7. Compensation of the Board of Directors and Executive Board subject to approval at the Annual General Meeting in 2023

7.1 Approval of maximum total fixed compensation for the Board of Directors

In the past, the Board of Directors received fixed compensation in cash and variable compensation in the form of Company shares as the Articles of Association did not permit stock-based fixed compensation for directors. Upon and subject to approval of the amendments to the Articles of Association proposed under item 6.2, directors’ fixed compensation can be paid in cash and/or shares of the Company. Consequently, variable compensation will no longer be paid to the Board of Directors as of the 2023 fiscal year. In addition, fixed compensation will include the option of a non-monetary benefit that can be applied toward voluntary stock purchase programs (restricted shares) that allow participants to purchase stock at a discount. The total amount compensation of the Board of Directors will not change significantly. The changes detailed in the compensation report are related to the assumptions used to determine the imputed maximum value of the non-monetary benefit of the shares that could be allocated under the voluntary stock purchase programs. The comparative figures have been adjusted for this paragraph. Maximum total compensation thus consists of the following components:

• Maximum fixed compensation of CHF 742 000 (previous period: CHF 751 341, therof fixed compesation of CHF 607 341 and variable compensation of CHF 144 000);
• Maximum non-monetary benefit of CHF 114 000 applicable toward voluntary stock purchase programs (previous period: CHF 33 801);
• Maximum employer contributions of CHF 24 000 for compulsory social insurance schemes (previous period: CHF 11 684).

The Board of Directors proposes approval of maximum total compensation of CHF 880 000 (previous period: CHF 796 826) for the Board of Directors for the term of office ending with the conclusion of the next Annual General Meeting. The payment will be made partly in Company shares, which are subject to a three- respectively four-year lock-up period, and in cash.

7.2 Approval of the maximum total variable compensation for the Board of Directors

In order for the members of the Board of Directors to be paid compensation in the form of Company shares in accordance with the current Articles of Association, the Board of Directors will receive variable compensation in the form of Company shares that is not aligned with reported results. The calculation of the variable compensation for the Board of Directors is described in section 4.1 and disclosed in section 5.1.

The Board of Directors proposes the approval of total variable compensation of CHF 181 226 (2021: CHF 244 550) for the Board of Directors for the 2022 financial year. Payment will be made in the form of shares of the Company, subject to a four-year lock-up period.

7.3 Approval of the maximum total fixed compensation and long-term variable compensation for the Group Executive Board

The Board of Directors reviewed the fixed compensation paid to the Group Executive Board and did not change the amount of fixed compensation paid to the board’s previous members compared to the previous year. Analogous to the Board of Directors, fixed compensation includes the option of non-monetary benefit that can be applied toward voluntary stock purchase programs (restricted shares) that allow participants to purchase stock at a discount. Fixed compensation thus consists of the following components:

• Maximum fixed compensation of CHF 620 000 (2022: CHF 805 000);
• Maximum non-monetary benefit of CHF 270 000 applicable toward voluntary stock purchase programs (2022: CHF 61 594);
• Maximum employer contributions of CHF 182 400 for compulsory social insurance schemes, as well as other insurance schemes and pension plans (2022: CHF 214 028).

The proposed amount of fixed compensation for the Group Executive Board for the 2023 financial year is thus CHF 1 072 400 (2022: CHF 1 080 622). 

The changes shown are related to the retirement of Jan Kollros from the Group Executive Board as well as to the assumptions used to determine the maximum value of the monetary benefit of the shares potentially allocated under the voluntary participation programs.

The Group CEO participates in a Long-Term Incentive Plan in connection with the asset management mandate of BB Biotech AG. In 2023 he is entitled to receive a maximum of 1 700 shares (2022: 1 700 shares) of BB Biotech AG. Based on the closing price as of December 31, 2022, this corresponds to a maximum compensation of CHF 93 900 (2022: 131 200) plus compulsary social security contributions of CHF 7 000 (2022: 9 800). This corresponds to a maximum total amount of CHF 100 900 (2022: CHF 141 000).

The Board of Directors proposes the approval of maximum total fixed and long-term variable compensation of CHF 1 173 300 (2022: CHF 1 221 622) that can be awarded and paid to the members of the Group Executive Board during the current 2023 fiscal year.

7.4 Approval of the total short-term variable compensation for the Group Executive Board

Subject to approval by the Annual General Meeting, the members of the Group Executive Board will be paid short-term variable compensation related to performance based on annually agreed targets and expectation. The following proposal is based on performance and target achievement in the 2022 fiscal year. The components and the calculation of the variable compensation for the Group Executive Board are described in section 4.2 and disclosed in section 6.2.

The Board of Directors proposes the approval of total short-term variable compensation of CHF 1 322 955 (2021: CHF 3 255 805) for the Group Executive Board for the 2022 financial year.