Remuneration

This Remuneration report was prepared in accordance with the requirements of the Swiss Code of Obligations. The amounts disclosed comprise the overall remuneration granted to the members of the Board of Directors of Alpiq Holding Ltd. and the Executive Board for financial year 2023. Remuneration is recognised in the year of payment. The information in note 6.2 of the consolidated financial statements shows the remuneration in accordance with IFRS.

1 Remuneration governance

As laid down in the Articles of Association, the Annual General Meeting (AGM) approves the overall remuneration amounts for the Board of Directors and the Executive Board annually, separately and with binding effect, for the following financial year. The Board of Directors extends an annual invitation to the AGM to approve the total compensation of the Board of Directors and the Executive Board by means of a separate consultative vote in the reporting year.

Information on remuneration governance can be found in the relevant passages of the Organisational Regulations and is not listed separately here.

Nomination, Remuneration and Strategy Committee (NRSC)

The Nomination, Remuneration and Strategy Committee (NRSC) is a committee of the Company’s Board of Directors formally appointed by the Board of Directors. The committee comprises at least three members of the Board of Directors.

In June 2023, the tasks and duties of the former “Nomination and Remuneration Committee” (NRC) were enlarged to include Group strategy and sustainability, with the goal of reflecting the increasing importance of and focus on sustainability. The Committee was therefore renamed the “Nomination, Remuneration and Strategy Committee” (NRSC) and focuses on the following three areas:

• i) Pre-discussion of the Group strategy before approval by the Board of Directors
• ii) Sustainability targets at Group level, including implementation of suitable reporting
• iii) Employees in general, nominations, remuneration and objectives and rewards

The NRSC meets as often as business requires, at a minimum once a year. In the reporting year, the NRSC held four ordinary meetings and four extraordinary meetings mostly related to corporate strategy and sustainability. The meetings lasted between two and four hours.

The NRSC submits proposals to the Board of Directors for approval and reports verbally on its activities, resolutions, conclusions and recommendations at each meeting of the BoD.

The detailed tasks and duties of the NRSC related to area iii) are:

• a) the exercise of its supervisory duty with regard to succession planning for the Executive Board;
• b) definition and review of remuneration policies, guidelines and performance targets;
• c) preparation of proposals to the Annual General Meeting on remuneration of the Board of Directors and the Executive Board;
• d) determination of all further terms and conditions of contract or employment for the Board of Directors;
• e) approval of other terms and conditions of contract or employment for the CEO (at the Chair’s request) and the Executive Board (at the CEO’s request);
• f) assessment and pre-discussion of the corporate strategy for final discussion and approval by the Board of Directors;
• g) assessment and pre-discussion of all matters related to sustainability, including but not limited to environmental, social and governance aspects, and related reporting for approval by the Board of Directors.

The tasks and the duties of the NRSC in the fields of nominations, contracts, terms of employment, objectives and rewards comprise the following in particular:

1. Nominations
   Approval of selection criteria and evaluation of the CEO’s proposals to be put to the Board of Directors for nomination of the members of Alpiq Holding Ltd.’s Executive Board.
2. Contracts and terms of employment
   Proposal on the remuneration of the individual members of the Board of Directors. Proposal on special conditions and additional remuneration of members serving on the Board of Directors’ committees. Proposal on the general contractual conditions.
   
   Application for total compensation and approval of the other terms and conditions of the CEO’s employment at the Chair and CEO’s request. Proposal on the overall remuneration and approval of further terms of employment for the individual members of the Executive Board. 
   
   Approval of the bonus regulations at the CEO’s request.
3. Objectives and rewards
   The NRSC acknowledges the annual objectives of the members of the Executive Board, which are in principle derived from the implementation measures of the strategy approved by the Board of Directors.
   
   After the end of the financial year, management prepares a value creation report on the value created by the management, taking into account the non-influenceable external factors over the year. This serves to assess the value that the Executive Board has created for the company. Thus, it is the basis for determining the degree of achievement of the reward. The Chair of the BoD gives an assessment and submits a proposal for reward achievement.
   
   The NRSC approves the annual target setting for the CEO and the members of the Executive Board and determines the annual reward achievement based on the value creation report and the assessment of the Chair of the BoD.

The decision-making processes are summarised in the following table:

2 Market-compliant remuneration

To ensure that the remuneration of members of the Executive Board and the Board of Directors conforms to standard market practice, Alpiq regularly engages independent external consultancy firms to evaluate overall remuneration packages relative to the market environment.

In 2023, an exhaustive review of Alpiq’s remuneration system was initiated, aimed at harmonising the remuneration system for the entire company and ensuring equal pay throughout the group.

3 Remuneration principles

Members of the Board of Directors receive fixed basic remuneration, additional expense allowances and statutory pension benefits. These components are not performance related. The amount of fixed remuneration depends on the role on the Board of Directors, such as membership of a committee or chairing function on the BoD or a committee. Apart from statutory social security contributions and pension contributions if they have pensions with the Swiss pension fund “Stiftung Pensionskasse Energie” (PKE), members of the Board of Directors do not receive any other pension benefits.

Members of the Executive Board receive a fixed salary. All members are eligible for the allocation of a performance-related reward. Selected members in addition are eligible for the allocation of a long-term incentive (LTI). The Head of Trading is additionally eligible for the allocation of a trading deferred incentive (TDI). In these cases, the total remuneration is made up of basic remuneration, reward, LTI and TDI. Members are also entitled to a company car allowance, an expense allowance and, if requested, a GA travelcard for first-class travel. The reward is based on performance and value creation. It is approved by the Board of Directors and the Annual General Meeting after the end of the financial year. The reward can range between 0% and 133%. For the selected cases with additional LTI reward, the range of the reward is 0% to 200%, for the LTI 0% to 100% and for the TDI 0% (floor) to 100% (target) and up to 200% for overachievement with cap. All members of the Executive Board are covered by statutory social security and the PKE pension fund.

4 Key changes to the Board of Directors and the Executive Board in the reporting year

Board of Directors

At the Annual General Meeting on 26 April 2023, Ronald Trächsel was nominated as member of the Board of Directors and Chair of the Nominations, Remuneration and Strategy Committee, as of 1^st July 2023. He replaced Phyllis Scholl, whose mandate as member of the Board of Directors and Chair of the Nomination and Remuneration Committee ended on 26 April 2023.

On 23 July 2023, the Board of Directors changed the name of the former Nomination and Remuneration Committee (NRC) to the Nomination, Remuneration and Strategy Committee (NRSC), and tasked the committee with supporting the BoD and supervising the Executive Board in the fields of strategy and sustainability.

Aline Isoz and Jean-Yves Pidoux stepped down as members of the Board of Directors as of 31 December 2023. On 19 December 2023, the Extraordinary General Meeting elected Adèle Thorens Goumaz and François Gabella as new members of the Board of Directors as of 1 January 2024.

Executive Board

No changes occurred to the Executive Board in 2023.

In view of the retirement of Michael Wider, Deputy Chairman and Head of the Business Division Switzerland, as of March 2024, the Board of Directors has appointed Amédée Murisier, Head of Hydro Power Generation at Alpiq, as a new member of the Executive Board as of 1 March 2024.

5 Members of the Board of Directors’ remuneration in the reporting year

5.1  Remuneration paid to the Board of Directors in 2023

In 2023, members of the Board of Directors received fixed remuneration, additional attendance fees, expense allowances and statutory pension benefits. These components are not performance related. A breakdown of payments made to the members of the Board of Directors is shown in the table below.

Remuneration comprises directors’ fees, attendance fees and payments for serving on the ARC, the NRSC and the Ad hoc or Strategic Committee.

A breakdown of payments made to members of the Board of Directors is shown in the table below.

5.2 Remuneration paid to the Board of Directors in 2022

In 2022, members of the Board of Directors received fixed remuneration, additional attendance fees, expense allowances and statutory pension benefits. These components are not performance related. A breakdown of payments made to the members of the Board of Directors is shown in the table below.

Remuneration comprises directors’ fees, attendance fees and payments for serving on the ARC, the NRSC and the Ad hoc or Strategic Committee.

6 Remuneration of Executive Board members in the reporting year

The employment contracts, terms and conditions of employment and remuneration for members of the Executive Board were approved by the NRSC for the reporting year.

In the financial year 2023, Executive Board members received remuneration in accordance with the remuneration regulations that have been in force since 1 January 2023 and received remuneration consisting of the following components:

Navin Parasram was appointed as member of the Executive Board and Head Trading as of 1 June 2022. From April 2020 to 31 May 2022, he had the role of Head Merchant Trading at Alpiq. In 2023, he also received short-term incentive (STI) and long-term incentive (LTI) remuneration related to his previous role.

6.1 Determination of remuneration for the financial year

After the end of the financial year, the CEO, together with the Executive Board, presents the most important areas in which value has been created for various stakeholders based on a value creation report and, on this basis, submits a proposal to the NRSC for a target achievement level between 0% (floor), 100% (target) to 133% or 200% for over-achievement with a clear cap. The NRSC discusses the report with the CEO as representative of the Executive Board and then submits its assessment of the degree of target achievement to the Board of Directors for approval.

It is entirely at the discretion of the NRSC and the Board of Directors where the level of target achievement is set.

6.2 Remuneration paid to members of the Executive Board in 2023

In the reporting year, the ratio of fixed salary components (totalling CHF 3.2 million) to variable components (totalling CHF 1.3 million) was 71% to 29%.

1) Does not include remuneration received by Navin Parasram in relation to his previous role as head of Merchant Trading (STI and LTI of CHF 1’000 thousand).
2) Includes remuneration for Alexandra Machnik until her contractual exit on 31.03.2023.
3) “Other remuneration” includes allowances (e.g. car, child, family, GA).
4) No Executive Board LTI tranches vested during 2023.
5) Employer social security contributions were paid in accordance with statutory requirements.

Each member of the Executive Board was paid an additional annual expense lump sum of CHF 24 thousand; the CEO received CHF 30 thousand. Expense allowances for the Executive Board totaled CHF 126 thousand. Each member of the Executive Board was paid a car lump sum of CHF 6 thousand, which totalled CHF 30 thousand.

6.3 Remuneration paid to members of the Executive Board in 2022

In the previous year, the ratio of fixed salary components (totalling CHF 4.0 million) to variable components (totalling CHF 0.7 million) was 85% to 15%.

1) Includes remuneration for three people who left the Executive Board in 2022 and 2021 (Alexandra Machnik, Matthias Zwicky, Michel Kolly).
2) “Other remuneration" includes car expenses.
3) No Executive Board LTI tranches vested during 2022.
4) Employer social security contributions were paid in accordance with statutory requirements.

Each member of the Executive Board was paid an additional annual expense lump sum of CHF 24 thousand; the CEO received CHF 30 thousand. Expense allowances for the Executive Board totaled CHF 146 thousand. Each member of the Executive Board was paid a car lump sum of CHF 6 thousand, which totalled CHF 35 thousand.