COMPENSATION REPORT
CHF 1 000 factor applied Performance value at grant Undiscounted
Value of shares allocated on vesting 2
2010 PSP grant/2013 PSP vesting 0.5 3 2 441 1 567
2009 PSP grant/2012 PSP vesting 1.0 2 133 2 600
1 These values differ from the grant values disclosed in the 2009 and 2010 Annual Report as the 16% discount in view of the shares restricted availability at the time of grant is no longer applied. The shares were valued at a market price of CHF 272 (grant 2010) and CHF 272 (grant 2009).
2 The value reflects a possible amendment of the share units that were initially granted (according to the respective regulations of the plans), in the case that a GEB member has left the company. The shares were valued at a market price of CHF 297 (vesting 2013) and CHF 331.5 (vesting 2012).
3 For one member of the GEB a performance factor of 1.0 has been applied according to the applicable rules.
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■■ PENSION PAYMENTS
Kuoni Group maintains various forms of defined benefits retirement plans and other retirement benefit schemes that cover a large majority of the Company’s personnel according to the local regulations in each country. Members of the GEB receive pension benefits. A member of the GEB will be entitled to additional vested benefits (Freizügig- keitsleistung) on retirement which are calculated pursuant to the regula- tions on early retirement of the Kuoni Welfare Foundation (“Regle- ment vorzeitige Pensionierung” der “Fürsorgestiftung der Kuoni Reisen Holding AG und der ihr wirtschaftlich nahestehenden Firmen”, Ausgabe Januar 2011).
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■■ COMPENSATION TO THE GROUP EXECUTIVE BOARD
The tables in this section provide an overview of the total compensa- tion of the GEB in 2013 and 2012, including basic salary, short-term incentive compensation for the respective financial year (paid out in April of the following year) and pension benefits. They also outline the undiscounted value at grant of awards under the RSP and PSP, using the Kuoni share price at grant. These amounts will be modified and awarded based on actual performance in the subsequent three year period.
The aggregate compensation of the GEB in 2013 amounted to CHF 10.8 million (2012: CHF 10.2 million). CEO Peter Rothwell was the GEB member with the highest total compensation in both 2013 and 2012 (aggregate compensation of CHF 2.7 million in 2013
2013 CHF 1 000
Group Executive
Board 12 Peter Rothwell Of which: 2
Basic salary 3 897 944
Short-term incentive 3 2 153 573
Shares Award (RSP) 4 1 378 392
Shares Award (PSP) 5 2 002 548
Pension scheme contributions 6 423 111
Social security contributions 760 120
Other compensation amounts 7 216 6
Total 10 829 2 694
2012 CHF 1 000
Group Executive
Board 8 Peter RothwellOf which:
Basic salary 3 397 940
Short-term incentive 9 2 134 670
Shares Award (PSP) 1011 3 227 940
Pension scheme contributions 6 655 111
Social security contributions 791 151
Other compensation amounts 7 39 6
Total 10 243 2 818
1 Six members. Leif Vase Larsen has left the GEB at the end of March 2013 and Peter Rothwell at the end of June 2013. Zubin Karkaria joined the GEB on 21 March 2013, so the amounts include the compensation paid to him from the day of his appointment to the GEB up to the end of the year 2013.
2 Amounts owing to former GEB members are outlined in the “Description of termination arrangements for GEB members” section of this report.
3 The members of the GEB were paid STI variable compensation in cash of CHF 2.1 million in 2013 for the prior-year period. The STI variable compensation paid to CEO Peter Rothwell amounted to CHF 0.7 million. 4 Members of the GEB were granted 4 765 shares under the RSP in 2013. These shares were valued at a market price of CHF 289.
5 Members of the GEB were granted 6 928 shares under the PSP in 2013. These shares were valued at a market price of CHF 289. A total of 3 699 registered shares B with a value of CHF 1.1 million were delivered to members of the present GEB in 2013 from the Share Awards (PSP) assigned in 2010. Thereof, 1 111 registered shares B with a value of CHF 0.3 million were delivered to Peter Rothwell. The shares were valued at a market price of CHF 297.
6 One member of the GEB was entitled to an early retirement at the age 58 in accordance with the regulations of the Fürsorgestiftung. This early retirement provision was eliminated as of 31 December 2013 and the retirement age was put on par with that of the other members of the GEB in Switzerland, who retire regularly at the age of 62. The non-contribution-base costs of the corresponding benefits are included in the pension fund contributions shown.
7 Allowances and other benefits including compensation in relation to company car entitlements. 8 Five members
9 The members of the GEB were paid STI variable compensation in cash of CHF 0.7 million in 2012 for the prior-year period. The cash-form variable compensation paid to CEO Peter Rothwell amounted to CHF 0.2 million. 10 Members of the GEB were granted 11 822 shares under the PSP in 2012. These shares were valued at a market price of CHF 273.
11 In the 2012 Compensation Report the market value calculated included a 16% discount in view of the shares restricted availability at the time of grant. The discount has not been applied in the above table.
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■■ CONTRACTUAL TERMINATION CLAUSES OF GROUP
EXECUTIVE BOARD MEMBERS
Employment contracts for the GEB contain notice periods of 12 months. The employment contract of Stefan Leser was amended in 2013 without compensation in order to be aligned with all other members of the GEB and to ensure there are no entitlements to severance payments.
No additional compensation or benefits are provided in the event of a change of control. Special rules apply for vesting of equity based compensation on change of control, such that awards will not vest at a rate greater than 100% of the original grant.
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■■ DESCRIPTION OF TERMINATION ARRANGEMENTS FOR
GROUP EXECUTIVE BOARD MEMBERS
In June 2013, Peter Rothwell ceased employment with Kuoni Group and his employment contract will end in June 2014. The terms of Mr Rothwell’s contract include a twelve-month notice period, during which a non-competition clause applies with no extra compensation. In addition to the amounts disclosed in the above compensation tables, Mr Rothwell will receive termination payments in accordance with his contractual employment terms and is entitled to:
* Basic salary of CHF 78 644 paid monthly from January to June 2014 and other compensation amounts (allowances and other benefits including compensation in relation to company car entitlements), in total CHF 494 864.
* Short-term incentive payment in April 2014 in the amount of CHF 282 000 (a pro-rated amount on target level relating to the
* Grants under the PSP in 2011, 2012 and 2013 will vest as per the Plan rules in 2014, 2015 and 2016 respectively.
* One-third of the grant under the RSP in 2013 will vest in April 2014, the remaining two-thirds will lapse.
In March 2013, Leif Vase Larsen ceased employment with Kuoni Group and his employment contract will end in March 2014. The terms of Mr Larsen’s contract include a twelve-month notice period. In addition to the amounts disclosed in the above compensation tables, Mr Larsen will receive termination payments in accordance with his contrac- tual employment terms and is entitled to:
* Basic salary of CHF 42 690 paid monthly from January to March 2014 and other compensation amounts (allowances and other benefits including compensation in relation to company car entitlements), in total CHF 167 985.
* Short-term incentive payment in April 2015 up to a maximum of CHF 64 035 (a pro-rated amount relating to the 2014 performance year). As agreed a portion of the 2014 performance year short- term incentive amounting to CHF 32 018 has already been paid at target level in 2013.
* Grants under the PSP in 2011 and 2012 will vest as per the Plan rules in 2014 and 2015 respectively.
No further compensation will be paid to the former GEB members other than what is detailed above.
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■■ OTHER COMPENSATION, FEES AND LOANS
No other compensation or fees were accrued for or paid to any member or former member of the GEB during 2013. Kuoni Group
member or former member of the GEB as at 31 December 2013. No options were allocated in the year under review.
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■■ PREVIOUS PLANS – 2011 AND 2012 PSP
This section summarises the Kuoni Group long-term incentive arrange- ments that remain subject to vesting in 2013 under prior grants, namely awards under the PSP granted in 2011 and 2012, which remain in place unchanged. For prior grants under the PSP, GEB members were allocated a number of performance shares that will vest based on the achievement of performance targets measured over a three year period.
The level of vesting will be determined by multiplying the number of shares granted by a performance factor that can range between 0.25 and 3. However, vesting will only occur if no negative cumulative EBIT is incurred over the three year performance period. This means that the number of shares that will vest can range between zero and three times the number of shares initially granted, meaning that GEB members will be compensated appropriately for both over- and underperformance.
The performance factor will be determined based on the achievement of Kuoni Economic Profit (KEP) targets. The KEP targets are set as follows:
* Growth expectations, risk profiles, investment levels and profit- ability levels that are typical of the industry in which the Kuoni Group operates are considered, to determine an investor’s perspective of a risk-adjusted return on their investment.
* The expected return on investment and profit considerations over a three-year period are translated into operational KEP targets.
For 2011 and 2012 grants, the KEP target was set at a risk-adjusted expected return of 8.5% WACC. If this target is met, a performance factor of one will be applied when determining the level of vesting. The KEP targets were set with the assistance of independent external consultants. Hostettler Kramarsch & Partner assisted with deter- mining the KEP targets.
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■■ COMPENSATION OF BOARD OF DIRECTORS
Compensation of members of the BoD consists of fixed compensa- tion and social security contributions in accordance with Swiss regulations.
Half of the fixed compensation is paid in cash, and half is delivered in shares that are subject to a three-year blocking period. The issue price of the shares concerned is redefined each year and amounts to the average of all closing prices for the last ten trading days of the month before the Ordinary General Meeting of shareholders. The shares are awarded on the trading day following the day of dividend distribution after the Ordinary General Meeting of shareholders. The members of the BoD are also entitled to travel concessions which predominantly match those granted to all Kuoni employees in Switzerland.
The amount per Board member and role is specified in the “Com- pensation Elements of the Board of Directors of Kuoni Travel Holding” regulations of 4 December 2012. These regulations were devised by Kuoni on the basis of the Ethos survey entitled “Exe-
for Chairmen of the BoD produced by the CC&T Company in 2002. The compensation per BoD role is outlined in the table below (actual compensation paid differs, for example due to mandatory social security contribution calculations).
CHF 1 000
Total compensation (net)
Role
Chairman of the Board of Directors 500
Chairman of the Audit Committee 250
Chairman of the Nomination and Compensation Committee 200
Member of the Board of Directors 150
For each additional function (e.e. Vice-Chairman) 30
The compensation of Kuoni Group’s BoD is periodically benchmarked to ensure that compensation is comparable and competitive in the market. In 2013, PricewaterhouseCoopers was commissioned with con- ducting a benchmark and analysis of the structure and amount of the compensation of the BoD. The compensation awarded to members of the BoD is being confirmed annually by the BoD.
The aggregate compensation of the BoD in 2013 amounted to CHF 1.9 million (2012: CHF 1.9 million). The Board member with the highest compensation in both 2013 and 2012 was Henning Boysen, Chairman (CHF 0.6 million in 2013 and CHF 0.6 million in 2012).
Fixed Compensation net (cash)
Fixed Compensation
net (shares) 1 Social security Contributions 2 Total
CHF 1 000 CHF 1 000 Number of shares CHF 1 000 CHF 1 000
2013
Henning Boysen, Chairman 250 250 878 52 552
Heinz Karrer 115 115 404 29 259
Jae Hyun (Jay) Lee 75 75 264 19 169
John Lindquist 75 75 264 19 169 Adrianus (Adriaan) Nühn 75 75 264 19 169 David Schnell 125 125 439 32 282 Annette Schömmel 75 75 264 19 169 Raymond D. Webster 75 75 264 14 164 Total 865 865 3 041 203 1 933 2012
Henning Boysen, Chairman 250 250 755 52 552
Heinz Karrer 3 115 115 347 28 258
Jae Hyun (Jay) Lee 4 75 75 227 19 169
John Lindquist 75 75 227 19 169 Adrianus (Adriaan) Nühn 4 75 75 227 19 169 David Schnell 125 125 378 32 282 Annette Schömmel 75 75 227 19 169 Raymond D. Webster 75 75 227 14 164 Total 865 865 2 615 202 1 932
1 The shares were valued at a market price of CHF 285 (2012: CHF 331.5), representing the full fair value of grants made in the relevant financial year. Note, in the 2012 Compensation Report the market value calculated included a 16% discount in view of the shares’ restricted availability at the time of grant. This discount has not been applied in the above table anymore. Further, the values shown in the table do not include any
accrued value for grants made and reported in previous financial year(s).
2 The 2012 Social Security Contributions shown in the table have been updated to include both employee and employer contributions. Employee contributions had previously been included in column “Fixed compensation net (cash)”.
3 Appointed as Vice-President on 17 April 2012 4 Elected as member of the BoD at the AGM 2012
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■■ OTHER COMPENSATION, FEES AND LOANS
No compensation was paid in 2013 to any member of the BoD who had left in the prior period or earlier.
As at 31 December 2013, Kuoni Group had not granted any collateral, loans, advances or credits to members of the BoD or to persons associated with them. No options were allocated in the year under review.
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■■ OWNERSHIP OF SHARES
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■■ GROUP EXECUTIVE BOARD
As at 31 December 2013, the members of the GEB held Kuoni shares and the conditional right to receive shares under deferred compensa- tion or long-term incentive plans, as shown in the table below. The total number of shares held amounts to less than 0.5% of Kuoni’s total shares outstanding. The total number of unvested shares held amounts to less than 1.0% of Kuoni’s total shares outstanding (assuming GEB members receive their target amount of shares under the PSP and RSP).
No other equity instruments are held by members of the GEB other than those outlined in the table below.
Unvested as at 31 Dec 2013
Total number of
shares held Voting rights
Performance shares conditionally granted under the 2011 PSP Performance shares conditionally granted under the 2012 PSP Performance shares conditionally granted under the 2013 PSP Restricted shares conditionally granted under the 2013 RSP As at 31 Dec 2013 Peter Rothwell 1 1 827 0.04% 2 448 3 443 1 898 452 Peter Meier 295 0.01% 1 858 2 491 1 668 1 161 Zubin Karkaria 2 1 584 0.03% 632 764 903 581
Leif Vase Larsen 1 0 0.00% 1 051 1 346 0 0
Stefan Leser 3 998 0.08% 1 809 2 271 1 286 861
Rolf Schafroth 1 793 0.03% 1 809 2 271 1 286 861
Total 9 497 0.19% 9 607 12 586 7 041 3 916
Unvested as at 31 Dec 2012
Total number of
shares held Voting rights
Performance shares conditionally granted under the 2010 PSP Performance shares conditionally granted under the 2011 PSP Performance shares conditionally granted under the 2012 PSP As at 31 Dec 2012 Peter Rothwell 1 716 0.03% 2 222 2 448 3 443
Leif Vase Larsen 1 207 0.02% 1 308 1 051 1 346
Stefan Leser 5 178 0.10% 1 640 1 809 2 271
Peter Meier 1 0.00% 588 1 858 2 491
Rolf Schafroth 2 573 0.05% 1 640 1 809 2 271
Total 10 675 0.20% 7 398 8 975 11 822
1 Members of the Executive Board who have left the company during 2013. 2 Member of the Executive Board who has joined during 2013. The 2013 value shows the full-year grant.
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■■ BOARD OF DIRECTORS
As at 31 December 2013, the Chairman and other members of the BoD held 15 731Kuoni shares. This amounts to less than 0.5% of Kuoni’s total shares outstanding.
The table below shows the number of Kuoni shares held by each mem- ber of the BoD. No person closely linked to a member of the Board held any shares of Kuoni. No other equity instruments are held by mem- bers of the BoD other than those outlined in the table below.
Total number of shares Blocking periods for total number of shares held
As at 31
Dec 2013 Voting rights Dec 2012As at 31 Voting rights Unblocked period 2014Blocking period 2015Blocking period 2016Blocking
Henning Boysen, Chairman 5 916 0.12% 5 038 0.10% 3 690 593 755 878
Heinz Karrer 1 918 0.04% 1 514 0.03% 930 237 347 404
Wolfgang Beeser 1 n.a. n.a. 1 052 0.02% n.a. n.a. n.a. n.a.
Jae Hyun (Jay) Lee 491 0.01% 227 0.00% 0 0 227 264
John Lindquist 1 367 0.03% 1 373 0.03% 698 178 227 264 Adrianus (Adriaan) Nühn 491 0.01% 227 0.00% 0 0 227 264 David Schnell 2 494 0.05% 2 805 0.06% 1 380 297 378 439 Annette Schömmel 1 217 0.02% 953 0.02% 548 178 227 264 Raymond D. Webster 1 837 0.04% 1 573 0.03% 1 168 178 227 264 Total 15 731 0.32% 14 762 0.29% 8 414 1 661 2 615 3 041
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■■ The Financial Report and the information on Corporate Governance constitute an integral part of the Kuoni Group Annual Report.
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■■ This Annual Report is also available in German. The German original shall prevail.
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■■ Der Geschäftsbericht ist auch in deutscher Sprache erhältlich. Massgebend ist der deutsche Originaltext.
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■■ AGENDA 2014
The Kuoni Group will be providing information on its further business performance on the following dates:
Half-year-results 21 August 2014
Nine-month Business Update 6 November 2014
The Annual General Meeting will take place on 25 April 2014 at: Renaissance Zurich Tower Hotel
Turbinenstrasse 20, 8005 Zurich 10:00 am. (door opening 09:30 am.)
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■■ INVESTOR RELATIONS
Laurence Bienz
Kuoni Reisen Holding AG Neue Hard 7, CH- 8010 Zürich tel + 41 (0)44 277 45 29 fax + 41 (0)44 277 40 31 [email protected]
Kuoni Travel Holding Ltd Corporate Communications Neue Hard 7, CH-8010 Zürich tel +41 (0)44 277 43 63 fax +41(0) 44 272 39 91 www.kuoni.com 2013.kuoni-annualreport.com Twitter: www.twitter.com/KuoniGroup Facebook: www.facebook.com/KuoniGroup Büroecco GmbH
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