6. Group Executive Board: Compensation, loans and stock ownership

6.1 Goals and achievement of goals

For the 2020 financial year, the following goals were defined for the Group Executive Board and assessed by the Compensation Committee:

In the overall evaluation, the performance of the Group Executive Board is rated successful and above expectations. The secure management of Bellevue Group AG through the year marked by the COVID-19 pandemic, the achievement of further growth in assets under management, and the increase in operating profit and return on equity shall be highlighted specially. During the financial year, the sale of Bank am Bellevue AG was successfully completed and therefore the strenghtening and focusing on asset management has been pushed. In addition, structures were adapted to the new, focused business model with significant cost savings. New growth initiatives were launched in the business unit Bellevue Private Markets, while the repositioning of StarCapital AG continues to be implemented. In addition, major progress was made in the area of ESG/sustainability during the financial year.

6.2 Compensation

In compliance with Art. 8 para. 1, section 1 of the Articles of Association, fixed compensation for the current financial year is subject to approval by the Annual General Meeting. Fixed compensation of CHF 1 488 500 (2019: CHF 1 365 000) was approved for the 2020 financial year. The actual payout for the aforementioned financial year (including compulsory employer contributions to social insurance plans) was CHF 1 318 627 (2019: CHF 1 502 362). The Group Executive Board has waived 20% (CEO: 25%) of the fixed compensation from April 1, 2020 to August 31, 2020 due to the Corona pandemic.

In the previous year, following the Annual General Meeting, Mr. Jan Kollros (July 1, 2019) and Patrik Gilli (December 16, 2019) were appointed members of the Group Executive Board.

Art. 29 para. 1 and 3 of the Articles of Association include the following provisions:

If persons are appointed to the Group Executive Board after the Annual General Meeting has approved the maximum aggregate fixed compensation for the Group Executive Board, these new members are entitled to receive a maximum of 50% of the aggregate fixed compensation for the Group Executive Board most recently approved by the Annual General Meeting (additional amount).

This additional amount may only be used if the maximum aggregate fixed compensation for the Group Executive Board for the respective financial year approved by the Annual General Meeting is not sufficient to cover the compensation of the new members. The Annual General Meeting does not vote on the additional amounts of compensation actually expended.

Due to the appointment of the new members of the Group Executive Board during 2019, the aggregate fixed compensation for the Group Executive Board approved by the Annual General Meeting was exceeded. The additional amount of compensation was exclusively tapped for the new member Jan Kollros and amounted to CHF 137 362, which is within the 50% threshold relative to the aggregate fixed compensation approved by the Annual General Meeting.

The reported short-term variable compensation totaling CHF 2 820 030 must be approved by the 2021 Annual General Meeting in compliance with Art. 8 para. 1 section 4 of the Articles of Association.

Subject to approval, the variable compensation of CHF 2 828 030 will be paid out in the first half of 2021 in accordance with the explanations under 4.2.2. For the portion paid out in shares, the fair value of the shares is calculated based on the volume-weighted average prices paid during a 10-day period preceding the respective date of transfer. The shares are blocked for a period of four years (voluntary employee stock ownership plan three years) from the date of transfer.

The short-term variable compensation (profit-sharing) of the Group Executive Board was modified during the financial year for the following reasons:

• As a result of the divestment of Bank am Bellevue, the compensation model was changed so the employees of the Corporate Center no longer receive discretionary variable compensation and instead participate in the pool described in section 3.4 above. In addition, some of the Group’s costs could no longer be allocated to the former bank subsidiary. This led to a lower total bonus pool.
• Due to the fact that in the previous year several members of the Group Executive Board had not received variable compensation for the entire financial year, the aggregate sum for the current year showed an increase compared to the previous year.

In 2020, the Board of Directors authorized a voluntary employee stock ownership plan. The members of the Group Executive Board were entitled to purchase 26 481 shares of the Company from the given pool at a discounted price of CHF 17.65 per share. This represented a discount of approximately 25% on the quarterly VWAP prior to the date the purchase right was granted. The difference between the 10-day VWAP on the date the shares are actually transferred and the purchase price corresponds to the monetary benefit. This benefit is subject to the approval of shareholders at the pending Annual General Meeting. The shares were blocked for three years from the date of transfer.

The reported long-term variable compensation totaling CHF 136 100 must be approved by the 2021 Annual General Meeting in compliance with Art. 8 para. 1 section 3 of the Articles of Association.

In previous years, entitlements to share awards under the long-term incentive plans of the Group’s investment companies on the basis of the various performance criteria were recognized as compensation at the time of vesting. In the current Remuneration Report, this was changed to the date of grant. The prior-year figures were adjusted. As a result of this change, these entitlements are now recognized as long-term variable compensation (previous years: short-term variable compensation). This change has no influence on the aggregate compensation of the Group Executive Board approved by the preceding Annual General Meetings.

The percentage ratio of fixed compensation to variable compensation for the entire Group Executive Board is 30% fixed compensation and 70% variable compensation (2019: 40% fix and 60% variable). For the CEO, the total amount of fixed compensation amounts to 21% and the variable compensation is 79% (2019: 23% fix and 77% variable).

Bellevue Asset Management AG regularly reviews the accrued vacation entitlements of its employees from previous periods. From time to time, larger balances are partially settled by cash payments. In fiscal year 2020, André Rüegg, CEO, was paid CHF 28 832 in addition to the above-mentioned amounts as partial settlement of vacation entitlements.

The values in the table above differ in certain respects from the Remuneration Reported in note 11 «Transactions with related companies and persons» of the consolidated financial statements 2020 of Bellevue Group AG , which were prepared in accordance with the International Financial Reporting Standards (IFRS). The differences relate to the valuation date of stock awards in connection with the bonus and the individual long-term incentive plans, which are subject to service period conditions. Under IFRS, their value is spread over the future vesting period («service period»), but for the purposes of this report, the amount granted is fully recognized on the date of grant.

During the reporting year, no compensation was paid to related parties of members of the Group Executive Board.

For the months of January and February 2020 (2019: March to December), CHF 50 000 (2019: 250 000) was paid to Daniel Koller, the former CFO of the Company and a member of the Group Executive Group, as compensation for a one-year non-competition clause, in accordance with Art. 33 para. 4 of the Articles of Association. This compensation was agreed in a severance and release agreement. Daniel Koller left Bellevue Group as of February 28, 2019. In addition, CHF 15 161 (excl. 7.7% VAT) was paid to Daniel Koller for advisory services related to a Group project.

6.3 Loans

At the end of 2020 and 2019, the following loans had been granted to the members of the Group Executive Board:

In the past, loans granted to members of the Group Executive Board were arranged through Bank am Bellevue AG. These were Lombard loans granted for the purchase of shares of the Company’s stock or of products that were managed by the Company. Following the divestment of Bank am Bellevue AG, there are no longer any outstanding loans with members of the Company’s governing or management bodies. The interest rate for Lombard loans was fixed at 1.0% in October 2018.

There were no outstanding loans to former members of the Group Executive Board that had been granted at market terms.

6.4 Holdings of shares in the Company

The members of the Group Executive Board owned the following Company shares at the end of 2020 and 2019: