Annual Report 2010/11 - Sonova

The shares/rSus have a blocking period of up to four
years. One of the four equal tranches vests each year,
starting one year after the grant date. Additional information
can be found in note 30 to the Consolidated
financial Statements.
Welcome AB Executive Equity Award Plan 2010
The unique Welcome AB Executive Equity Award Plan
(EEAP) 2010 has been issued in conjunction with the acquisition
of Advanced Bionics to selected employees of
Advanced Bionics. This plan was designed with respect
to the Advanced Bionics integration and entitles participants
to purchase warrant appreciation rights (WArs).
The WArs granted in conjunction with this plan have a
term of four years and are divided into two tranches. The
blocking period for the first half of the WArs expires
after two years, and the blocking period for the second
half expires after three years.
DETErMInATIOn Of THE COMPEnSATIOn TO MEMBErS
Of THE MAnAGEMEnT BOArD
The compensation policies and the Executive Equity Award
Plan (EEAP) described above apply to the CEO and the
Management Board. In Management Board compensation,
the variable salary component has a stronger weighting
with respect to the target income than for other employees
of the Sonova Group. The variable cash compensation
varies between 30% and 40% of the target salary for members
of the Management Board and 50% of the target
salary for the former CEO. If a member of the Management
Board achieves less than 80% of the stipulated target,
no variable salary component is paid out. If the target
is exceeded, the variable cash compensation may be
granted to a maximum of double the original amount, or
for the former CEO, a maximum of 174%, depending on
the actual level of achievement. The variable cash compensation
is a function of company performance, based on
sales, operating profit (EBITA), and individual achievement
of objectives. The sales and EBITA targets are not interlinked.
The Board of Directors can also award further cash
components for exceptional achievements that do not
fall under the annual objectives. The former CEO’s incentive
plan differed in that the EEAP options were not granted
to the former CEO annually in the last few years. The granting
of options, including the period for exercising, was
part of his employment contract.
COMPEnSATIOn rEPOrT
DETErMInATIOn Of THE COMPEnSATIOn TO MEMBErS
Of THE BOArD Of DIrECTOrS
The compensation policies for the Board of Directors
differ from those for Sonova Group employees. The
members of the Board of Directors receive a retainer and
no variable cash compensation. The members of the
Board of Directors also participate in the Executive Equity
Award Plan. The compensation for the members of the
Board of Directors is defined by the nomination and Compensation
Committee, periodically reviewed and set by
the Board of Directors.
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