Content and method for determining the compensation programs:
The Appointments and Compensation Committee (ACC) of the Board of Directors (BOD) draws up principles for compensation of members of the Board of Directors and submits them to the BOD for approval. It approves the employment contracts with the CEO, members of the Executive Committee, heads of functions and of major subsidiaries. It also reviews the corresponding salaries regularly together with the CEO. The committee reviews the bonus, option and share plans and makes recommendations to the BOD. Furthermore, it reviews employee benefit regulations, dismissal regulations and contractual severance compensation with the heads of divisions, members of the Executive Committee, function heads and heads of subsidiaries.
Clariant`s compensation policy is based on three main principles:
- The level of the total compensation should be competitive and in line with market conditions.
- The structure of the total remuneration should be highly performance- and success-oriented in order to ensure that shareholder and management interests are aligned.
- The compensation components should be straightforward, transparent and focused, so as to guarantee all participants the highest degree of clarity and goal-orientation.
Clariant introduced into the Group a new, variable remuneration system for managers in 2005. This system also covers members of the Executive Committee. Consequently, the following statements apply not only to the members of the Executive Committee but also to approximately 270 other managers at Clariant. The Clariant Executive Bonus Plan is based on the following key features:
The total amount of bonus payments distributed in a year is solely determined by the result achieved by the Clariant Group.
- The Clariant Group`s result is determined with the aid of ROIC and cash flow targets.
- The amount of an individual participant’s bonus is determined by his/her individual target bonus and the contribution by his/her organizational unit (division, business unit, function) to the overall result.
- The target contribution of the business units and divisions is measured with reference to EBIT and developments in working capital (inventories, receivables from customers).
- An employee`s individual performance based on personal objectives is not measured under the bonus system but as part of the annual review of total compensation.