6. Group Executive Board: Compensation, loans and stock ownership
6.1 Goals and achievement of goals
For the 2023 financial year, the following goals were defined for the Group Executive Board and assessed by the Compensation Committee:
Quantitative targets | Target | Assessment | ||||
KPIs | – Assets under management | 10% Growth | Performance below expectation | |||
– Cost-Income ratio | <65% | Performance below expectation | ||||
– Return on equity | >20% | Performance below expectation | ||||
Qualitative targets | ||||||
KPIs | – Performance quality of products | 50% outperform benchmark | Performance below expectation | |||
– ESG | Further development of the ESG-initiatives | Performance above expectation |
The year 2023 was characterized by the persistently very challenging market environment for small and mid-cap growth stocks in the healthcare sector with below-average, and in some cases even negative, developments on the capital market, making it a very demanding year for the company and its employees. Bellevue was unable to escape the trend on the capital markets and recorded a reduction in client assets under management. With the investment performance of the products falling short of expectations, there was no compensatory momentum. In the overall evaluation, the performance of the Group Executive Board fell short of expectations against the backdrop of a significantly reduced earnings base and Group result.
In addition to focusing on stabilizing the Group in the core area of established investment strategies, the Executive Board used 2023 to flesh out new growth initiatives and further embed ESG criteria in the corporate and investment strategy. For example, new product ideas were launched in growth areas such as Bellevue Obesity Solutions and Bellevue AI Health, and attractive transactions were realized in the area of private market investments. Further investments in the expansion of investment expertise and the modernization of the infrastructure should further underpin the medium to long-term growth prospects as a specialist asset manager and provide a solid foundation for future development.
6.2 Compensation
As with the Board of Directors, fixed compensation includes a potential non-monetary benefit for participation in voluntary stock purchase programs (restricted shares) at a discount. A maximum amount for this position was already approved at the 2023 Annual General Meeting. This position was in the past recognised as short-term variable compensation. The comparative figures have been adjusted to the new presentation.
CHF | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||||||
André Rüegg CEO 1) | Total 2) | André Rüegg CEO 1) | Total 3) | |||||
Fixed compensation – in cash | 350 000 | 605 000 | 350 000 | 805 000 | ||||
Non-monetary benefit from voluntary stock purchase programs 4) | - | - | 30 046 | 61 594 | ||||
Social insurance contributions 5) | 92 998 | 159 339 | 94 084 | 214 028 | ||||
Total fixed compensation | 442 998 | 764 339 | 474 130 | 1 080 622 | ||||
Short-term variable compensation (profit-based compensation) | 350 000 | 570 000 | 675 000 | 1 181 667 | ||||
– in shares | - | - | 337 500 | 590 834 | ||||
– of which in restricted shares 6) | - | - | 100 000 | 266 667 | ||||
– of which in restricted shares with a vesting period and claw back right provisions 6) 7) | - | - | 237 500 | 324 167 | ||||
– in cash | 350 000 | 570 000 | 337 500 | 590 833 | ||||
Social insurance contributions 8) | 25 000 | 41 000 | 44 000 | 78 300 | ||||
Total short-term variable compensation | 375 000 | 611 000 | 719 000 | 1 259 967 | ||||
Long-term variable compensation | 93 900 | 93 900 | 131 200 | 131 200 | ||||
– in shares | 93 900 | 93 900 | 131 200 | 131 200 | ||||
– of which long-term incentive plans, investment companies 9) | 93 900 | 93 900 | 131 200 | 131 200 | ||||
Social insurance contributions 8) | 7 000 | 7 000 | 9 800 | 9 800 | ||||
Total long-term variable compensation | 100 900 | 100 900 | 141 000 | 141 000 | ||||
Total compensation | 918 898 | 1 476 239 | 1 334 130 | 2 481 589 | ||||
1) André Rüegg is the CEO of Bellevue Group AG and Bellevue Asset Management AG.
2) As of December 31, 2023, the Group Executive Board consists of André Rüegg, CEO and CEO Bellevue Asset Management AG, and Michael Hutter, CFO.
3) As of December 31, 2022, the Group Executive Board consisted of André Rüegg, CEO and CEO Bellevue Asset Management AG, and Michael Hutter, CFO. Jan Kollros, CEO adbodmer AG and Bellevue Private Markets AG, has left the Group Executive Board as of August 31, 2022.
4) This is the amount of the monetary benefit which reflects the difference between the discounted purchase price and the 10-day VWAP for the effective share allocation.
5) The social insurance contributions include compulsory employer contributions to social insurance plans, employer contributions to pension plans and employer contributions to health and accident insurance plans.
6) All shares of the Company were or are valued at market value (volume-weighted average prices during the 10-day trading preceding the date of grant). Compulsory employee contributions to social insurance plans on these amounts were settled in cash, not in the form of shares.
7) The shares are subject to a one-year service period and a one-year claw back right clause.
8) The social insurance contributions include compulsory employer contributions to social insurance plans. With respect to variable compensation that has not yet been paid out, a prospective rate of 6.5% is used to calculate prospective employer contributions to social insurance plans and rounded up. The actual amount due (in the subsequent year) may be lower. Pension plan contributions are not levied on any components of variable compensation, which is not included in the respective insurance coverage.
9) Entitlement to a maximum of 1 700 shares of BB Biotech (2022: 1 700 shares of BB Biotech), valued at fair value (closing price on 31.12.2022 and 31.12.2021, respectively).
In compliance with Art. 8 para. 1, section 2 of the Articles of Association, fixed compensation for the current financial year is subject to approval by the Annual General Meeting. Fixed compensation (including the monetary benefit from voluntary stock purchase programs) of CHF 1 072 400 (2022: CHF 1 175 000) was approved for the 2023 financial year. The actual payout for the aforementioned financial year (including compulsory employer contributions to social insurance plans) was CHF 764 339 (2022: CHF 1 017 634).
The resolutions of the Annual General Meeting regarding the fixed remuneration for the Group Executive Board for the 2023 financial year were therefore complied with.
The reported short-term variable compensation totaling CHF 611 000 must be approved by the 2023 Annual General Meeting in compliance with Art. 8 para. 1 section 3 of the Articles of Association. Subject to approval, the variable compensation for work performed in 2023 of CHF 611 000 will be paid out in the first half of 2024 in cash due to the departure of the two members of the Group Executive Management.
In 2023 and 2022, the Board of Directors authorized a voluntary employee stock ownership plan. The members of the Group Executive Board did not exercise any rights to buy shares (2022: 8 200 shares) at a discounted price. In 2022, 8 200 shares at a discounted price of CHF 23.75 per share were allocated to the Group Executive Board. 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. The shares were blocked for three years from the date of transfer.
The short-term variable compensation (profit-sharing) of the Group Executive Board essentially decreased by more than 50% in the financial year compared to the previous year due to the reduced operating performance of the company.
Under the « BB Biotech Long-term Incentive Plan 2023», André Rüegg received in 2023 an entitlement of 1 700 shares (2022: 1 700 shares) in BB Biotech. The following performance criteria apply to the entitlement for the assessment period from January 1, 2023 to December 31, 2023:
KPIs | Weighting in % | Parameter | ||
Absolute Performance | 60 | > 10% p.a. = 100% | ||
(share price incl. dividends) | > 9% p.a. = 90% | |||
> 8% p.a. = 80% | ||||
> 7% p.a. = 70% | ||||
> 6% p.a. = 60% | ||||
≥ 5% p.a. = 50% | ||||
<5% p.a. = 0% | ||||
Performance relative to NBI | 20 | Outperform = 100% | ||
(Nasdaq Biotech Index) | Underperform = 0% | |||
Performance relative to SPI | 20 | Outperform = 100% | ||
(Swiss Performance Index) | Underperform = 0% |
The effective number of shares will be allocated based on the KPIs achieved in January 2026. Due to the retirement of André Rüegg as of January 1, 2024 the number of shares has already been reduced on a pro rata basis.
Under the « BB Biotech Long-term Incentive Plan 2021», André Rüegg received an entitlement to 1 700 shares in BB Biotech. The target achievement of the plan was 0% as at December 31, 2023. No BB Biotech shares will be allocated.
Under the « BB Biotech Long-term Incentive Plan 2020», André Rüegg received an entitlement to 1 700 shares in BB Biotech. The target achievement of the plan was 0% as at December 31, 2022. No BB Biotech shares were allocated.
The percentage ratio of fixed compensation to variable compensation for the entire Group Executive Board is 52% fixed compensation and 48% variable compensation (2022: 44% fix and 56% variable). For the CEO, the total amount of fixed compensation amounts to 48% and the variable compensation is 52% (2022: 36% fix and 64% variable).
Gebhard Giselbrecht, designated CEO as of January 1, 2024, has already been employed at Bellevue as an employee as of December 1, 2024 in order to hand over the business. He was paid a fixed compensation of CHF 29 167 in the month of December. In addition, social security contributions of CHF 7 672 were due. Furthermore, due to the earlier commencement of employment a compensation of CHF 300 000 was already paid out in cash in December 2023 for valuable claims against the previous employer. Social security contributions of CHF 19 000 were due on this amount. The total amount of CHF 319 000 will be submitted to the 2024 Annual General Meeting for approval in accordance with Art. 27 para. 2 of the Articles of Association.
The values in the table above differ in certain respects from the Remuneration Reported in note 9 «Transactions with related companies and persons» of the consolidated financial statements 2023 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 on conditions other than the customary market conditions.
6.3 Loans and credits
At the end of 2023 and 2022, no loans and no credits had been granted either to the members of the Group Executive Board or former members of the Group Executive Board or any related parties.
6.4 Holdings of shares in the Company
The members of the Group Executive Board owned the following Company shares at the end of 2023 and 2022:
Number of shares | 31.12.2023 | 31.12.2022 | ||
André Rüegg, CEO and CEO Bellevue Asset Management AG | 93 009 | 300 000 | ||
Michael Hutter, CFO | 38 125 | 71 162 |
6.5 Activities in other companies
André Rüegg, CEO
Bellevue Funds (Lux) SICAV | Luxembourg | Chairman of the Board of Directors | Private |