This compensation report illustrates how we have implemented our new remuneration structure since the start of our merger in 2023. It contains a comprehensive overview of our rewards design and governance.
The report not only outlines facts and figures but also explains the considerations we used to arrive at our decisions. It additionally clarifies the roles, responsibilities, and governance procedures involved. It has been prepared in compliance with Article 734 et seq. of the Swiss Code of Obligations. It comprises the information required by the Code, while taking into consideration the Swiss Code of Best Practice for Corporate Governance.
The compensation details for 2024 cover the entire year and are compared to 2023. It should be noted that the 2023 figures pertain to the period from 18 April (the listing date of our merged company) to 31 December 2023. Therefore, the numbers are not fully comparable.
Activities of the Compensation Committee in 2024
Chaired by Carla Mahieu, the Compensation Committee comprises additionally Thomas Leysen, Frits van Paasschen, and André Pometta (no change compared to 2023). The Committee is assisted by in-house rewards experts. A new external rewards advisor, Willis Towers Watson, was selected in November 2024 to support us as and when needed going forward.
The Compensation Committee performed its regular activities throughout the year. These included reviewing business performance, regulatory changes around remuneration, and reporting and market assessments of Board and Executive Committee pay structures. New targets were set for business and sustainability performance in 2024, building on the framework that had been put in place at the inception of the merger, fit for purpose for our young organization. For the first time, the target set for the 2024 Long-Term incentive grant includes a measurable reduction of our Scope 3 greenhouse gas emissions.
The voices of our stakeholders
Remuneration requires close collaboration with the Executive Committee and reward experts, as well as engagement with our stakeholders and proxy advisors, helping us to make thoughtful and well-informed decisions.
This reveals a range of different perspectives: whereas some stakeholders voice a preference for a higher financial weight in variable remuneration schemes, others believe that we are appropriately positioned, appreciating both the measurability of our sustainability goals and their clear link to our strategy and our license to operate. In alignment with our purpose and strategy, we will continue to set ambitious, impactful goals that drive long-term sustainable value creation.
The Compensation Committee will balance these views by making remuneration decisions that support the transformation of our company. As the remuneration structure was introduced in 2023, there is no immediate reason for change.
The Committee believes that the design of our remuneration structure is balanced in comparison with our peers and industry benchmarks and that it adequately supports the rollout of our strategic objectives.
Transparency
Our compensation structure is aligned over the long term with our company strategy of becoming a Category of One.
We always aim for transparency and clarity in our disclosures, seeking to enhance the information provided without disclosing business-sensitive information in a manner that would serve neither our own interests nor those of our stakeholders.
Our 2023 Compensation Report received convincing support at the 2023 Annual General Meeting (AGM). Transparency – especially regarding the ex-post disclosure of Short-Term Incentive (STI) targets and their achievement – remained a focal point. Building on the disclosure of Long-Term Incentive (LTI) targets, this year’s report also discloses the targets and achievement of the goals governing our STI in 2024.
In accordance with the CSRD requirements, our Sustainability report includes the Annual Pay ratio, i.e., the ratio between total compensation of the best-paid employee in the company versus the median of all other employees.
2024 performance
We strive to enable our people to be the best version of themselves every day, driving the success of the company and bringing progress to life. Besides building a strong, unified culture underpinned by shared values and development opportunities, the dsm-firmenich remuneration approach is an important building-block for achieving this.
dsm-firmenich aims to reward progress, emphasizing a performance-driven culture that helps to achieve outstanding results. We aim to compensate all employees fairly in line with market conditions, and we do this by offering competitive, results-oriented remuneration incorporating an appropriately balanced mix of fixed and variable compensation. Our incentive programs are designed to attain stretched targets, encouraging the achievement of strategic objectives, and allowing our employees to share in our success.
We are well on track of our strategic course and delivered on all our commitments in 2024. Supported by the delivery of merger synergies and the vitamin transformation program, the financial results in all our businesses strongly improved, while our cash flow surpassed our mid-term target. The strong financial results translate into maximum achievement of the financial targets of the Short-Term Incentive program. This was also the case for Safety, while the engagement of our workforce as well General & Administrative synergies where on par with the predefined target. Overall, the STI achievement landed on 175% of target.
Outlook for 2025
As we look ahead to 2025, our focus remains on aligning remuneration to the implementation of our business strategy, fostering a performance-driven culture, innovation, and longer-term sustainable growth. In this respect, we appreciate the feedback of our stakeholders, and we will continue to monitor market developments (both quantum and plan design) and, if necessary, will act upon continuously evolving governance regulations. With this report, we aim to help our readers to build an informed opinion of our company’s reward practices. On behalf of the Compensation Committee and Board of Directors, I thank our stakeholders for their support.
Carla Mahieu
Chair, Compensation Committee
