Dear Shareholders

We are pleased to present Implenia Ltd.’s Remuneration Report for the 2018 financial year. In addition to the prescribed review of the year, we wanted to use this opportunity to highlight the most important changes we are making.

The transition at the top of the management on 1 October 2018, when new CEO André Wyss took over from his long-standing predecessor Anton Affentranger, also ushered in a series of other adjustments and changes. Since then, the Nomination and Remuneration Committee, in close consultation with the Board of Directors as a whole, has initiated a fundamental review of the remuneration system and remuneration structures used for executive management. Internal and external experts were brought in to support this review. Remuneration structures are gradually being adjusted over the course of 2019 to fit with the new strategic plan, the divisional organisation and the new management structures and responsibilities.

We would like to give you a brief overview of the changes here. You will be able to find more details in the Remuneration Report itself, especially in section 3.1.

  • The weighting of the fixed and variable salary components have been adjusted and will now be based on the annual target salary (rather than, as previously, on the salary at contract signing). The CEO now receives 40% of his target salary in the form of fixed remuneration and 60% in the form of performance-related variable remuneration (20% relating to short-term and 40% to long-term). For other members of the executive management, now called the Implenia Executive Committee (IEC), the ratio is 50% fixed and 50% variable (of which 20% short-term and 30% long-term).
  • Target salaries are gradually being adjusted in the light of market data and the new responsibilities, and contract terms are being revised.
  • Financial targets for division heads under the Short Term Incentive Plan (STI) are now focused mostly on divisional results (rather than just on Group results, as was previously the case).
  • The previous practice of allocating a number of shares determined at contract signing, is being replaced by a performance-related Long Term Incentive Plan (LTI), under which Performance Share Units (PSU) earned over a period of 3 years are allocated if certain pre-defined targets are met
  • A shareholding guideline is being introduced for the new IEC as well as for the Board of Directors.

The additional personnel changes mean that the 2019 financial year will be a year of transition in terms of remuneration as well. With all the new appointments and promotions, as well as the departures from executive management, we currently expect that the additional sum allowed for by Art. 15 para. 5 of the Articles of Association will have to be used for the 2019 financial year in accordance with the provisions. We believe, however, that this change process contributes significantly to align the entire company with both the new strategy and operating model, and bring the expected rewards for shareholders.

It is also important to ensure that Implenia remains an attractive employer for skilled employees, so it can continue to count on talent.

The changes detailed above will also influence the proposed maximum remuneration for executive management (IEC) for the 2020 financial year: Instead of the previous CHF 10.0 million maximum amount for five members, we propose a maximum sum of CHF 13.0 million for nine members of executive management, plus residual payments for former members whose period of notice only runs out during the 2020 financial year. Apart from severance costs, overall compensation for the top two management levels will, however, remain stable under the new, strategy-compliant organisation and clearer responsibilities.

At Board of Directors level, we are pleased to propose the re-election of all six existing members, as well as the election of Barbara Lambert as a new member. This will leave the Board of Directors with seven members again, which is why the proposed overall remuneration has been increased from CHF 1.35 million to CHF 1.5 million. The remuneration paid to individual members of the Board of Directors is not being changed.

We count on your trust and thank you very much for your support for this change process, which the Board as a whole believes is essential.

Ines Pöschel
Chairman of the Nomination and Remuneration Committee