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Remuneration Report

Dear Shareholders, Dear Sir / Madam,

This Remuneration Report provides you with an overview of BKW’s salary policy and system of remuneration. It contains detailed information about the remuneration paid to the Board of Directors and the Group Executive Board during the 2019 financial year.

BKW concluded an eventful 2019 successfully. At 35 %, it came in well over the EBIT target set by the Board of Directors. The implementation of the company’s strategy continued with the acquisition of various companies, including Swisspro AG in the building solutions area and LTB Leitungsbau GmbH in Germany in the infra services area. The transformation process that was started continued to be implemented at a rapid pace. The organisation is even better positioned as a result and, on the whole, has begun the new year even stronger. Intensive discussions – both positive and negative – took place regarding compensation, which proved to be somewhat contentious. The Board of Directors determined that the remuneration of the CEO and Group Executive Board was justified in view of the Group’s extraordinary performance in recent years. It is in line with the wage policy presented in the Remuneration Report for the past several years. However, the performance of the share price – which has proven sustainable – was among the factors that led the Board of Directors to review the remuneration system in collaboration with a well-known consultancy.

The Group Executive Board’s remuneration system is to be modernised and adjusted in line with the prevailing standards. The aim will continue to be securing the Group’s long-term success. The review will be carried out in 2020 and the changes implemented the following year. As a transitional solution, it was decided to change the way the long-term remuneration of the CEO is calculated for the 2019 financial year. This change only applies to the CEO.

A rough review of the remuneration system carried out for the Board of Directors revealed that the compensation is below the market level for comparable companies with similarly strong performance. For this reason, the focus is not on a revision of the remuneration paid to the Board of Directors. The members will continue to receive mainly a fixed base salary and attendance fees. The compensation of the Board of Directors remained constant in 2019.

The compensation of the Group Executive Board is comprised of a high base salary, a relatively low short-term performance-related component paid in cash (bonus) and substantial long-term profit sharing in the form of shares. As part of the gradual alignment of the remuneration paid to members of the Group Executive Board with the market level, the compensation paid to the Group Executive Board increased slightly, while the overall remuneration of the CEO fell by 13 %, even though the objectives set by the Board of Directors were once again exceeded significantly. The main reasons for the reduction were the lack of the one-off effect of the additional payment to the pension fund this year and the fact that the allocation of the long-term remuneration in shares was revalued as a result of the transitional solution.

At the 2020 General Meeting, we will present this Remuneration Report for approval within the scope of a consultative vote. You will note that the remuneration paid to the Board of Directors and Group Executive Board are within the maximum remuneration amounts set by the General Meeting.

Kind regards,

Urs Gasche
Chairman of the Board of Directors

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