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Salary policy and long-term Group strategy (stakeholder value)
_Now that the Board of Directors has defined a sustainable, long-term development policy, compensation is in line with the strategic aims defined by the Board of Directors. It also takes into account the fact that under certain conditions economic success may only be achieved over the long term. Because other parameters of the Group’s long-term development strategy are also taken into account, short-term profits do not have a corresponding effect on compensation. The company therefore does not pay any compensation in the form of traded options. Board members, members of the Corporate Executive Committee and members of senior management all share in the Group’s profit in the form of shares. Independent of their compensation and under the terms of the share acquisition plan for employees, every year employees are entitled to acquire a certain number of shares which is specified in company regulations.

Key compensation principles
_Employee compensation generally consists of a fixed basic salary, which depends on the employee’s position level and, for members of the Corporate Executive Committee and senior management, a bonus. The bonus system allows members of the Corporate Executive Committee to participate in the profits of the Group and senior management to participate in the profits both of the Group and of the business sector. The attainment of personal targets is also rewarded. Members of the Corporate Executive Committee and certain members of senior management also receive additional long-term remuneration.

_The purpose of the bonus system is to ensure that members of senior management act and make decisions in such a way as to support the achievement of targets at all levels and thereby contribute to sustained positive results for the Group as a whole, as well as the business sector and company to which they belong. This serves to harmonise the interests of shareholders with those of management and the Group. Through share participation, identification with the company is further enhanced. Finally, members of the CEC and senior management receive contributions to pension funds and other compensation, such as car allowances.

_Both bonuses and long-term remuneration depend on the achievement of the defined value growth and on the changes in the share price. The Galenica Economic Profit (GEP) is a measure designed to reflect the principles of value-based management derived from an economic-value-added (EVA) approach and is based on the understanding that in the interests of shareholders and other important stakeholder groups the Galenica Group will strive to achieve a long-term investment return which exceeds the weighted average cost of capital. Poor performance inevitably has a negative impact on the total remuneration. However, the compensation system does not include any particular malus provisions.

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