Letter from the Chairman of the Nomination and Compensation Committee

Dear Shareholders,

In my role as Chairman of the Nomination and Compensation Committee (NCC) and on behalf of its fellow members, I am pleased to introduce our 2021 Remuneration Report, which adheres to the Swiss Ordinance Against Excessive Compensation for stock exchange listed companies. In this report, we outline the current compensation policies and the decisions made in relation to 2021 compensation for the Executive Committee of Lonza.

We continue to be grateful for the active engagement and time with our shareholders, the investor community and proxy advisors in 2021. It helps to ensure we continue our open and transparent dialogue. Our discussions during 2021 covered matters relating to changes to the Executive Committee, the implementation of environment, social and governance (ESG) compensation measures into executive compensation as well as overall Company developments.

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At a Glance

Lonza’s approach to compensation is designed to attract and retain talent with competitive compensation programs. Our compensation programs are performance-based, linking employee rewards with company and individual performance. Executive compensation is aligned with the short-term and long-term objectives of the wider business. Results are measured based on the achievement of specific short and long-term objectives, which are defined to achieve a balance between short-term and long-term outcomes. We encourage strategic decisions that drive competitive advantage but discourage executives from taking unnecessary or excessive risks that may threaten the financial health, reputation or sustainability of the Company.

2021 Executive Committee Compensation Policy Table

Base SalaryBenefitsShort-term Incentive Plan (STIP)Long-term Incentive Plan (LTIP)Lonza Restricted Share Unit Plan (LRSP)Shareholding Guidelines
Fixed amount paid in return for the day-to-day duties and responsibilities performedPost-employment and other benefits to complement Lonza’s total compensation offeringShort-term variable compensation component, rewards for annual company and individual performanceLong-term variable compensation component, rewards for long-term company performance. Aligns interests of the Executive with shareholdersBuy-out instrument for Executive Committee members awarded solely in cases where an Executive forgoes certain compensation at their previous employer. Used as a vehicle to support the Executive Committee Appointments Policy and replicates existing vesting schedule at previous employerShareholding guidelines to align interests of the Executive with shareholders
100% cashPension and other benefits such as company car / transportation allowance, expense allowances and insurances100% cash; or 50% cash and 50% equity (until shareholding guidelines are met)100% vesting subject to a three-year performance period100% equity subject to a two to five-year time-based vesting period 

Consideration for

• experience of individual;

• direct role responsibilities; and

• market levels observed at companies in the relevant industry to Lonza

Aligned with companywide and country specific benefits policies Target levels: 
• CEO – 100% of salary 
• Other EC – 75% of salary  
Minimum = 0% of target
Maximum = 200% of target
Target levels: 
• CEO – 150% of salary 
• Other EC – 125% of salary 
Minimum = 0% of target
Maximum = 200% of target
Levels set equivalent or less than forgone awards, considering, but not limited to previous employer variables such as historical company performance, volatility and the equity instrument

CEO – 300% of salary

Other EC – 200% of salary

To be accumulated over 5 years

Performance Measures

May be a mix of financial and individual measures, typically with weighting of 80% and 20% respectively

2021 was based on 100% financial measures


31.25% Sales

18.75% Operating free cash flow

50% CORE EPS 1

50% ROIC

Sustained performance in role

Continued employment

1 CORE results exclude exceptional expenses and income related to e.g. restructuring, environmental-remediation, acquisitions and divestitures, impairments and amortization of acquisition-related intangible assets, which can differ significantly from year to year

2021 STIP and LTIP Outcomes

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  1. Includes 10% CORE EBITDA, 6.25% Sales and 3.75% operational free cash flow distributed from 20% individual performance element.

2021 Total Remuneration Paymix (CHF)

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  1. Lonza Restricted Share Unit Plan (LRSP) awards are separate from typical total compensation and are awarded only in cases where a new Executive Committee member forgoes cash or equity at their previous employer. See the Remuneration PDF on page 195 for details of the LRSP award

  2. Cash payment (including base salary, other benefits, short–term incentive and social security) and shares (LTIP) received by a departed member of the Executive Committee during 2021 and a cash payment to an Executive Committee member upon their appointment to compensate for forfeited annual bonus at their previous employer

Board of Directors

Compensation Board of Directors Annual General Meeting (AGM) 2021 to 2022 (excluding social security contributions)

In CHFBase annual feeCommittee  membership feeCommittee Chairperson fee
Chairperson of the Board of Directors 1600,000--
Board of Directors Member 2200,00040,00080,000
 The additional responsibilities of Vice-Chairperson3 do not attract any additional fees
Form of payout50% in Lonza Group shares and 50% in cash. This is paid in quarterly installments during the 2021 financial year
  1. The compensation of the Chairman of the Board of Directors includes compensation as a member of the Innovation and Technology Committee of the Board of Directors. For details on the compensation received for the role of CEO ad interim during 2020 please see the 2020 Remuneration Report

  2. The compensation for Committee Chairpersons amounts to CHF 280,000 and includes the committee membership fee. In the case of multiple committee memberships, this attracts one committee membership fee only

  3. The roles and responsibilities of such Vice-Chairperson are in line with sect. 19 para. 2 of the Swiss Code of Best Practice for Corporate Governance, requiring adequate control mechanisms, and commensurate to such position