Dear Shareholders,

In the name of the Board of Directors and the Nomination and Compensation Committee, I am pleased to introduce the 2017 Compensation Report. 2017 has again been a very good year for Sika, with an 8.7% revenue growth in Swiss francs (9.0% in local currencies) and 12.7% EBI Tincrease. The positive development of business in all regions, together with investments in new factories, the founding of further national subsidiaries and the market launch of new products all contributed to Sika’s strong growth.

In terms of relative performance, Sika outperformed its peers both in terms of sales growth and profitability improvement. The Compensation Report explains how these results impacted the variable incentive payments made to the members of Group Management under the different compensation plans.

During 2017, changes to Group Management occurred with Paul Schuler succeeding Jan Jenisch as the new Chief Executive Officer onJuly 1, 2017 and the appointments of Ivo Schädler as Head Region EMEA, Mike Campion as Head Region APAC, Frank Höfflin as ChiefTechnology Officer and Thomas Hasler as Head Industry and Automotive. Thanks to our strong and well-established talent pool, all vacancies were filled with experienced internal candidates promoted within or onto Group Management. During the reporting year, following last years’ amendments to the share-based compensation of Group Management and the introduction of a shareholding ownership guideline, the Nomination and Compensation Committee decided not to implement any further changes to the compensation system.

In addition to the nominations to the Group Management mentioned above, the Committee performed its regular activities throughout the year such as the succession planning for the positions on the Board ofDirectors and Group Management, the performance goal setting at the beginning of the year and the performance assessment atyear end, the determination of the compensation of the members of Group Management, as well as the preparation of the Compensation Report and of the say-on-pay vote at the Annual General Meeting. At the 2017 Annual General Meeting, a binding vote on the aggregate maximum compensation amounts for the Board of Directorsand for the Group Management was conducted, as well as a consultative vote on the Compensation Report, so that shareholders could express their opinion on our compensation policies and principles.

The shareholders approved the compensation amount for the Group Management with a result of 99.56%, however the compensation amount for the Board of Directors (binding vote) and the Compensation Report (consultative vote) were again rejected mainly because of the majority voting rights of the main shareholder.

Looking ahead, we will continue to assess and review our compensation programs to ensure that they are still fulfilling their purpose in the evolving context in which the company operates and are aligned to the interests of our shareholders. We will also continue to maintain an open dialog with our shareholders and their representatives.

We would like to thank you here for sharing your perspectives on executive compensation with us and trust that you will find this report informative.


FRITS VAN DIJK Chairman of the Nomination and Compensation Committee


Chairman of the Nomination and Compensation Committee