The remuneration of our Executive Board members is set and reviewed annually by the Supervisory Board. It depends upon the responsibilities and personal achievements of the individual Executive Board member as well as the economic situation and market environment of the company as a whole. Further, the customary level of remuneration at peer companies and the internal Symrise remuneration structure are also considered. In a vertical compensation comparison, the target total compensation of all Executive Board members corresponds to around 28 times the average compensation of Symrise employees in Germany or worldwide and around 27 times the highest collectively agreed compensation group in Germany. Therefore, the remuneration of Executive Board members is appropriate according to an internal company comparison. All members of the Executive Board receive a target total remuneration. This is comprised of a fixed remuneration (33 %), the annual variable component (additional 33 %) and a long-term variable component (additional 33 % of the total target remuneration), each at 100 % goal attainment. This total target remuneration is restricted by a maximum remuneration for the annual bonus and the long-term incentive (cap).
90 % of the variable annual remuneration for our Executive Board members is based on earning targets (EBITDA, EBITDA margin, sales, business free cash flow, earnings per share) that have been agreed upon with the Supervisory Board. A further 10 % relates to sustainability objectives. The performance goals are derived from the business plan for the current calendar year as well as agreed-upon individual, segment-specific goals. The company’s sustainability objectives are also incorporated into individual performance goals and thereby into the remuneration package of the Executive Board members. The members’ performance goals are communicated to the managers in the respective divisions. In 2019, we focused on optimizing our working capital. In addition, certain items were also incentivized, such as the reduction of our direct and energy-indirect (Scopes 1+2) CO2 emissions, the sustainable orientation of our innovation process or the sourcing of raw material from sustainable sources.
Moreover, the Supervisory Board allows the members of the Executive Board to participate in our long-term incentive program. Upon maturity, this three-year program provides for a cash bonus (33 % of the entire remuneration) independent of how the share price of Symrise has performed over a period of three years. Our company does not offer shares or share options.
When an Executive Board member’s contract expires, we offer no termination benefits. If a change-of-control situation happens to arise, then the Executive Board member’s contract provides for termination benefits that comply with the German Corporate Governance Code.
We offer a company pension in the form of deferred compensation. This applies to the Executive Board as well as to the entire management. We provide our remaining employees with either a retirement benefit plan in the form of a membership in a retirement fund (today’s standard) or a suitable retirement plan (old cases).
For our managers and employees who are not governed by collective bargaining agreements, remuneration is determined worldwide by means of a job grade model. This model rates the functional contribution of each individual to the success of the company (strategy, responsibility for sales and expenses, manager-to-staff ratio, etc.) and assigns a corresponding remuneration range to the function. Our managers receive a regular fixed monthly or annual income.
All employees who are not governed by collective bargaining agreements additionally receive variable remuneration between 15 % and 30 % according to the remuneration range. We have established a separate global performance bonus plan for our approximately 120 managers who have global or regional responsibilities (senior management). With this, we align the organization and thereby managers with the achievement of agreed company targets by means of a variable remuneration geared toward results and performance. Depending upon level of seniority, the variable remuneration of our senior management amounts to 25 % to 50 % of the fixed annual remuneration. A cap is set at 160 % of the 100 % target annual bonus, the same as with the Executive Board.