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1 BKW salary policy

The BKW salary policy defined by the Board of Directors is derived directly from the BKW strategy and is intended, in particular, to promote the long-term interests of the company. BKW strives to provide market-rate compensation for all functions, irrespective of gender, age, nationality and other demographic characteristics. It rewards competency and responsibility as well as performance, with a focus on the implementation of the strategy and the company’s results. In order to ensure that overall compensation is in line with the market and performance, BKW regularly reviews the salary bands of the individual professional groups to make sure they correspond to the market median.

The BKW remuneration system for the Board of Directors and Group Executive Board is simple and geared towards stability. It ensures that the interests of the Board of Directors, the members of the Group Executive Board and the shareholders are aligned. It is also intended to ensure that the best people available in the free market can be recruited for these crucial functions.

In the framework of this wage policy, BKW also reviews its remuneration system for the Board of Directors and Group Executive Board on a regular basis. BKW tasked specialised consultancy HCM International AG with the review of its remuneration of the Group Executive Board. The results will be presented in 2020 and included in the remuneration of the Group Executive Board and CEO starting in 2021.

In view of the review of the wage system, a market survey of the compensation of CEOs was carried out (benchmark year: 2018). In order to take account of the specific features of BKW, the compensation was assessed on the basis of various benchmark groups comprised of companies listed on the stock exchange:

As there are few energy groups and companies with majority stakes held by the public sector that can be compared in terms of size, stock exchange listing, areas of activity and available information, only one company in each of these two categories was included in the review. On the whole, both companies had a similar level of compensation. However, compared with the energy group, BKW has a relatively higher proportion of restricted shares. As a result, the related price risk is higher and the realisation period for the CEO of BKW is much longer. Compared with the exchange-listed companies with a majority stake by the public sector, there are substantial differences in terms of the composition of the individual remuneration elements. While the base salary is at a similar level, the short-term variable remuneration of the BKW CEO is much lower and the long-term remuneration in restricted shares is more substantial. The market comparison with industrial companies shows that the overall remuneration of the CEO of BKW is in the middle of the range, but well below the median. If the performance of the benchmark companies is taken into account (measured in terms of total shareholder return and total share revenue), the CEO’s compensation appears low because of the above-average performance of BKW.

BKW also conducted a comparison of the compensation of the chairs of the board of directors for the above companies with the overall compensation of the Chair of BKW (benchmark year: 2018). Compared with the industrial companies with a wide range from CHF 150,000 to CHF 6,150,000, the compensation of the Chair of BKW at CHF 387,000 is at the lower end and also well below the compensation of the chairs of the boards of directors of the energy group and the company controlled by the public sector.

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