Annual report 2018

Galenica annual report 2018 | 71 Short-term Incentive Programme (STI or bonus, variable) The annual bonus aims at rewarding the achievement of the financial results and recognises individual contributions to the company’s performance over a business year. The target bonus is expressed as a percentage of the annual base salary and varies depending on the level of the function in the organisation and on the impact of the function on the overall business result. At the beginning of the calculation period, the target bonus is defined, i.e. the amount paid out if the targets for all bonus components are reached 100% (target bonus), whereby the achievement of financial objectives of the Group is weighted 75% and individual objectives 25%. This is normally set indi- vidually on an annual basis as an absolute amount together with the relevant fixed salary for the next year. For both financial and individual objectives, a target, a thresh- old and a payment curve are defined against which the results are assessed. The total bonus is capped and has an upper limit of 200% of the target bonus. Upon approval of the annual results by the Board of Direc- tors, the GEP attainment level of the Group is calculated as a percentage. The achievement of financial and individual objectives is assessed by the Remuneration Committee for the CEO and submitted to the Board of Directors for approval. The attainment of these objectives of the other members of the Corporate Executive Committee is assessed by the CEO and, in consultation with the Chairman, submit- ted to the Remuneration Committee for approval. The payment of the bonus is made in the subsequent year after the publication of the full-year results. The CEO, the other members of the Corporate Executive Committee and Senior Management are required to draw up to 32% of the bonus in shares of Galenica; the rest is paid out in cash. A discount of currently 25% on the average stock market price for the month of January in the year in which the bonus is paid is granted as the shares remain blocked for five years. Long-term Incentive Programme (long-term remuneration, LTI, variable) The objective of the variable long-term remuneration is to promote the strategy of the Galenica Group. The Long-term Incentive Programme (LTI) is designed to motivate eligible managers to ensure that their actions and decisions promote the achievement of the medium- and long-term value-based targets across all levels. With this instrument Galenica also seeks to harmonise the interests of management and the Group with the interests of its shareholders, and to sus­ tainably create value for customers and its shareholders over the long term. In addition, the LTI Programme aims to strengthen the loyalty of its managers to Galenica, identifi- cation with the company and to motivate its key talents to stay with the company. Under the LTI Programme, the short-term bonus is supplemented by variable, long-term remuneration in the form of a share plan. The GEP target for the long-term remuneration (LTI) is defined for a three-year period. The CEO, members of the Corporate Executive Committee and selected members of Senior Management participate in the LTI Programme. The factors exerting a significant influence on the value of the LTI are the operating performance of the Galenica Group and the share price performance of Galenica shares. The LTI Programme is based on performance units which are granted to participants after the release of the results of the preceding year and which convert into shares of Remuneration elements Fixed base salary Bonus (short-term) LTI (long-term) Member of the Board of Directors yes no no CEO and members of the Corporate Executive Committee yes yes yes Member of Senior Management (MDI) yes yes yes (partly) Remuneration Report Galenica