The Compensation Report describes the compensation principles and programs, as well as the governance framework related to the compensation of the Board of Directors and the members of Sika’s Group Management. The report also provides details regarding the compensation programs and the payments made to members of the Board of Directors and of Group Management in the 2019 business year.?

The Compensation Report is written in accordance with the Ordinance against Excessive Compensation in Listed Stock Corporations, the standard relating to information on Corporate Governance of the SIX Swiss Exchange, and the principles of the Swiss Code of Best Practice for Corporate Governance of economiesuisse.

Member of Sika Board of Directors Frits van Dijk
"Looking ahead, we will continue to assess and review our compensation programs to ensure that they are still fulfilling their purpose in the evolving context in which the company operates and are aligned with the interests of our shareholders. We will also continue to maintain an open dialog with our shareholders and their representatives. We would like to thank you for sharing your perspectives on executive compensation with us, and trust that you will find this report informative." Frits van Dijk, Chairman of the Nomination and Compensation Committee

Outlook on Compensation Architecture for 2020

Compensation of the Board Of Directors

The compensation structure and level for the Board of Directors remain unchanged.

Compensation of Group Management

The compensation structure for Group Management was redesigned extensively in 2019. In the spirit of continuity and stability, the Nomination and Compensation Committee established that the compensation framework should remain stable in the coming few years.

The only change foreseen for 2020 relates to the performance objective setting under the annual Performance Bonus with the introduction of an objective in the area of sustainability: the reduction of the carbon footprint. This objective was chosen to recognize the importance of mitigating the company’s impact on the environment and to encompass sustainability in the measurement of the performance of Group Management.

The individual objectives will continue to account for 40% of the total Performance Bonus and will be set in the following categories:

  • bottom line contribution: profitability of the business under responsibility (EBIT objective expressed as an improvement versus previous year) – this is unchanged;
  • sustainability: reduction of CO2 emissions per ton sold – this is new;
  • people and projects management: strategic objectives such as entry into new markets, introduction of new products, improvement of processes and operational efficiency, and leadership objectives – this is unchanged.
?
Overview of performance objectives and respective weighting for 2020
Compensation of Group Management

The overall structure of the Performance Bonus remains otherwise unchanged. Further details around the performance objectives will be provided in the 2020 Compensation Report.