Role of Shareholders and Articles of Association
Shareholders have a say in compensation matters, as their approval is required for the aggregate maximum amounts of compensation for the Board and for the IEC through binding votes at each AGM. In addition, the principles of compensation are governed by the Articles of Association, which are also approved by the shareholders. The compensation provisions in the Articles of Association include the principles of compensation applicable to the Board and the IEC, the structure of the shareholders’ vote on compensation, and provisions on credit and loans, as summarized in the table:
| Overview of compensation-related provisions in Idorsia’s Articles of Association | |
| Resolutions on compensation | 7 |
| Supplementary compensation amount for new members of the IEC | 8 |
| Permitted additional activities | 24 |
| Agreements relating to compensation for members of the Board of Directors and the IEC | 25 |
| Principles relating to the compensation of the members of the Board of Directors | 26 |
| Principles of compensation relating to the members of the IEC | 27 |
| Credit and pension schemes | 28 |
Nominating, Governance & Compensation Committee
As specified in the Charter of the NGCC, which can be found in the company’s By-laws, the NGCC consists of at least three, but no more than five, Non Executive Directors (NEDs). The NGCC members are individually elected, for a one-year term, by the shareholders at the AGM.
The NGCC supports the Board in questions relating to nomination and governance as well as compensation. With regard to compensation-related matters, the duties of the NGCC include:
- determining the compensation strategy of the company;
- recommending and reviewing compensation policies and plans for approval by the full Board;
- reviewing and assessing the adequacy of the provisions in the Articles of Association related to compensation, as well as the adequacy of the NGCC charter;
- proposing and recommending to the Board for approval by the AGM the aggregate maximum compensation of the Board for the term of office until the next ordinary AGM and the aggregate maximum compensation of the IEC for the next financial year;
- recommending to the Board for approval the compensation of the Board members within the limits approved by the AGM;
- recommending to the Board for approval the compensation of the CEO, as well as setting the annual performance targets and determining target achievement of the CEO under the relevant compensation schemes;
- approving, upon recommendation of the CEO, the compensation of the CEO’s direct reports;
- preparing the Compensation Report for approval by the Board.
The responsibilities of the various bodies involved in compensation matters are summarized below:
| Annual process and responsibilities for compensation of the Board and IEC | ||||
| August - September | October - December | January - February | April - May |
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| Compensation policy review and compensation principles for next financial year | + NGCC BoD |
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| Compensation incentive plans (design, performance targets) | - NGCC + BoD |
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| Aggregate maximum amounts of compensation for the Board and the IEC | - NGCC / BoD |
+ AGM (binding) |
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| Compensation structure and levels for the Board | - NGCC + BoD |
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| Target compensation of the CEO | - NGCC | + BoD | ||
| Target compensation of individual IEC members | - CEO | + NGCC | ||
| Short-term incentive plan (STIP) payouts for IEC members* | - CEO + NGCC |
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| Long-term incentive plan (LTIP) grants for EC members* | - CEO + NGCC |
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| Compensation Report | - NGCC / BoD |
+ AGM (consultative) |
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* Proposals related to CEO compensation are prepared by the NGCC Chair and approved by the Board.
- Recommending body
/ Reviewing body
+ Approving body
The NGCC meets as often as business requires, but at least four times a year. The NGCC Chair may decide to invite executives to attend meetings as appropriate. Executives do not attend meetings when their own compensation and/or performance is being discussed.
The NGCC Chair reports to the Board on the activities of the committee after each meeting. The NGCC meeting minutes are available to the Board.
The NGCC may decide to consult external advisors for specific compensation matters.