Remuneration report

CPH Group is an employer that employs qualified and high-performing employees and provides value-based remuneration in line with the market. The amount of total remuneration and the individual components of this remuneration are subject to regular peer comparisons. This ensures that remuneration for each role and functional level is in line with the market and is proportionate to the duties, results and performance of the person receiving it. Relevant key figures such as cash flow margins and ROCE are regularly reported for each division to support value-based management. These are clearly defined and form the basis for short-term and long-term variable remuneration (see here).

The General Meeting elects the members of the Personnel and Compensation Committee individually for a term of one year each.

In accordance with the statutory provisions on remuneration at companies whose shares are listed on the stock exchange (Art. 732 et seq. CO) and the Articles of Incorporation of CPH Group, the General Meeting of shareholders votes on the maximum total amount of remuneration for the Board of Directors for the period up to the next General Meeting. Pursuant to the same provisions, a vote is held on the maximum total amount of remuneration for the Group Executive Board for the financial year following that General Meeting.

The proposals regarding the maximum remuneration of the Board of Directors and Group Executive Board are prepared by the Personnel and Compensation Committee, reviewed by the Board of Directors and submitted to the General Meeting for approval. If the proposal is rejected, the Board of Directors may submit a new proposal. If it does this and the new proposal is likewise rejected, an extraordinary General Meeting may be convened within three months, or the Board of Directors may submit the remuneration for retrospective approval at the next General Meeting.

As the remuneration of the Board of Directors and Group Executive Board is decided on a prospective basis, the General Meeting holds an annual non-binding consultative vote on the remuneration report.

Within the framework of the Articles of Incorporation, the Board of Directors adopts a remuneration policy that takes into account the company’s strategic objectives, corporate culture and long-term value orientation. It decides on the basic structure of the remuneration system for the members of the Board of Directors and Group Executive Board.

The Board of Directors submits a proposal to the General Meeting on the election of members of the Board of Directors and decides on the appointment of the CEO and the members of the Group Executive Board, as well as their conditions of employment.

The Board of Directors decides on the total amounts for the Board of Directors and Group Executive Board to be submitted to vote by the General Meeting each year.

When determining individual remuneration, the Board of Directors complies with the resolutions of the General Meeting and the provisions stipulated in the Articles of Incorporation and applicable regulations concerning the division of responsibilities between itself and the Personnel and Compensation Committee. The Board of Directors has final responsibility for determining the remuneration (including its components) of the Board of Directors, the CEO and the members of the Group Executive Board within this framework.

The Board of Directors prepares an annual remuneration report for the attention of the General Meeting and ensures transparency with regard to the remuneration paid to the members of the Board of Directors and Group Executive Board.

Details on the composition of the Personnel and Compensation Committee can be found in the section “Corporate governance report.”

The Personnel and Compensation Committee usually meets three times a year, but at least twice a year. Three half-day meetings were held in the reporting year. The attendance rate for the meetings was 100 %.

Minutes are drawn up for each meeting of the Personnel and Compensation Committee, which are also sent to the members of the Board of Directors. In addition, the committee notifies the other members of the Board of Directors at the next meeting about the topics discussed and provides background information on any proposals and recommendations.

Adjustments to the remuneration of the Board of Directors, the CEO and the members of the Group Executive Board are proposed to the Board of Directors by the Personnel and Compensation Committee on the basis of conducted market comparisons.

The structure and amount of remuneration for selected positions is subject to regular review every three years on the basis of external benchmarks. In the reporting year, a company specializing in this area analyzed the remuneration of the various positions on the Board of Directors. The peer group consisted of internationally operating industrial companies of a comparable size based in Switzerland, similar to the peer group for the Group Executive Board shown below. Fixed remuneration is generally based on the peer group median. These and other findings will be incorporated into remuneration beginning from the 2026 General Meeting.

A benchmark analysis was also carried out in the reporting year regarding the remuneration of the Group Executive Board and the management teams of the divisions. At Group Executive Board level, the peer group consisted of a wide variety of international industrial companies of a similar size and complexity based in Switzerland (e.g. Arbonia, Bystronic, Comet, Dottikon, Gurit, Komax and Schweiter). Fixed remuneration is generally based on the peer group median. These and other findings of the analysis with regard to the structure and amount of remuneration will be incorporated into remuneration for 2026. The next review is scheduled for 2028 for the 2029 financial year.

The remuneration of the Board of Directors consists of fixed remuneration, the amount of which depends on the position (Chair, Deputy Chair, chair of a committee or member of the Board of Directors). An attendance fee is also paid for work on one of the committees. A daily allowance is paid for board activities outside of normal meetings.

This remuneration is generally paid out in cash. Since the previous year, each member of the Board of Directors has been able to receive up to 20 % of remuneration in shares. The allotment price of the shares is based on the arithmetic mean of the closing price of the CPH Group share on 15 consecutive calendar days immediately prior to and following publication of the annual financial statements. The shares confer voting rights and qualify for dividends from the time they are allotted, but are subject to a three-year vesting period beginning from the allotment date. During this period, the number of shares allotted is not subject to any further service, performance or vesting conditions. However, their value changes depending on stock market performance.

At the end of the three-year vesting period, the shares of each tranche issued are freely available to the beneficiaries without restriction. To guarantee the independence of the members of the Board of Directors when exercising their supervisory duties, there is no variable remuneration. The members of the Board of Directors are not covered by the employee pension provision.

The remuneration of the Group Executive Board of CPH Group consists of fixed remuneration, variable remuneration (STI), share-based remuneration (LTI), contributions to the employee pension provision and social insurance schemes, and other remuneration. No adjustments were made to the remuneration system in the reporting year.

The fixed basic remuneration is paid to the members of the Group Executive Board fully in cash.

Individual performance on the part of all employees – including managers – influences the performance of the company and should be reflected appropriately in total remuneration. Accordingly, the variable remuneration of the Group Executive Board is linked to clearly defined performance targets that take into account both the short-term operating results and long-term performance of the company. Based on this, the members of the Group Executive Board receive variable remuneration in cash in the form of a short-term incentive (STI) in addition to their fixed remuneration, which is dependent on target achievement.

60 % of variable remuneration is based on the financial and measurable parameters of EBIT, operating cash flow and operating net working capital (weighted equally). 40 % of variable remuneration is based on clearly defined financial and non-financial performance targets along the dimensions “customers & market,” “innovation,” “processes,” “employee management” and “sustainability” (backed by quantitative and qualitative targets). This “individual targets” component underpins sustainable corporate development and long-term value growth of CPH Group and its divisions. Linking variable remuneration to the parameters of EBIT, operating cash flow and operating net working capital ensures that due consideration is given to the value levers that have the greatest impact on enterprise value as measured by ROCE and that can be influenced as directly as possible by individual managers.

For divisional heads, the financial targets are assessed two-thirds on the basis of the results generated by their respective division, and one-third on the results of CPH Group overall.

A target value for variable remuneration (STI) is agreed with each member of the Group Executive Board for 100 % target achievement. The actual amount of variable remuneration (STI) is calculated on the basis of this target value and the degree of target achievement. The maximum achievable variable remuneration (STI) is limited to 150 % target achievement. Between 0 % and 100 % or 100 % and 150 %, each individual target is evaluated on a linear or step-by-step basis; the details are defined as part of the annual target-setting process, which serves to assess target achievement and thus determine variable remuneration.

The maximum variable remuneration (STI) for the CEO is 100 % of fixed basic remuneration; for the other members of the Group Executive Board, the ceiling is a maximum of 50 % of fixed basic remuneration.

The Board of Directors decides on the targets in all elements for all members of the Group Executive Board; the financial parameters are the agreed budget specifications. The CEO and the members of the Group Executive Board have the right to propose the targets. The CEO has the right to propose the remuneration of members of the Group Executive Board. The CEO assesses annual target achievement for members of the Group Executive Board and submits a proposal to the Personnel and Compensation Committee of the Board of Directors. The Chairman of the Board of Directors assesses the performance of the CEO. The Personnel and Compensation Committee of the Board of Directors discusses these assessments and submits a proposal to the Board of Directors concerning performance achievement and the variable remuneration to be paid to the individual members of the Group Executive Board.

If an employee joins or leaves the company during the course of the year, the amount of variable remuneration (STI) is adjusted on a pro rata basis.

In the interests of long-term value-based corporate governance, the members of the Group Executive Board receive share-based variable remuneration (LTI) under a restricted stock plan in the form of a long-term incentive (profit-sharing plan). The number of shares actually allotted is linked to conditions relating to performance and success and is calculated on the basis of the agreed target amount of the LTI components, applying the degree of target achievement under the STI. The allotment price of the shares is based on the arithmetic mean of the closing price of the CPH Group share on 15 consecutive calendar days immediately prior to and following publication of the annual financial statements.

The shares are definitively allocated to the beneficiaries on the grant date immediately after determining the allotment price. The shares confer voting rights and qualify for dividends from the time they are allotted, but are subject to a three-year vesting period beginning from the allotment date. During this period, the number of shares allotted is not subject to any further service, performance or vesting conditions. However, their value changes depending on stock market performance.

At the end of the three-year vesting period, the shares of each tranche issued are freely available to the beneficiaries without restriction. The three-year vesting period ensures that the company’s long-term value development is reflected in remuneration and that all members of the Group Executive Board hold a corresponding minimum shareholding in the company.

The maximum share-based variable remuneration (LTI) for the CEO is 50 % of fixed basic remuneration; for the other members of the Group Executive Board, the ceiling is a maximum of 25 % of fixed basic remuneration.

The number of shares to be allotted is determined for each member of the Group Executive Board depending on the individual LTI target amount and actual target achievement. The shares required for remuneration of members of the Group Executive Board are acquired on the market by CPH Group. They are allotted in annual tranches immediately after determining the allocation price 15 calendar days after publication of the annual financial statements.

If an employee joins or leaves the company during the course of the year, the amount allotted is adjusted on a pro rata basis.

The company operates an employee pension provision scheme which insures all employees in Switzerland as well as members of the Group Executive Board under the same pension provision. There is no additional employee pension provision for members of the Group Executive Board.

Other remuneration includes private use of company cars and long-service awards.

If new members of the Group Executive Board are appointed and take up their positions with the company after the General Meeting has approved the maximum total remuneration for members of the Group Executive Board for the relevant financial year, an additional sum is set aside amounting to 40 % of total remuneration approved by the General Meeting for members of the Group Executive Board which can be allocated to these new members; this provision is outlined in Art. 23 of the Articles of Incorporation of CPH Group.

The notice period for the CEO and other members of the Group Executive Board is six months. There are no contractual agreements on severance payments.

The remuneration systems for the management teams of the divisions of CPH Group are structured in the same way as those for the Group Executive Board.

The amounts shown in the reporting year correspond to the remuneration paid for the respective year. Variable and share-based remuneration is reported independently of the (possibly later) payment date (accrual basis). Remuneration is shown net, i.e. both employee and employer pension and social security contributions are listed separately. The shares allotted to members of the Group Executive Board are reported at their effective market value.

At the General Meeting on 20 March 2024, fixed remuneration of a maximum of CHF 1.1 million was approved for the period from the 2024 annual General Meeting to the 2025 annual General Meeting. This amount was maintained at CHF 1.0 million.

The remuneration reported for the reporting year is below the level for the previous year, as remuneration totaling CHF 0.1 million was paid in the previous year for additional expenses and project management relating to the spin-off of the Paper Division. Following this spin-off, remuneration was also reviewed in the reporting year and adjusted downward by 10 % on average. The composition of the Board of Directors and thus the number of members of the Board of Directors did not change during the reporting period. In both the reporting year and the previous year, remuneration was paid out exclusively in cash.

No remuneration was paid to former members of the Board of Directors.

At the extraordinary General Meeting on 20 June 2024, a maximum total amount of CHF 4.7 million was approved for the reporting year for remuneration of the Group Executive Board. This amount was underutilized by CHF 0.5 million.

The remuneration reported for the reporting year is higher than the previous year overall. Contributing factors include the change in CEO as of 1 April 2025, as the remuneration paid to the previous CEO for the transition period and release phase remained payable for the entire reporting year. On top of this, the members of the Group Executive Board were paid one-time additional remuneration in the reporting year as compensation for the significant additional workload involved in the spin-off of the Paper Division and also as a loyalty bonus to ensure a smooth and successful spin-off. Following the spin-off in the middle of the previous year, the number of members of the Group Executive Board was reduced by one person in the shape of the Head of the Paper Division. As results fell short of targets, coupled with lower average target achievement of 89 % with regard to the factors that determine variable remuneration (prior year: 106 %), a lower variable remuneration resulted in the reporting year. Remuneration is reported net after deduction of the amount of CHF 0.5 million charged for the provision of management services as CEO and CFO of Perlen Industrieholding AG.

Following discontinuation of the one-time additional remuneration, the maximum total amount approved for the 2026 financial year by the annual General Meeting on 18 March 2025 is CHF 2.75 million.

Variable remuneration for the previous year has been adjusted and shows the amounts actually paid. This is not new remuneration; it is the same as the remuneration shown in the report from the previous year. At that time, however, remuneration could only be shown on the basis of the provisions set aside (accrual basis); the final amounts actually paid in the previous year are now shown here. The share of CHF 0.3 million charged for the provision of management services as CEO and CFO of Perlen Industrieholding AG was also deducted to ensure consistent reporting of effective costs.

No remuneration was paid to former members of the Group Executive Board.

No loans or credits were granted to current or former members of the Board of Directors or Group Executive Board, or to parties related to these persons. No such loans or credits are outstanding.

No remuneration was paid to persons related to members of the Board of Directors or Group Executive Board (except for the remuneration shown in the notes to the consolidated financial statements, Note 30, Transactions with related parties). No transactions were concluded on an arm’s length basis with natural persons or legal entities related to members of the Board of Directors or Group Executive Board.

The following table shows all external activities performed by members of the Board of Directors and Group Executive Board in comparable functions at other companies with a business purpose as of the end of the reporting period. The resumes of all members of the Board of Directors and Group Executive Board can be found in the section “Corporate governance report”.