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Compensation, Shareholdings and Loans


Content and method of determining the compensation of the Board of Directors

The Board of Directors determines on a yearly basis the level of compensation payable to its members in accordance with their activities and responsibilities. The membership in committees is not remunerated separatly. Extraordinary activities exceeding the normal activities of a member of the Board of Directors may be compensated separately. The members of the Board of Directors receive the total remuneration in cash. No variable portion is included in the total compensation.
No member of the Board of Directors participates in the existing share option plan. Any social costs are borne by the employer.


Content and method of determining the compensation of the Group Management

Based on the proposal of the Compensation Committee, the Board of Directors annually determines the compensation of the Group Management. The total compensation for the CEO is proposed by the Compensation Committee. The total compensation for the other members of the Group Management is proposed by the CEO and presented annually to the Compensation Committee for authorisation.


The compensation is determined in accordance with the global responsibility, the individual and concrete contribution that adds value to the long term strategic development of the Group and on the complexity of the area of responsibility. There are individual remuneration agreements with each member of Group Management. The target remuneration of each member of the Group Management consists of a fixed and of a variable component.


The variable component ranges between 10 % and 60 % of total compensation, depending on the function and the general business performance. There are two key criteria for defining the variable compensation component of each member of Group Management: the total Group result or the result for which the member is responsible, and the achievement of individually defined objectives such as the launch of new products, increase of market share, successful development of strategic projects, the development of new markets, etc. The individual objectives range from 20% to 70% of the variable remuneration component. The percentage depends on the function (operational management or central function) and on the strategic position of the company or operational unit.
The basic key performance indicators for the Group are the revenue development, the increase in productivity and the EBIT. If a member does not achieve the agreed objectives due to external facts beyond his influence, the Compensation Committee may, as an exception, deviate from the compensation agreement in favour of the member of Group Management.


Adjustments to the fixed remuneration component can only be agreed upon after a term of three to four years and are subject to individual performance assessments and changes in the scope of responsibility. The fixed compensation component is paid in cash. The variable component is either fully paid in cash or partly or even fully paid in shares. The payment method is individually determined with each member of Group Management. A part of the shares assigned may be blocked over a period of three to five years.


In March 2006, Group Management and forty senior employees holding a management position at that date were offered to participate in a share option scheme. The option life ends on September 30th, 2013. The option cannot be executed before April 1st, 2012. Each option entitles to subscribe for one Interroll share. The strike price is CHF 323 per share. The compensation of the difference between the market value at the exercise date and the strike price is impossible. The number of allocated shares was individually agreed with each Group Management member, whereby the specific function within the Group Management was taken into account.


There are special pension fund regulations for some members of Group Management. A member of Group Management pays a fourth or a third of the saving portion. The rest is paid by the employer.
In addition, each member of Group Management has a company car at his disposal or, alternatively, an equivalent monthly allowance is paid. Beyond that no other significant compensation is made.


Compared with the previous year, the total compensation of Group Management did not change significantly based on the new organisational structure and new composition of this body introduced on 1.1.2011. The fixed remuneration components of the existing members of Group Management remained unchanged, year on year, and adjustments within the variable components were insignificant.


Whenever deemed appropriate, external support and/or international compensation benchmark studies will be referred to for the definition of the pay and benefits scheme.


Loans to governing bodies

INTERROLL HOLDING LTD. and its subsidiaries have not granted any loans, advances or credits to members of the Board of Directors or of the Group Management in both years under review.
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