Corporate Governance
CORPORATE GOVERNANCE
Bystronic attaches great importance to good corporate governance and consequently to providing shareholders with detailed information. In this section, the chairpersons of the committees report on their activities in 2022. It is followed by the Corporate Governance Report in accordance with the Swiss Stock Exchange Directive on Information Relating to Corporate Governance and by the Compensation Report.
Report of the Human Resources Committee
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“Compensation has been aligned with Bystronic’s long-term success.”
Chairman of the Human Resources Committee
In 2022, the Human Resources Committee convened five times while also maintaining regular contact with a view to advancing strategic projects and succession planning. The Human Resources Committee was composed of Urs Riedener (Chairman), Robert F. Spoerry, and Heinz O. Baumgartner. As a general rule, the CEO, and the Group CHRO participate in the meetings in an advisory capacity, albeit not when it comes to their own compensation.
The change of name of Conzzeta AG to Bystronic AG in 2021 resulted in a number of follow-up tasks and activities relating to the development of contemporary human resources tools. The guidelines for the further development of topics relating to human resources and compensation consist of the axes of action that were elaborated within the framework of Bystronic AG’s medium-term strategy:
i) Culture & leadership: Focusing on the subtopics performance and learning culture, leadership effectiveness, leadership development, diversity and inclusion, and employer branding.
ii) Talent management & performance management: Focusing on subtopics such as talent acquisition, talent identification, development, and retention, career development, succession planning, employee engagement opportunities, succession planning, and engagement.
iii) Efficiency & effectiveness: Here, the focus is on optimizing existing HR processes and concepts and building new ones (e.g., compensation models), standardization, optimizing HR systems, data analytics, and the provision of knowledge databases.
A great deal of attention was paid to the training and continuing education of technical specialists and management staff. Within the framework of comprehensive workshops, the employer value proposition was honed and measures to strengthen the company’s employer branding were defined. Particularly in light of the scarcity of skilled workers and a rapidly changing labor market, a strong employer brand is an important factor in attracting talent and safeguarding the company’s future success. A global employee survey confirmed a very high level of employee engagement and satisfaction. A well-structured succession planning process supports the targeted development and promotion of top talents.
Already for the 2022 financial year, initial compensation elements, in particular the STI (Short-Term Incentive), were linked more closely to Bystronic’s business success. In future, in addition to the four performance components sales, operating result (EBIT), operating free cash flow, and individual target achievement, the achievement of ESG targets will also have a 10% weighting.
The elements of the LTI (Long-Term Incentive) have been redesigned. The objective of this is to ensure closer alignment between the interests of shareholders and the management, to appropriately reward challenging performance conditions as measured over three years in comparison with other companies, and generally to achieve a higher level of engagement by means of long-term capital commitment. With the issuance of grants as a component of annual compensation, PSUs (Performance Share Units) are awarded, which are converted into vested PSUs after a three-year vesting period and depending on the performance relative to the EPS (earnings per share) and TSR (total shareholder return) after vesting targets. This results in participants holding shares in the company, 60% of which they are required to hold for at least two years. For the time being, the participants comprise the Executive Committee and the Extended Executive Committee. The initial plan cycle will begin in 2023. In order to improve the effectiveness of the tool, the share of the LTI in the total compensation of the participants has been increased. The Board of Directors approved the LTI Plan on October 27, 2022, in compliance with the Articles of Association. The Human Resources Committee will monitor the implementation and submit the necessary decisions to the Board of Directors in accordance with the Organizational Regulations.
The regular review and further development of our compensation system will be undertaken in the light of the ongoing dialog with different stakeholders and in consideration of our business strategy, best practices, and market trends. For example, the expansion of the redesigned compensation system to additional selected management positions is envisaged.
Within the framework of the Bystronic Group’s first Sustainability Report, objectives were also defined for the field of human resources. The legally required equal pay was determined, confirmed, and certified in Switzerland.
Furthermore, it was possible to systematically expand the expertise, diversity, and rejuvenation of the Board of Directors with the proposal for the election of Eva Zauke and Felix Schmidheiny as new members. In addition, the performance targets set at the beginning of the year were assessed. Moreover, the compensation of the Executive Committee and the Board of Directors was specified and submitted to the respective bodies.
We are convinced that the targeted activities will boost enthusiasm for Bystronic and that performance is rewarded in line with the market and in a sustainable manner in accordance with the interests of the shareholders.
The compensation budgets for the Board of Directors and the Executive Committee as approved at the 2021 and 2022 Annual General Meetings were adhered to in accordance with the Articles of Association. At the 2023 Annual General Meeting, the shareholders will decide on the future compensation budgets for the Board of Directors and the Executive Committee and express their opinion on the 2022 Compensation Report by way of a consultative vote.
Urs Riedener
Chairman of the Human Resources Committee
Report of the Audit Committee
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“The tender for the audit mandate has been successfully completed.”
Chairman of the Audit Committee
In 2022, the Audit Committee was again made up of Matthias Auer and Roland Abt (Chairman). In the reporting year, four regular meetings and one extraordinary meeting for the selection of the new external auditors were convened. In addition to the members of the Audit Committee, the Chairman of the Board of Directors, the CEO, and the CFO of the Group generally also attend the regular meetings in an advisory capacity. Where items of relevance to the external auditors are on the agenda, their representatives are also present.
The tendering of the auditors’ mandate was the most important item on the agenda of the Audit Committee in the reporting year. According to Bystronic’s rules relating to corporate governance with regard to the rotation of the external auditors, the mandate should have been put out to tender by 2020. At that time, due to the strategic realignment, the Board of Directors decided to postpone this until the process had been completed. Following the completion of the strategic realignment, a comprehensive tender process was conducted in 2022. As a result, the Audit Committee submitted a proposal to the Board of Directors regarding the audit firm to be proposed to the 2023 Annual General Meeting. The Board of Directors resolved to recommend to the General Meeting the election of PricewaterhouseCoopers as the Group auditor from the 2023 financial year.
The treasury organization was scrutinized by external specialists. The result of the analysis was very positive. The Audit Committee addressed the report and the recommendations during a meeting and initiated the corresponding modifications of the Treasury Policy.
Bystronic offers its customers financing plans for the purchase of their machines. This is done out either via leasing companies or directly by means of customer loans. The prerequisites for the granting of financing to a customer are clearly defined. The resulting risks that Bystronic may incur are also limited by means of contracts with the leasing companies or via internal credit limits. The Audit Committee periodically reviews these plans and pays particular attention to compliance with the risk limits. The result of this review was very positive.
The internal audit function, which is carried out by the accountancy firm Deloitte, once again performed valuable work in the reporting year. Nine internal audits were carried out, and the Audit Committee deliberated the presented reports in detail. It also discussed and approved the audit schedule for 2023. The Audit Committee regularly monitors the management’s progress in addressing the follow-up items identified during the audits.
A key factor in the achievement of a high cash flow is the management of the net working capital. In order to assess where we stand in terms of best practices in this field, a specialized consulting firm was employed. The results and conclusions of this study were discussed in detail by the Audit Committee. The measures derived from this study are currently being implemented.
Dr. Roland Abt
Chairman of the
Audit Committee