FY 2012 Annual Report - Orascom Development

64 Orascom Development 2012 Annual Report 65
5.5. Compensation, shareholdings and loans 5.6. Shareholders’ participation
For detailed information on compensation paid to members of the Board of
Directors and to members of Executive Management for the financial year
2012, and on shares and options held by and loans granted to these persons
as of December 31, 2012, please refer to Note 12.1 (Board and Executive
Compensation Disclosures as Required by Swiss Law) of the consolidated
financial statements.
The compensation of the members of the Board of Directors and of Executive
Management is determined as specified below. The Company does not have
any formal stock ownership or option plans for members of the Board of
Directors or Executive Management. It does not employ external advisors or
systematically use external benchmarks for fixing compensation.
Board of Directors
In respect of the compensation of members of the Board of Directors for their
service on the Board and on its committees, the Board decided in 2008, in
its discretion, on the amount of the annual remuneration per member (CHF
160’000 for all Board members, except for the Lead Director in whose case
the amount is set at CHF 185’000), and on the form in which that remuneration
is discharged. It was decided that half the remuneration shall be discharged in
cash and half in the form of shares of the Company. This decision of the Board,
in which all Board members participated at the time, remained in effect for the
2012 financial year. The shares of the Company allocated to the members of the
Board as compensation are, for that purpose, purchased by the Company in
the market, and their valuation (for purposes of the calculation of the number of
shares allocated to each member) is based on the average purchase price paid
by the Company for the shares.
For members of Executive Management, the Policy provides that their target
bonus lies in the range of 0-75% of their base salary, and that it may be paid
in cash or in the form of unrestricted shares of the Company (for 50% of the
bonus at most). Details in respect of compensation paid in the form of shares,
if any, remain to be defined upon individual agreement.
The amount of the bonus paid to members of Executive Management for a
particular year (percentage of the target bonus) is determined, pursuant to the
Policy, based on two categories of targets:
• Firstly, a target figure for the Company’s financial performance
(Net Profit) is annually defined, the achievement of which determines the
bonus entitlement of the members of Executive Management in respect
of three fourths of the target bonus. The entitlement for this part of the
bonus rises, in defined steps, from 0% (in case of achievement of less than
95% of the Net Profit target) to 100% (in case of achievement of
99-101% of the Net Profit) and further to a maximum of 150% (in case of
achievement of more than 110% of the Net Profit).
• Secondly, several individual bonus targets are set for members of Executive
Management at the beginning of each year, which in the aggregate
determine the member’s entitlement in respect of one fourth of the target
bonus (e.g. where five individual targets are set, each target will determine
the entitlement to 5% of the target bonus). Such individual targets comprise
both quantitative and qualitative targets.
As the Company didn’t achieve its financial performance target (Net profit) in
2012, this part of the bonus was zero.
Voting rights and representation restrictions
With the exception of restrictions on the transferability of shares (ref. to Section
5.2 above), there are no limitations on voting rights. At a general meeting of
shareholders, each share entitles its owner to one vote. By means of a written
proxy, each shareholder may be represented by a third person who does not
need to be a shareholder.
Statutory quora
According to Art. 10 of the Articles of Incorporation, the holders of at least
25 percent of issued shares must be present or represented at an ordinary
general meeting of shareholders for the meeting to be validly constituted.
Similarly, holders of at least 50 percent of issued shares must be present
or represented at an extraordinary general meeting of shareholders for the
meeting to be validly constituted.
Resolutions are generally passed, in the case of an ordinary general meeting
of shareholders (except for matters subject to a higher majority requirement
by law), with the absolute majority of the shares represented. In the case of
an extraordinary general meeting of shareholders, resolutions are generally
passed with a majority of two thirds of the shares represented.
Resolutions relating to the following matters, however, require a majority of 75
percent of shares represented at the meeting: (a) capital increases pursuant
to Art. 650 CO and reductions of the share capital pursuant to Art. 732
CO; (b) dissolving the Company before its termination date or changing its
duration (which pursuant to the Articles of Incorporation is 99 years from its
formation); (c) changing the Company’s purpose; and (d) any merger with
another company.
Agenda
Shareholders who represent shares with a par value of at least CHF
1,000,000 may request that an item be placed on the agenda. The request
must be communicated to the Board of Directors in writing, stating the item to
be placed on the agenda and the shareholder’s corresponding motion, at least
45 days prior to the general meeting of shareholders.
Record date for entry into the share register
In order to be entitled to participate at the 2012 ordinary general meeting
of shareholders, a holder of registered shares need be inscribed in the share
register as a shareholder with voting rights by May 2, 2013.
5.7 Changes of control and defense
measures
Duty to make an offer
The Articles of Incorporation do not provide for any “opting out” or “opting up”
arrangements within the meaning of Art. 22 and Art. 32 SESTA.
Clauses of change of control
No change of control clauses have been agreed upon.
Executive Management
Compensation of the members of Executive Management for their service in
Executive Management consists of a base salary which is annually reviewed,
and a bonus payment which is annually determined, as further described below.
The initial base salaries of the members of Executive Management were either
(in case of members who have served in that capacity since the Company was
formed in 2008) carried over from their previous employment with Orascom
Hotels & Development S.A.E., or (in case of members appointed at a later
time) they were determined in a discretionary decision of the CEO together
with the Nomination & Compensation Committee.
In respect of the annual salary review and bonus determination, the Nomination
& Compensation Committee discusses the proposals presented by the CEO,
approves them if deemed fit, and subsequently informs the Board on its
decisions. Members of Executive Management do not have a right to attend
meetings of the Nomination & Compensation Committee at which decisions
are taken in respect of their compensation, or otherwise to participate in the
decision process. In the year under review, there were no changes in the base
salaries of members of Executive Management.
Bonus
In late 2010, the Board of Directors approved a formal bonus policy (“Policy”) for the
Company. Since 2010, the Policy applies to the members of Executive Management.
The individual targets set for each member of Executive Management were
achieved at different levels in 2012. The members of Executive Management
agreed to defer the payment of this bonus part to January 2015.
Furthermore, all members of the Executive Management agreed that the
entitlement to this bonus part will be subject to a certain share price of the
Company at the end of 2014. If the share price at the end of 2014 is:
- below CHF 20.00 0% of the deferred bonus part is
to be paid
- between CHF 20.00 and CHF 24.99 50% of the deferred bonus part
is to be paid
- between CHF 25.00 and CHF 29.99 100% of the deferred bonus part
is to be paid
- above CHF 30.00 150% of the deferred bonus part is
to be paid
Convocation of the general meeting of shareholders
An ordinary general meeting of shareholders is to be held annually following
the close of the financial year. It is called by the Board of Directors or, if
necessary, by the auditors. Extraordinary general meetings may be called by
the Board of Directors, the auditors, the liquidators, or by the general meeting
of shareholders itself.
One or more shareholders representing at least 10 percent of the share capital
may request in writing that the Board of Directors call an extraordinary general
meeting of shareholders. The request must state the purpose of the meeting
and the agenda to be submitted. General meetings of shareholders are held
at the statutory seat of the Company or at such other place as determined by
the Board of Directors.
Notice of a general meeting of shareholders is given by means of a single
publication in the Swiss Commercial Gazette (Schweizerisches Handelsamtblatt)
or by registered letter to the shareholders of record. There must be a time period
of not less than 20 days between the day of the publication or the mailing of the
notice and the scheduled date of the meeting. The notice of the general meeting of
shareholders must indicate the agenda and the motions by the Board of Directors.