The Compensation Report describes the compensation principles and programs, as well as the governance framework related to the compensation of the Board of Directors and the members of Sika’s Group Management. The report also provides details regarding the compensation programs and the payments made to members of the Board of Directors and of Group Management in the 2020 business year.

The Compensation Report is written in accordance with the Ordinance against Excessive Compensation in Listed Stock Corporations, the standard relating to information on Corporate Governance of the SIX Swiss Exchange, and the principles of the Swiss Code of Best Practice for Corporate Governance of economiesuisse.

Board of Directors
"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 with the interests of our shareholders. We will also continue to maintain an open dialogue with our shareholders and their representatives. We would like to thank you for sharing your perspectives on executive compensation with us, and trust that you will find this report informative." Justin M. Howell, Chairman of the Nomination and Compensation Committee

Compensation of Group Management

Following an extensive review of the compensation programs in 2018, several changes to the compensation of the Board of Directors and of Group Management were implemented in 2019. The Nomination and Compensation Committee established that the compensation design is well aligned with the business strategy and the shareholders’ interests and decided not to implement any change for 2020, with one exception: As announced in last year’s Compensation Report, the reduction of Sika’s carbon footprint will be introduced as a new performance objective for the annual Performance Bonus. This objective was chosen to recognize the importance of mitigating the company’s impact on the environment and to encompass sustainability in the measurement of the performance of Group Management. Further details on this change are provided in this Compensation Report. The compensation system applicable for 2020 as described in this report will also apply for 2021.

Overview of performance objectives and respective weighting for 2021
Compensation of Group Management 2021

Considering the increasing focus on environment, social and governance (ESG) matters, the Performance Bonus now includes between 10% and 20% of ESG objectives: 10% relate to environmental matters, with the reduction of CO2 emission objective, and for certain roles, 10% relate to social matters with the health and safety and/or the leadership performance objectives.

The overall bonus payout is capped and cannot exceed 150% of the Performance Bonus target. The Performance Bonus is paid out in April of the following year.