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4 Remuneration paid to the Board of Directors and Group Executive Board

The remuneration amounts paid to the Board of Directors and Group Executive Board are disclosed in the financial year in which they are recognised in the annual financial statements.

4.1 Remuneration paid to the Board of Directors

This report contains information about the remuneration paid to members of the Board of Directors for the financial years 2018 and 2017. The amounts paid in 2018 will be compared against the maximum overall remuneration ratified by the 2018 General Meeting in respect of the 2018/2019 term of office.

The fixed remuneration of the members of the Board of Directors and the attendance allowances were increased slightly for the 2018 financial year on the basis of the aforementioned market comparison. For individual members of the Board, payment is made in whole or in part to their employers. The attendance fees paid depend on the number of meetings attended by the Board member. No attendance fees are paid to the Chair.

The other remuneration includes social security contributions and any statutory withholding tax. Following the approval of the expense regulations for the members of Board of Directors of BKW AG by the Tax Administration of the Canton of Bern, “Other remuneration” will no longer include fixed expense payments from 2018 onwards.

Share-based payments comprise the benefit in fair value of the preferential purchase of BKW shares. In 2018, each member of the Board of Directors was offered the opportunity to purchase 600 BKW shares (2017: 600 shares) at a preferential price of CHF 40.75 per share (2017: CHF 32.40). The underlying market value was CHF 60.00 per share (2017: CHF 54.75).

Remuneration of members of the Board of Directors in 2018

CHF thousands

Fixed remuneration

Attendance allowance

Share-based payments

Other remuneration

Total

Urs Gasche

Chairman

336

0

2

49

387

Hartmut Geldmacher

Deputy Chair

62

17

6

47

132

Dr. Carole Ackermann

Member (from 18.05.2018)

32

19

0

0

51

Marc-Alain Affolter

Member (until 18.05.2018)

20

5

6

3

34

Roger Baillod

Member

60

24

6

1

91

Dr. Georges Bindschedler

Member (until 18.05.2018)

20

5

6

0

31

Barbara Egger-Jenzer 1

Member (until 18.05.2018)

20

5

4

1

30

Rebecca Guntern

Member (from 01.09.2018)

32

7

0

4

43

Andreas Rickenbacher

Member (from 18.05.2018)

32

17

0

5

54

Kurt Schär

Member

48

24

6

1

79

Total

662

123

36

111

932

1 All remuneration, including attendance allowances, was paid to the Canton of Bern.

Remuneration of members of the Board of Directors in 2017

CHF thousands

Fixed remuneration

Attendance allowance

Share-based payments

Other remuneration

Total

Urs Gasche

Chairman

280

0

8

52

340

Hartmut Geldmacher

Deputy Chair

52

10

8

44

114

Marc-Alain Affolter

Member

40

20

8

13

81

Roger Baillod

Member

50

20

8

6

84

Dr. Georges Bindschedler

Member

40

30

8

6

84

Barbara Egger-Jenzer 1

Member

40

28

3

5

76

Paul-Albert Nobs

Member (until 12.05.2017)

17

4

8

6

35

Kurt Schär

Member

40

20

8

6

74

Total

559

132

59

138

888

1 All remuneration, including attendance allowances, was paid to the Canton of Bern.

Maximum overall remuneration for the term of office 2018/2019

The General Meeting ratifies the maximum overall amount of remuneration of the Board of Directors for its term of office, i. e. from the General Meeting (each May) until the next General Meeting (the following April). This Remuneration Report is based on the financial year and, thus, the information published as of 31 December 2018; the amount disclosed in this report has therefore been adjusted to a period of eight months (May to December 2018).

The 2018 General Meeting ratified a proposal for a maximum overall amount of CHF 1,200,000 in respect of remuneration of the Board of Directors for the 2018/2019 term of office. Calculated for the period of eight months to 31.12.2018, the payments to members of the Board of Directors amounted to CHF 618,000. The amounts yet to be paid in 2019 (from January to April 2019) are within the maximum overall amount ratified by the General Meeting.

The General Meeting 2019 will receive a report on the entire remuneration period (General Meeting 2018 to General Meeting 2019). The Remuneration Report for the 2019 financial year will show an overall view of the remuneration period from the General Meeting 2018 to the General Meeting 2019.

Overall remuneration Board of Directors 2018/2019

CHF thousands

Entire term of office 2018/2019

Period 05 – 12/2018

Period 01 – 04/2019

Maximum overall remuneration ratified by the General Meeting

1,200

Amount actually paid out

Information for the ­General Meeting 2019

618

Information for the ­General Meeting 2019

Overall remuneration Board of Directors 2017/2018

CHF thousands

Entire term of office 2017/2018

Period 05 – 12/2017

Period 01 – 04/2018

Maximum overall remuneration ratified by the General Meeting

1,500

Amount actually paid out

879

569

310

4.2 Remuneration paid to the Group Executive Board

After remaining constant in the previous year, the total remuneration paid to the Group Executive Board and the CEO rose substantially in 2018. This was due to three main factors: the increase in the base salary with the aim of bringing it in line with market remuneration levels, the increase in the share-based remuneration in order to align the interests of the Group Executive Board more closely with the interests of shareholders and the positive development of the BKW share price. There were also much higher pension benefits. The pension benefits are primarily a one-off effect, which is due to the defined benefit plan of the BKW pension fund that still applied in 2018. The pension benefits also include the employer contributions to AHV/IV/ALV/EO, which are paid on the base salary, the short-term ­variable remuneration and the share-based ­remuneration; consequently, they will also rise considerably in 2018.

Remuneration of members of the Group Executive Board and the highest-earning member in 2018

Dr. Suzanne Thoma CEO

Group Executive Board 1 (including CEO)

CHF thousands

2018

2018

Fixed basic remuneration

780

2,520

Short-term variable remuneration

234

563

Long-term profit sharing (share-based payments)

568

1,491

Pension benefits

449

1,097

Total

2,031

5,671

1 With the abolition of the Renewables and Efficiency division following the merger of the wind business with the traditional energy business, one member left the Group Executive Board on 31 May 2018.

Remuneration of members of the Group Executive Board and the highest-earning member in 2017

Dr. Suzanne Thoma CEO

Group Executive Board (including CEO)

CHF thousands

2017

2017

Fixed basic remuneration

650

2,713

Short-term variable remuneration

195

519

Long-term profit sharing (share-based payments)

287

910

Pension benefits

169

675

Total

1,301

4,817

Based on the review conducted in 2017, the base remuneration of the CEO was increased by 20 % and that of the other members of the Group Executive Board by around 10 %. As a result, the basis for calculating the short-term variable remuneration was also increased accordingly. As in 2017, the short-term variable remuneration for the CEO was 30 % of the fixed base remuneration and that of the other members of the Group Executive Board 20 %. Measured in terms of the base remuneration, therefore, the weight of the variable remuneration remained the same.

In order to focus the remuneration more on the long-term performance of BKW and thus the interests of shareholders, the proportion of share-based remuneration paid to the CEO was increased to 40 % and that to the other members of the Group Executive Board to 30 % of the fixed base remuneration. As a result, 9,455 shares (2017: 6,000) were transferred to the CEO and 24,796 (2017: 19,000) to the other members of the Group Executive Board. The reported value of long-term profit sharing also rose as a result of the extremely good performance of BKW’s shares in 2018. The allocated shares are blocked from being sold by the Group Executive Board until 7 December 2021.

Pension benefits, comprised of employer contributions to AHV/IV/ALV/EO and employer payments to the pension fund, rose significantly in 2018. This was due to the defined benefit plan of the pension fund that still applied in 2018, which requires additional payments if remuneration subject to social security contributions increases. These special effects will no longer occur from 2019 onwards.

In summary, the remuneration paid fully complies with the maximum amount of CHF 8,000,000 ratified by the 2017 General Meeting for remuneration of the Group Executive Board for the 2018 financial year.

Measurement of the short-term variable remuneration

The short-term financial objectives for 2018 were achieved and the implementation of the strategy was continued consistently and with great speed. This was the case despite the ongoing negative environment in the energy area. Compared with 2017, revenues from the production of electricity fell sharply again as a result of the collapse in electricity prices. In addition, unusual weather patterns, unplanned disruptions at partner plants and the unclear situation regarding the integration of Switzerland in the European electricity market posed particular challenges for the management of electricity positions. Despite electricity prices that remain volatile at low levels and the uncertain regulatory environment, the Group achieved good results thanks to the ongoing restructuring and repositioning of the energy business. The Group continued its rapid technological optimisation of the Grid business with a view to digitalisation and the integration of decentralised and fluctuating energy production. The performance of the Grid business was positive and in line with the plan. The establishment of the Services business as a network of companies proceeded very well. Revenue and income rose substantially and profitability increased ­significantly. As a result, the CEO was allocated a short-term variable remuneration of 30 % and the other members of the Group Executive Board 20 % of their fixed remuneration.

Maximum overall remuneration of the Group Executive Board

Taking account of the change in the market level and maintaining the flexibility needed to achieve the desired positive growth in the share price in 2019, the 2018 General Meeting approved a maximum amount of CHF 8,800,000 for the 2019 financial year.

The 2019 General Meeting will be asked to approve an unchanged maximum amount of CHF 8,800,000 for the 2020 financial year. This amount ensures – taking account of the strong share-based remuneration of the Group Executive Board – flexibility for the desired positive growth in the share price and the necessary flexibility for any further development of the Group Executive Board.

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