2 Governance framework for compensation

2.1 Involvement of shareholders

Over the past few years, the shareholders have played an increasingly important role in matters relating to compensation. In particular, the General Meeting approves the Articles of Association and their compensation-related provisions. These are available here and cover the following:

• Election for a one-year term of office of the members of the Compensation Committee (Art. 21).
• Approval of the maximum total compensation and benefits for the members of the Board of Directors for the next term of office (Art. 23 para. 1 let. a).
• Approval of the maximum total compensation and benefits for the members of the Executive Board for the following financial year (Art. 23 para. 1 let. b).
• Additional compensation for new members of the Executive Board (Art. 24).
• Principles governing the variable, performance-related compensation of the Executive Board and Board of Directors (Art. 25).
• Provisions regarding employment contracts of members of the Executive Board (Art. 26).
• Rules concerning loans and retirement benefits for members of the Executive Board (Art. 27).

Although not required by provisions of the Articles of Association, the Board of Directors also submits the Compensation Report to the Annual General Meeting each year for a consultative vote.

The following chart illustrates how the General Meeting (GM) exerts its “say on pay."

2.2 Compensation Committee

2.2.1 Organization and tasks

The Compensation Committee consists of three members of the Board of Directors. The General Meeting individually elects the members of the Compensation Committee for the term of office until the conclusion of the next Annual General Meeting. In its function as the Human Resources Committee, the Compensation Committee also assumes other responsibilities. At the Annual General Meeting on April 17, 2024, Urs Riedener (Chairman), Inge Delobelle, and Robert F. Spoerry were elected to the Compensation Committee.

The Compensation Committee convenes as often as business requires, but at least three times a year. The tasks and responsibilities of the Compensation Committee comprise, among others, the following:

• Periodic review of Bystronicʼs compensation policy and principles.
• Review of the compensation system, the resulting payments to the Executive Board, and the compliance of these with the Articles of Association.
• Annual review of the individual compensation of the CEO, the members of the Executive Board, and the members of the Board of Directors as well as regular benchmarking with regard to compensation.
• Review, adaptation, and approval of the performance assessment of the CEO and the other members of the Executive Board.
• Preparation of the Compensation Report and deliberation of the report with the external auditors.

As a general rule, the Chairman of the Board of Directors, the CEO, and the CHRO participate in meetings of the Compensation Committee in an advisory capacity. The Committee Chairman may invite other individuals as appropriate. The CEO does not attend the meeting when his own compensation is the subject of deliberation.

After each meeting, the Chairman of the Compensation Committee reports to the Board of Directors on the activities of the committee. The minutes of the committee meetings are made available to all members of the Board of Directors.

The following table summarizes the decision-making powers for the most important compensation-related topics as stipulated by the Articles of Association and the Organizational Regulations of Bystronic AG:

The approval of the actual compensation of the Board of Directors and the Executive Board within the limits of the maximum compensation approved by the General Meeting is the responsibility of the Board of Directors.

2.2.2 Focus topics in the reporting year

In the reporting year, the Compensation Committee held five meetings. They were carried out according to the annual schedule, focusing on the following topics:

Further information on the tasks and activities of the Compensation Committee/Human Resources Committee is in the Corporate Governance Report, section 3.5 organization and definition of areas of responsibility and in the Human Resources Committee Report.