Letter from the Chairman of the Nomination and
Dear Sir or Madam,
For all of us, 2020 was an intense and challenging year of immense change. At the same time, it gave us a chance to focus on what’s important and once again showed that change also always brings about opportunities. In the 2020 financial year, Raiffeisen Switzerland focussed on making the most of these opportunities to ensure that we continue to meet the demands of a modern and innovative banking group into the future. The central focus was on employees, the strengths of an empowering and adaptable “We” culture as well as the review and alignment of existing remuneration systems.
The central focus was on employees, the strengths of an empowering and adaptable “We” culture as well as the review and alignment of existing remuneration systems.
With the appointment of Kathrin Wehrli, Roger Reist and Helen Fricker as members of the Executive Board, Raiffeisen Switzerland was able to add valuable skills and expertise to the Board in the current year. Over the past year, the Executive Board of Raiffeisen Switzerland has become an established, diverse and strong executive body who is committed to the Raiffeisen Group and its employees with great energy and motivation.
At the strategic level, the Board of Directors of Raiffeisen Switzerland has been reduced to nine members following a resignation. The constructive and respectful cooperation in the Board and in the committees was continued and further enhanced. Intensive exchange with internal and external stakeholders was actively fostered, and the strategic topics advanced unrestricted.
The Group strategy adopted in the current year aims to create a corporate culture that focusses more on “We” as well as on flexibility and trust, among other goals. This will enable our employees and also Raiffeisen Switzerland as a whole to respond to changes and uncertainties even better and more swiftly. For instance, the introduction of “FlexWork” in August 2020 has given employees at Raiffeisen Switzerland the opportunity to align their working hours and their place of work to their individual needs. In addition, the multifaceted and balanced structure of teams and project groups across all levels established important conditions for a learning, agile and adaptable organisation that provides the freedom to develop dynamic and joint solutions for the entire Group.
Raiffeisen Switzerland initiated a strategic change process in the 2020 financial year. This includes the establishment of a remuneration system that aligns with the strategy as well as the cooperative values. The prospective new remuneration model for all employees as well as for the Executive Board of Raiffeisen Switzerland was specified and finalised in the current year. In doing so, Raiffeisen Switzerland decided to do away with individual bonus payments in future and and instead introduce a collective profit-sharing element, which emphasises group effort and highlights the increased focus on the “We” culture.
The Board of Directors also carried out the biennial review of its remuneration in the 2020 financial year as stipulated in the remuneration regulations. The fundamentals of the remuneration of the Board of Directors essentially remained unchanged. The compensation paid to the Board of Directors meets the requirements of market-based and attractive remuneration. At the same time, it reflects the cooperative idea of providing appropriate, fair and sustainable compensation. Two minor adjustments were resolved for implementation from 1 January 2021. They involve harmonisation of the committee remuneration and a moderate adjustment to the flat-rate expenses. The moderate adjustment to the flat-rate expenses is associated with the specification that Raiffeisen Switzerland will no longer provide any IT equipment to perform the mandate in the future. The overall gross remuneration framework will remain unchanged between the 2020 and 2021 financial year.
The Board of Directors of Raiffeisen Switzerland is convinced that our cooperative has made the most of the opportunities to launch a strategic change process.
The Board of Directors of Raiffeisen Switzerland is convinced that, in a challenging 2020, our cooperative has made the most of the opportunities to launch a strategic change process that will help to make Raiffeisen a more attractive employer. We have also laid the foundations for an adaptable corporate culture that focuses on the collective provision of Group-wide solutions and services. The new remuneration policy at Raiffeisen Switzerland that entered into force across all levels of hierarchy on 1 January 2021, meets the various requirements of a cooperative and fares well in a market comparison. In addition to the numerous other topics, this new policy implemented by Raiffeisen Switzerland makes an important contribution to the cooperative alignment and the long-term corporate success of our Group.
On behalf of the Nomination and Remuneration Committee, I would like to thank everyone in the committees and working groups who played a part in successfully managing the activities in the 2020 financial year. I look forward to continued cooperation, new and exciting topics, and a constructive professional exchange of ideas.
Chairman of the Nomination and Remuneration Committee of the Board of Directors of Raiffeisen Switzerland 16 April 2021
Raiffeisen Group remuneration report
The Raiffeisen Group (Raiffeisen Switzerland, including the Raiffeisen banks and consolidated companies) paid CHF 1,059,025,368 in total remuneration in the current year. The share of variable remuneration (excluding employer pension and social insurance contributions) totalled CHF 97,344,617. Remuneration was rendered exclusively in the form of cash. None of it was deferred.
|Total Raiffeisen Group remuneration||1,058,170,444||1,059,025,368|
|of which total Raiffeisen Group variable remuneration pool||101,608,808||97,344,617|
A competitive remuneration system plays a key role in successfully positioning Raiffeisen Switzerland as an attractive employer. The remuneration system is designed to attract skilled workers on the job market and to retain them, among other things. Outstanding and extraordinary achievements are recognised and rewarded.
Raiffeisen Switzerland’s remuneration model is based on criteria provided in laws, rules and regulations, especially on Circular 2010/1 “Remuneration schemes” of the Swiss Financial Market Supervisory Authority (FINMA).
Raiffeisen Switzerland remuneration report
The Nomination and Remuneration Committee of Raiffeisen Switzerland is responsible for implementing the regulations issued by the Board of Directors of Raiffeisen Switzerland. It consists of at least three members of the Board of Directors. The Nomination and Remuneration Committee reviews proposals concerning the remuneration of the Executive Board of Raiffeisen Switzerland and Board of Directors and submits recommendations to the Board of Directors for approval. In addition, the Nomination and Remuneration Committee and the Board of Directors jointly evaluate the performance of the Chairman of Raiffeisen Switzerland’s Executive Board and sit down with him to jointly review the performance evaluations of the other Executive Board members.
Raiffeisen Switzerland’s Board of Directors is responsible for the following:
- Outlining the remuneration policy in the form of regulations for Raiffeisen Switzerland and recommendations for Raiffeisen banks
- Approving the annual remuneration report submitted to the Board by the Nomination and Remuneration Committee
- Reviewing remuneration policy on a regular basis and whenever there are indications that reviews or revisions may be necessary
- Having the structure and implementation of its remuneration policy checked by external auditors periodically or by Internal Auditing as necessary
- Regularly determining the amount of the total variable remuneration pool
- Defining the fixed and variable component of the remuneration for Members of the Executive Board and the Head of Internal Auditing, including contributions to the occupational pension
The Nomination and Remuneration Committee deals with remuneration topics at its meetings. At least four meetings are required each year. In 2020, the Nomination and Remuneration Committee held eight meetings (including conference calls) with a general attendance rate of 100%. The Nomination and Remuneration Committee focused on the following areas in 2020:
- The amendment of the remuneration system for Raiffeisen Switzerland employees
- The final composition of the Executive Board
- The review and amendment of the remuneration system of the Executive Board of Raiffeisen Switzerland,
- The review and amendment of the remuneration system of the Board of Directors of Raiffeisen Switzerland
- Intensive exchange with internal and external stakeholders.
The Chairman of the Nomination and Remuneration Committee invites other members of the Board of Directors, the Executive Board, other experts, remuneration advisors and external legal advisors as needed. Whenever discussions pertain to remuneration, the person whose remuneration is being discussed does not take part in the discussion.
The remuneration approval structure can be summarised as follows:
Remuneration approval structure | Raiffeisen Switzerland
|Issue||Nomination and Remunerations Committee||Member of Board of Directors|
|Development or amendment of the remuneration policy||Recommendation||Approval|
|Chairman of the Executive Board||Recommendation||Approval|
|remaining Members of the Executive Board and Head of Internal Auditing||Recommendation1||Approval|
|Member of Board of Directors||Recommendation||Approval|
|Total amount of the variable remuneration of Raiffeisen Switzerland||Recommendation||Approval|
|1 Together with the Chairman of the Executive Board except for the Head of Internal Auditing|
At the General Meeting of Raiffeisen Switzerland in 2020, the Board of Directors proposed the approval of the Remuneration Report 2019 in a consultative vote. This proposal was approved by the General Meeting with 94% of the votes. In addition, Internal Auditing regularly evaluates the operational implementation of the remuneration regulations at Raiffeisen Switzerland to ensure compliance with Raiffeisen Switzerland’s remuneration system.
The remuneration policy is designed to align the interests of our employees with those of our clients. Raiffeisen Switzerland has an independent remuneration system that governs the remuneration paid to the Board of Directors and the Executive Board in detail and lays out basic principles for the total remuneration paid to all Raiffeisen Switzerland employees. Raiffeisen Switzerland also issues remuneration recommendations to Raiffeisen banks.
Remuneration caps are defined for all groups of risk-takers. There are limits on variable components. All remuneration is paid in the form of non-deferred cash. The remuneration system provides adequate incentives to drive and differentiate performance.
Being a cooperative, Raiffeisen Switzerland aims for stable returns and sustained success, which significantly affects the remuneration system. The remuneration policy aims to provide continuity. Incentives are designed to encourage appropriate business conduct and avoid potential conflicts of interest and excessive risk appetite.
The remuneration system is aligned with the business strategy. It gives due consideration to the Group’s goals, values, cooperative culture and long-term, sustainable alignment.
Furthermore, Raiffeisen Switzerland places considerable emphasis on social responsibility and on a remuneration system that is both simple and transparent. The remuneration system must be attractive enough to recruit, motivate and retain talent over the long term. At the same time, Raiffeisen Switzerland believes in equal pay for equal work. The results of two studies on wage equality, conducted at Raiffeisen Switzerland by the same independent partner as in 2014 and 2017, found that Raiffeisen Switzerland pays equal wages to men and women. Within the scope of equal opportunity and equality, Raiffeisen Switzerland welcomes the revised version of the Federal Act on Gender Equality (GEA) of 1 July 2020 and started collecting the data to conduct another analysis on wage equality based on a scientific and legally compliant method in the current year. The result of the study on wage equality will be reviewed by an external auditor by 30 June 2022. Next, the results of the audit will be presented to the employees. This approach allows Raiffeisen Switzerland to ensure compliance with equal pay.
The following table summarises the principles of our remuneration policy.
Principles of the remuneration policy | Raiffeisen Switzerland
|Transparency||The structure of the remuneration system of Raiffeisen Switzerland is simple and transparent; the principle of “equal pay for equal work” applies as an absolute matter of course.|
|Strategic direction||The remuneration system is aligned with the business strategy. It gives due consideration to the goals, values and cooperative culture as well as the long-term and sustainable alignment of the Group.|
|Consideration of risk||Incentives are designed to encourage appropriate business conduct and avoid potential conflicts of interest and excessive risk behaviour.|
|Performance orientation||The remuneration system provides adequate incentives to drive and differentiate performance.|
|Market positioning||The remuneration system is attractive enough to recruit talented individuals, motivate them and ensure their long-term loyalty to the company. The appropriateness of the remuneration is reviewed based on regular market comparisons.|
For all employees (including Members of the Executive Board, senior management, additional risk takers and controlling functions), remuneration comprises the following elements:
- Fixed remuneration in line with the market: Every employee has an individual contract establishing the fixed remuneration. This is based on a clearly defined job function and the employee’s skills and knowledge. Salaries must also be competitive with regard to the labour market. All fixed remuneration is paid in cash.
- Moderate variable remuneration: Variable remuneration is paid based on the Group’s sustained success and individual employee performance reviews. It is also based on the assessment of how much individual employees contribute to the corporate culture. It can be paid for all functions, including controlling functions. Special care is taken to prevent the remuneration system giving controlling functions incentives that could cause conflicts of interests with their duties. Employees generally have no contractual guarantee to be paid variable remuneration. Exceptions are listed in section “Other remuneration”. All variable remuneration is paid in cash and in non-deferred form.
- The determination of the total variable remuneration pool is based in equal measure on the long-term development of the following criteria:
- Relative profitability over time compared to the market
- Change in equity capital
- Performance of strategic initiatives and projects
- Changes in economic capital required relative to core capital
- Fringe benefits are granted within the framework of applicable regulations, directives and industry standards.
Determination of the remuneration for the Board of Directors
The members of the Raiffeisen Switzerland Board of Directors receive remuneration commensurate with their respective responsibilities and time commitment. Additionally, members belonging to a committee, heading a committee or presiding over the Board of Directors receive higher pay. The members of the Board of Directors do not receive variable remuneration. The Board of Directors has no performance indicators that would encourage unnecessary risk-taking.
In accordance with the valid remuneration regulations, the Chairman of the Board of Directors receives fixed remuneration of CHF 750,000 and was not entitled to receive committee fees. The full members of the Board of Directors received a fixed remuneration of CHF 90,000. The Chairman of the Board of Directors received a lump-sum expense allowance of CHF 9,000 for his representative duties. The other members of the Board of Directors receive an annual lump-sum expense allowance of CHF 3,000.
Furthermore, the full members of the Board of Directors received:
- CHF 25,000 per committee for being a member of the Nomination and Remuneration Committee or Strategy and Finance Committee,
- CHF 30,000 per committee for being a member of the Audit Committee or Risk Committee,
- CHF 40,000 per committee for serving as Chairman of the Nomination and Remuneration Committee or Strategy and Finance Committee,
- CHF 50,000 per committee for serving as Chairman of the Audit Committee or Risk Committee.
The remuneration table below shows the total remuneration paid to the individual members of the Board of Directors. Loans granted to members of the Board of Directors are disclosed in note 17 in the annual report. Loans to members of the Nomination and Remuneration Committee are approved by the Board of Directors, whereas loans to all other members of the Board of Directors are approved by the Nomination and Remuneration Committee.
Determination of the remuneration for the Executive Board
The gross caps communicated at the Delegate Meeting on 15 June 2019 – no more than CHF 1,500,000 for the Chairman of the Executive Board and generally less than CHF 1,000,000 for each of the other members of the Executive Board – were once again adhered to in 2020. The annual remuneration of the Executive Board consists of fixed and variable remuneration and fringe benefits. Loans granted to Members of the Executive Board and the Head of Internal Auditing are disclosed in note 17 the annual report. Loans to members of the Executive Board are approved by the Nomination and Remuneration Committee. Furthermore, the Executive Board enjoys industry-standard preferential terms, as do the other employees.
Fixed remuneration for Executive Board members and the Head of Internal Auditing is set in accordance with their labour market value, the requirements of the assigned department, management responsibilities and seniority. Each member of the Executive Board and the Head of Internal Auditing receive a fixed basic salary that is reviewed each year by the Nomination and Remuneration Committee. The members of the Executive Board and the Head of Internal Auditing receive market-standard pension and fringe benefits.
The process of determining the performance-based allocation includes determining the total available pool of variable remuneration. Individual allocation to the Members of the Executive Board as well as to the Head of Internal Auditing is configured as follows:
Individual variable remuneration is also allocated by the Board of Directors and cannot exceed two-thirds of the fixed remuneration (excluding employer contributions to pension plans and social insurance) in any individual case for the current year.
The variable remuneration is allocated based on the attainment of Raiffeisen Switzerland, area, team and employee targets. Both qualitative and quantitative targets are used for this purpose. The targets are assigned varying weights depending on the employee’s function and role.
Separate handling of risk-takers not on the Executive Board
The Board of Directors has identified another group of risk-takers other than the eight members of the Executive Board and the Head of Internal Auditing: Employees with access to the market and trading opportunities. Despite modest trading operations and an extensive system of limits that are subject to ongoing monitoring by independent controlling functions, the variable remuneration of these risk-takers is best handled separately. Risk-takers are identified every year before the remuneration process begins; they are reported to the Head of Human Resources and are approved, by name, by the Executive Board of Raiffeisen Switzerland as part of the motion determining the total variable remuneration pool. In 2020, this group consisted of 54 people (not counting members of the Executive Board or the Head of Internal Auditing).
The allocation of the variable remuneration to risk-takers is individually determined by the Executive Board. This allocation is based on achieved performance while taking into account the risks that were taken. The Executive Board or respective supervising line managers determine the allocation of variable remuneration among other employees. Function and performance reviews as well as the assessment of the contribution to corporate culture by the supervising manager play a major role in determining individual allocations. There are thus no incentives for individuals to strive for short-term success by taking excessive risks.
The remuneration structure is designed to ensure the variable remuneration paid to controlling functions in no way depends on the risks they monitor.
Remuneration for the Board of Directors
In 2020, the remuneration principles in place since 1 January 2019 and presented to the Delegate Meeting in June 2019 continued to apply for the remuneration of the Board of Directors. As a result, the members of the Board of Directors of Raiffeisen Switzerland received remuneration (excluding contributions to pension plans and social insurance) totalling CHF 2,066,250 for 2020. This remuneration is within the total remuneration approved in a consultative vote at the 2020 General Meeting. In addition, the employer share of social insurance contributions for the members of the Board of Directors totals CHF 390,051 for 2020. The following table provides details on the remuneration of individual members of the Board of Directors and their functions.
Remuneration for the Board of Directors | Raiffeisen Switzerland
|Position1||Base remuneration||Committee remuneration||Total gross remuneration||Flat-rate expenses||Employer pension plan |
and social insurance
|Lachappelle, Guy||Chair of the Board of Directors Member of the SFC and NRC||750,000||-||750,000||9,000||134,619|
|Gantenbein, Pascal||Vice Chair of the Board of Directors, Chair of the SFC and Member of the RC||140,000||70,000||210,000||3,000||39,698|
(Departure on 30.9.2020)
|Member of the BoD and SFC||67,500||18,750||86,250||2,250||16,617|
|Golob, Andrej||Member of the BoD and SFC||90,000||25,000||115,000||3,000||22,627|
|Müller, Thomas A.||Member of the BoD and AC and Chair of the RC||90,000||80,000||170,000||3,000||32,539|
|Rauber, Thomas||Member of the BoD and Chair of the NRC4||90,000||40,000||130,000||3,000||25,465|
|Roussy, Olivier||Member of the BoD, SFC and AC||90,000||55,000||145,000||3,000||28,673|
|Schwab, Beat||Member of the BoD, AC and NRC||90,000||55,000||145,000||3,000||28,371|
|Valenzano Rossi, Karin||Member of the BoD, RC and NRC||90,000||55,000||145,000||3,000||27,853|
|Walker, Rolf||Member of the BoD, Chair of the AC and Member of the RC||90,000||80,000||170,000||3,000||33,589|
|1 SFC = Strategy and Finance Committee|
AC = Audit Committee
RC = Risk Committee
NRC = Nomination and Remuneration Committee
|2 Employer contributions to the pension plan and social insurance comprise AHV/IV/EO and ALV including pension plans.|
Remuneration for the Executive Board
* Projection, since the variable remuneration will be paid in April 2021.
Remuneration for the Executive Board | Raiffeisen Switzerland
|Total gross remuneration||Flat‑rate expenses||Employer pension |
plan and social
|Huber, Heinz (Chairman of the Executive Board)|
|Executive Board as well as the Head of Internal Auditing (total)3|
|Former members of the Executive Board|
|1 Employer contributions to the pension plan and social insurance comprise AHV/IV/EO and ALV including pension plans.|
|3 Including the compensation payment disclosed in the Remuneration Report 2019.|
|2 Including members of the Executive Board who left during the current year|
|4 Including interim members of the Executive Board.|
Furthermore, former members of the Executive Board of Raiffeisen Switzerland received remuneration from continued salary payments during the notice periods (excluding employer pension plan and social insurance contributions) totalling CHF 795,833 in the current year. Employer pension plan and social insurance contributions amounted to CHF 273,267. Continued salary payments to former members of the Executive Board were accounted for in the 2019 income statement and deferred.
Further compensation in 2020
Raiffeisen Switzerland understands further compensation to mean joining payments as well as payments related to the waiver of entitlements or to compensate for disadvantages that arise. Such payments are only agreed to by Raiffeisen Switzerland within narrow limits and in justified exceptional cases. In this respect, joining payments are understood to mean compensation payments in the sense of compensation for disadvantages suffered. At Raiffeisen Switzerland, joining payments as well as payments related to the waiver of entitlements or to compensate for disadvantages that arise must be approved in compliance with a clear and transparent decision-making process. Raiffeisen Switzerland does not provide any severance payments, as Raiffeisen Switzerland considers severance payments to be payments not owed upon termination of an employment relationship.
Neither severance nor joining payments were paid in the current year.
Total remuneration by Raiffeisen Switzerland
In the current year, Raiffeisen Switzerland paid out remuneration (excluding employer pension plan and social insurance contributions) totalling CHF 308,574,056. Accrued remuneration expenses (both fixed and variable) for the current year have been recorded in full as personnel expenses. There are no remuneration expenses from earlier reporting years affecting profit and loss. The Board of Directors approved and deferred a total variable remuneration pool (excluding employer pension plan and social insurance contributions) of CHF 47,057,214 for Raiffeisen Switzerland in the current year. Of this amount, CHF 6,170,000 was paid to risk-takers outside the Executive Board and CHF 2,205,000 to the Executive Board and the Head of Internal Auditing.
The final calculation of the variable compensation took place as at 31 December 2020 and was submitted to the Board of Directors of Raiffeisen Switzerland for a decision in February 2021. The payment date for the variable remuneration is April.
The fixed component was paid in cash. The variable remuneration component for the 2020 financial year will also be paid in cash in April 2021. No shares of fixed or variable remuneration were deferred.
The total variable remuneration pool benefited the same group of people as in the years before. The final number of beneficiaries will not be available until the end of April 2021. In the previous year, Raiffeisen Switzerland paid variable compensation to 2,289 people.
Remuneration | Raiffeisen Switzerland
|in CHF||Total remuneration||fixed||variable|
|Total remuneration Raiffeisen Switzerland1||308,574,056||261,516,842||47,057,214|
|Charges/credits from earlier reporting years affecting current profit and loss||0||0||0|
|Total remuneration for risk-takers (excl. members of the Executive Board as well as the Head of Internal Auditing)||15,028,758||8,858,758||6,170,000|
|1 Excluding employer pension plan and social insurance contributions|
Remuneration and remuneration recommendations
for the Raiffeisen banks
The Board of Directors of Raiffeisen Switzerland recommends that the Raiffeisen banks orient their respective local remuneration systems to the recommendations made by Raiffeisen Switzerland.
Raiffeisen Switzerland advises the Raiffeisen banks and supports them in structuring and implementing their local remuneration systems while retaining their autonomy. The most important features of these recommendations are as follows:
- Remuneration for employees of Raiffeisen banks may involve fixed and variable elements. Members of the Board of Directors are ineligible to receive variable remuneration.
- Fixed remuneration is paid based on a clearly defined function and the employee’s skills and knowledge, as in the Raiffeisen Switzerland model.
- According to the risk profile of Raiffeisen banks and their balanced business model, all remuneration (both fixed and variable) is provided in the form of non-deferred cash payments.
- Variable remuneration in excess of CHF 3,000 accrues pension credits in the Raiffeisen Pension Fund.
- The Board of Directors decides on the total sum of the variable remuneration, as well as on the individual allocation of the variable remuneration to the members and Chairman of the Executive Board.
- The recommended allocation mechanism does not give employees an incentive to take excessively high risks, as doing so does cannot significantly increase remuneration.
Raiffeisen Switzerland monitors this process by regularly reviewing local remuneration systems in terms of conception and implementation and addressing irregularities with Raiffeisen banks in the context of a structured process.