4. 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 remuneration 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 SEE FIGURE 001). While Long-Term and Short-Term Incentives are based on Group Performance Indicators only (details are disclosed in chapter 5, Overview of existing Incentive Plans), individual performance – measured through a consistent, global Performance Management System – is a determining factor in career development and the annual salary review process. Within the Global Performance Management System, each manager’s or employee’s performance is assessed and discussed on a yearly basis. Clariant has practiced a calibration process of individual performance ratings for all management levels since 2017. In 2020, Clariant rolled out the Calibration Session process to Clariant levels below management levels and covered over 80% of the participating population. 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.
The total compensation for the CEO and the EC members was reviewed during the year 2020. This led to the decision to reduce the overall compensation for the 2020 EC members as well as amend the pay-mix structure focusing on STI and LTI effective in 2021.