3. Remuneration Structure for Management
The structure of total remuneration should be highly performance- and success-oriented to ensure that shareholder and management interests are aligned. As part of Clariant’s compensation philosophy, performance-based Short-Term and Long-Term Incentives in relation to total compensation increase with increasing responsibility/management level (see exhibit Global Pay Mix Figure 001). Clariant positions target levels for management incentives above market norm to provide a distinct incentive for achieving ambitious business objectives. While Long-Term and Short-Term Incentives are based on Group Performance Indicators only (details are disclosed in chapter 4. Overview of Existing Incentive Plans), individual performance – measured through a consistent, global Performance Management system – is a determining factor in career development and annual salary reviews. Within the Global Performance Management System, each manager’s or employee’s performance is assessed and discussed on a yearly basis. Since 2012, the process includes regular 360-degree feedback for all management levels. In addition to this, Clariant has practiced a calibration process of individual performance ratings for all management levels since 2017. In conjunction with other factors, such as internal and external market conditions, this results in transparency and consistent salary decisions. In general, Clariant applies a four-eyes principle, which includes the involvement of the line manager and next level supervisor in addition to obtaining guidance from global or local Human Resources professionals.