Dear Shareholders,
In my role as Chair of the Remuneration Committee (RemCo) and on behalf of its fellow members, I am pleased to introduce our Remuneration Report 2025, which was prepared in compliance with the Swiss Code of Obligations, the SIX Exchange Regulation, the Swiss Code of Best Practice and Lonza’s Articles of Association. In this report, we outline the current compensation policies and the decisions made in relation to 2025 compensation for the Executive Committee and Board of Directors of Lonza Group Ltd (the Board).
To enhance succession planning, ensure continuity, and strengthen governance, the Remuneration Committee (RemCo) and the People and Governance Committee (PGC) were established in mid-2024, following the split of the former Nomination and Compensation Committee (NCC). These committees now form an integral part of the company’s governance framework.
We are grateful for the active engagement and time with our shareholders, the investor community and proxy advisors in 2025. These interactions help to ensure we continue our open and transparent dialogue. During 2025 we had dedicated engagements with external stakeholders in relation to our remuneration approach, governance and remuneration system evolution. Our discussions covered matters relating to changes to the Executive Committee and the Board of Directors, peer group simplification, plan design enhancements, as well as overall company developments.
Reflecting the importance of these interactions, we have introduced a new section in this report on Shareholder Engagement, summarizing the key discussions held and the actions taken in response to stakeholder feedback.
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Pay for Performance - our compensation programs are performance-based, linking employee reward with individual and company performance, both financial and non-financial. Non-financial targets focus on ESG goals to support UN Sustainable Development Goals.
Drive Sustainability - our compensation programs are linked to our sustainability strategy. Strategic decisions that drive competitive advantage are encouraged but excessive risk taking is discouraged to avoid jeopardizing the financial health, reputation or sustainability of the company. We believe in equal pay for equal work. Our compensation programs are simple, transparent and communicated internally and externally.
Create Shareholder Value - our share-based compensation encourages long-term performance and alignment of interests of our management with those of our shareholders. Our executives are required to hold a minimum level of shares to ensure they have a stake and interest in the long-term success of the company.
Drive Strategy - a strong focus on growth, sustainability and personal contribution means our incentive programs support the One Lonza strategy powered by the Lonza Engine® – our unique set of core competencies that work together to generate long-term value: high performing teams; leading scientific, technological, digital ecosystem; unparalleled customer partnerships; end-to-end execution excellence and plug-and-play investment & integration capabilities. Our competitive compensation programs are designed to attract and retain diverse talent who drive these strategic priorities.
| Fixed pay and benefits | Performance related variable pay | ||||
| Base Salary | Pension and Benefits | Lonza Bonus | Long-term Incentive Plan (LTIP) | Lonza Restricted Share Plan (LRSP) | |
| Purpose | Attract and retain Payment for role | Attract and retain Protection against risk and retirement savings | Reward for year-over-year performance | Retain Reward for long-term performance Align to shareholders | Attract and retain including employees in the wider organization Supports EC Appointment Policy |
| Form of payment | Cash | Pension contributions Benefits, allowances and insurances | 100% cash; or 50% cash and 50% equity until shareholding guidelines are met | Performance Share Units (PSUs) subject to a three-year vesting period | Restricted Share Units (RSUs) subject to a two to five year vesting period |
| Drivers | Role and responsibilities Skills and experience Market value | Market practice Role | Performance against annual company financial and ESG objectives, individual goals, values and behaviors | Business performance over 3 years | Replacement award if on joining Lonza, certain compensation at their previous employer is forfeited Level is set lower than forgone awards |
| Performance measures | Sales CORE1 EBITDA Free cash flow ESG KPIs Personal performance | CORE1 Earnings per share (EPS) Return on invested capital (ROIC) | Sustained performance in role Continued employment | ||
CORE results for incentive plans are adjusted for divestitures, acquisitions, restructuring and extraordinary one-time events and as approved by the RemCo including rounding.
LRSP awards are separate from typical total compensation and are awarded at appointment and only in cases where a new Executive Committee member forgoes compensation at their previous employer and in line with Lonza's EC Appointment Policy.
Cash payment (including base salary, other benefits, bonus and social security) and shares (LTIP) received by departed members of the Executive Committee during 2025 in line with contractual obligations and in line with applicable plan rules as well as a replacement cash payment of CHF 290,000 to Jason Berndt in lieu of compensation forfeited at his previous employer with vesting period of less than 12 months.
Compensation of Board of Directors from Annual General Meeting (AGM) 2025 to 2026 excluding employer social security contributions.
Annual board retainer + | Annual committee fees | |
|---|---|---|
| Chair of the Board of Directors 1 | CHF 950,000 | Not eligible to committee fees |
| Vice-Chair of the Board of Directors | CHF 250,000 | CHF 80,000 (committee chair) CHF 40,000 (committee member) |
| Member of the Board of Directors 2 | CHF 225,000 | |
| The additional responsibilities of Lead Independent Director3 do not attract any additional fees | ||
| Form of payout | 50% in Lonza Group shares (blocked for three years) and 50% in cash and paid in quarterly installments | |
The compensation of the Chair of the Board of Directors is inclusive of all committee work.
The compensation for a Committee Chair amounts to CHF 305,000 where chairing one committee. In the case of multiple committee memberships each attracts a separate fee.
The roles and responsibilities of such Lead Independent Director are in line with sect. 18 para. 2 of the Swiss Code of Best Practice for Corporate Governance, requiring adequate control mechanisms, and commensurate to such position.
