Role of Shareholders and Articles of Association
Shareholders have an important say in compensation matters, with their formal approval being required for the aggregate maximum amounts of compensation for the Board and for the IEC through binding votes at each AGM, and with their approval being sought for the company’s remuneration policy through the non-binding, consultative vote on the Compensation Report. In addition, the principles of compensation for the Board and for the IEC 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 this table:
|Overview of compensation-related provisions in Idorsia’s Articles of Association|
|Resolutions on compensation||7|
|Supplementary compensation amount for new members of the Executive Management||8|
|Permitted additional activities||24|
|Agreements relating to compensation for members of the Board of Directors and the Executive Management||25|
|Principles relating to the compensation of the members of the Board of Directors||26|
|Principles of compensation relating to the members of the Executive Management||27|
|Credit and pension schemes||28|
Nominating, Governance & Compensation Committee
As specified in the Charter of the NGCC, which is an annex to the company’s By-Laws (available at www.idorsia.com/by-laws), the NGCC consists of at least three, but no more than five, NEDs. The NGCC members are individually elected, for a one-year term, by the shareholders at the AGM. Current members of the NGCC are Felix R. Ehrat (Committee Chair), Joern Aldag, Srishti Gupta, and Mathieu Simon.
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 relating 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 members of the Board 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 achievement against these targets of the CEO under the relevant compensation schemes;
- approving, upon recommendation of the CEO, the compensation of the CEO’s direct reports, as well as setting their annual performance targets and achievements against these targets within the framework of the relevant compensation schemes;
- preparing the Compensation Report for approval by the Board.
Additional information on the responsibilities of the NGCC is provided in the here.
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 -
|Compensation policy review and compensation principles for next financial year||NGCC
|Compensation incentive plans (design, performance targets)||NGCC
|Aggregate maximum amounts of compensation for the Board and the IEC||NGCC
|Compensation structure and levels for the Board||NGCC
|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
|Long-term incentive plan (LTIP) grants for EC members*||CEO
* Proposals related to CEO compensation are prepared by the NGCC Chair and approved by the Board.
The NGCC meets as often as business requires, but at least four times a year. In 2021, the NGCC held four meetings: one in person and three by video conference. Each meeting took on average 2 hours and 15 minutes. In addition, the NGCC Chair interacts regularly (normally every second or third week) with Idorsia’s Head of Global Human Resources.
The NGCC Chair may, at his discretion, invite executives to attend meetings. 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 independent external advisors for general and specific compensation matters. In 2021, Alvarez & Marsal (London office) provided services on compensation matters and related topics. Alvarez & Marsal did not provide any other services to Idorsia.