regarding their own compensation.

The Compensation Committee meets three to five times a year and informs the Board of its deliberations, recommendations and resolutions after each meeting. The minutes of the meetings are available to the full Board. The Committee utilises independent external consultants to benchmark the compensation of senior management and the Board.

The Articles of Incorporation of Givaudan include rules on the principles applicable to performance-related pay and to the allocation of equity securities, convertible rights and options (Arts. 23-25), additional amounts for payments to Executive Committee members appointed after the vote on pay at the shareholders’ meeting (Art. 27), loans, credit facilities and post-employment benefits for the Executive Committee and Board (Arts. 30 and 31) and the vote on pay at the shareholders’ meeting (Art. 26).
> Articles of Incorporation

Specific activities in 2017 

In 2017, beside its regular activities throughout the year, the Compensation Committee undertook a comprehensive review of the Performance Share Plan. Accordingly, changes to the PSP payout matrix will be introduced in 2018, reflecting our overall increasingly challenging targets and conversely further limiting payouts in the event of lower performance. Further details are provided in section 3.6, in the 2017 Compensation Report page 86.

Additionally, an increase in share ownership requirements for Executive Committee members was introduced in September 2017 under revised Guidelines. Further details are provided in section 6, page 90 in the 2017 Compensation Report.

Compensation of the Executive Committee

In 2017, total compensation reported remained stable compared to 2016. Total compensation for 2017 represented:

  • full year compensation for eight Executive Committee members (including CEO),
  • full year compensation for Joe Fabbri who stepped down from the Executive Committee on 1 July 2017 and provided transitional services and support on strategic projects until his retirement on 31 December 2017,
  • partial year compensation for the former Chief Financial Officer, Matthias Währen, who stepped down on 1 January 2017 and provided transitional services and support on strategic projects until his retirement on 30 June 2017 (including CEO).

Total compensation for 2016 represented full year compensation of eight Executive Committee members and partial year compensation of one new Executive Committee member, Anne Tayac, who was appointed Head of Givaudan Business Solutions on 1 August 2016 (including CEO).

No other compensation or fees were accrued for or paid to any member or former member of the Executive Committee during the reporting period. No member or former member of the Executive Committee or related parties had any loan outstanding as of 31 December 2017.

Matthias Währen retired from his role as Chief Financial Officer on 30 June 2017. He did not receive any special compensation as a result of his retirement.

Executive Committee compensation summary

 

in Swiss francs

Gilles Andrier
CEO 2017

Gilles Andrier
CEO 2016

Executive Committee members (excluding CEO) 1 2017

Executive Committee members (excluding CEO) 2 2016

Total
2017

Total
2016

- Base salary

 1,045,952

 1,035,599

 3,970,375

 3,819,306

 5,016,327

 4,854,905

- Pension benefits 3

 445,076

 442,705

 1,048,011

 1,558,506

1,493,087

 2,001,211

- Other benefits 4

 114,688

 111,061

800,451

 792,134

 915,139

 903,195

Total fixed compensation

 1,605,716

 1,589,365

5,818,837

 6,169,946

 7,424,553

 7,759,311

- Annual incentive 5

 977,142

 944,804

 2,513,556

 2,342,717

 3,490,699

 3,287,521

- Number of performance
   shares granted 6

 1,777

 1,686

 5,549

 5,441

 7,326

 7,127

- Value at grant 7

 2,881,583

 2,882,048

 8,998,258

 9,300,845

 11,879,841

 12,182,893

Total variable compensation

 3,858,726

 3,826,852

 11,511,814

 11,643,562

 15,370,539

 15,470,414

Total compensation

 5,464,441

 5,416,217

 17,330,651

 17,813,508

 22,795,092

 23,229,725

 

 

 

 

 

 

 

Employer social security 8

 442,000

 438,000

1,413,000

 1,427,000

 1,855,000

 1,865,000

1. Represents (a) full year compensation of seven Executive Committee members, (b) partial year compensation of the outgoing Chief Financial Officer, Matthias Wahren, who stepped down from his role on 1 January 2017 and retired on 30 June 2017 and (c) full year compensation for Joe Fabbri who stepped down from his Executive Committee role on 1 July 2017 and retired on 31 December 2017.
2. Represents full year compensation of eight Executive Committee members and partial year compensation of one new Executive Committee members who was appointed on 1 August 2016.
3. Company contributions to broad-based pension and retirement savings plans and annualised expenses accrued for supplementary executive retirement benefit.
4. Represents annual value of health and welfare plans, international assignment benefits and other benefits in kind.
5. Annual incentive accrued in reporting period based on performance in the reporting period.
6. 2017 Performance shares vest on 15 April 2020, 2016 Performance shares vest on 15 April 2019.
7. Value at grant calculated according to IFRS methodology and based on 100% achievement of performance targets.
8. 2017 estimated social security charges based on 2017 compensation; 2016 estimated social security charges based on 2016 compensation.

The compensation paid is within the amounts approved by shareholders in the respective Annual General Meeting. For 2016 compensation and as already disclosed in the respective Compensation Report, an additional supplementary amount of CHF 142,204 was paid in accordance with the Givaudan Articles of Incorporation (Art. 27).

The fixed and long term variable compensation approved for 2017 was CHF 19,800,000 (2016: CHF 19,800,000 ).

The annual incentive, short term variable compensation amount for 2017 was CHF 3,490,698 and will be submitted for approval at the 2018 Annual General Meeting (2016: CHF 3,287,520 ).

Compensation of the Board of Directors

Compensation of Board members consists of Director fees, Committee fees and Restricted Share Units (RSUs). Fees are paid at the end of each year in office completed. RSUs give participants the right to receive Givaudan shares (or a cash equivalent in countries where securities laws prevent the offering of Givaudan securities) at the end of a three-year blocking period. During this period Board members must hold RSUs (accordingly are restricted from trading RSUs or the underlying Givaudan shares), thereby aligning with shareholder interests over the longer term. Board members are entitled to receive Givaudan shares regardless of membership status so that, for example, if re-election does not occur during the restriction period, awarded RSUs are retained by the respective Board member. Such practice has been implemented in line with best practice in support of Givaudan’s commitment to ensuring Board independence.

The annual fees for Board membership and additional functions are summarised in the table below. The fees are consistent with prior year levels.

Board of Directors fees - Summary
 

 

Annual fees
(CHF)

Restricted Shares
Compensation
(CHF) ³

Chairman of the Board 1

400,000

580,000

Vice-Chairman of the Board 1

100,000

145,000

Board membership

100,000

145,000

Chairman - Audit Committee 2

55,000

 

Chairman - Other Committees 2

40,000

 

Membership - All Committees

25,000

 

1. Incl. Board membership fees
2. Incl. Committee membership fees
3. Number of RSUs granted represents the closest match to the values displayed

The Chairman of the Board does not receive any additional Board Membership or Committee fees. Similarly, a Committee Chairman does not receive any additional Committee Membership fees.

Each Board member receives an additional amount of CHF 10,000 to cover out-of-pocket expenses. This amount is paid for the coming year in office. The RSUs are also granted for the same period. 

Board fees are aligned with the total Board compensation approved by shareholders at the 2016 Annual General Meeting and with market practice. In 2017, Board member compensation was benchmarked against a peer group of other Swiss multinational companies of a size similar to Givaudan. This peer group consisted of Swiss Leader Index (SLI) companies that disclose board fee policy information, excluding the five largest companies and financial services institutions. The benchmark included 17 companies: Actelion, Adecco, Aryzta, Clariant, Dufry, Geberit, Kuehne + Nagel, LafargeHolcim, Lonza, Richemont, Schindler, SGS, Sika, Sonova, Swatch, Swisscom and Syngenta.

No additional compensation or fees were paid to any member of the Board. No Board member or related parties had any loan outstanding as of 31 December 2017.

No Special compensation of members of the Board who left the Company was incurred during the reporting period.

The compensation paid to the Board members for the period between the 2016 and 2017 Annual General Meetings (CHF 3,073,289) is within the amount approved by shareholders at the 2016 Annual General Meeting (CHF 3,300,000). Amounts approved at the 2017 Annual General Meeting (CHF 2,950,000) will be paid by the end of the year in office and validated in the 2018 Compensation Report. Such approved and paid amounts will differ from those shown in the Board compensation summary table which, according to the OaEC, must include compensation paid in the reporting year.

Board of Directors compensation summary

 

2017

in Swiss francs
 

Calvin Grieder
Chairman
5

Victor
Balli
5

Prof.
Dr-Ing.
Werner Bauer
5

Lilian
Biner
5

Michael Carlos
5

Ingrid Deltenre
5

Thomas Rufer
5

Dr Jürg Witmer
6

Total
2017
1

Director fees 2

 325,000

 100,000

 100,000

 100,000

 100,000

 100,000

 100,000

 100,000

 1,025,000

Committee fees 2

 61,250

 43,750

 65,000

 31,250

 58,750

 50,000

 55,000

 10,000

 375,000

Total fixed (cash)

 386,250

 143,750

 165,000

 131,250

 158,750

 150,000

 155,000

 110,000

 1,400,000

Number of RSUs
granted 3

 360

 90

 90

 90

 90

 90

 90

 

 900

Value at grant 4

 583,776

 145,944

 145,944

 145,944

 145,944

 145,944

 145,944

 

 1,459,440

Total compensation

 970,026

 289,694

 310,944

 277,194

 304,694

 295,944

 300,944

 110,000

 2,859,440

1. Represents total compensation for the Board of Director paid in respect of the reporting year, reported in accordance with the accrual principle.
2. Represents Director and Committee fees paid in respect of the reporting year, reported in accordance with the accrual principle.
3. RSUs vest on 15 April 2020.
4. Economic value at grant according to IFRS methodology, with no discount applied for the vesting period.
5. The function of each member of the Board of Directors are indicated on pages 63-65 in the Corporate Governance section of the 2017 Annual Report.
6. Retired at the Annual General Meeting in March 2017.

Estimated social security charges based on 2017 compensation amounted to CHF 205,000 (2016: CHF 221,000 ). 
In addition to the above, payments to Board members for out-of-pocket expenses amounted to CHF 70,000 (2016: CHF 70,000).

Ownership of Givaudan securities

  
Executive Committee
The Chief Executive Officer and other members of the Executive Committee, including persons closely connected to them, held 6,423 Givaudan shares. No member of the Executive Committee held any share options or option rights as at 31 December 2017 (31 December 2016: no member of the Executive Committee held any share options or option rights).

One person closely connected to a member of the Executive Committee owned 269 unvested Performance Shares as at 31 December 2017.

The Company is not aware of any other ownership of shares, share options/option rights, RSUs or Performance Shares as per 31 December 2017 by persons closely connected to members of the Executive Committee.

Executive Committee: ownership of Givaudan securities

2017

in numbers

Shares

Unvested
performance shares

Gilles Andrier, CEO

3,300

4,909

Tom Hallam

220

1,014

Mauricio Graber

750

2,817

Maurizio Volpi

785

2,313

Simon Halle-Smith

105

1,277

Willem Mutsaerts

199

1,361

Anne Tayac

110

917

Chris Thoen

685

1,337

Total 2017

6,154

15,945

Total 2016

4,460

19,278

Board of Directors
As per 31 December 2017, the Chairman and other Board members, including persons closely connected to them held 3,360 Givaudan shares in total.

The Company is not aware of any other ownership of shares, share options/option rights, RSUs or Performance Shares as per 31 December 2017 by persons closely connected to members of the Board.

Board of Directors: ownership of Givaudan securities

2017

in numbers

Shares

Unvested RSUs

Calvin Grieder, Chairman

119

536

Victor Balli

 

175

Prof. Dr-Ing. Werner Bauer

1,089

266

Lilian Biner

496

266

Michael Carlos

921

266

Ingrid Deltenre

26

176

Thomas Rufer

709

266

Total 2017

3,360

1,951

Total 2016

5,546

2,797