Compensation report

Like the section on corporate governance, the Compensation Report is subject to the SIX Corporate Governance Directive and complies with the transparency rules laid down in the Ordinance against Excessive Compensation in Listed Stock Companies (OaEC) and the principles set down in the Swiss Code of Best Practice for Corporate Governance.

The Compensation Report contains information on the Compensation Committee, compensation policy and the procedure for setting compensation paid to the Board of Directors and Executive Board, and states the compensation paid for the 2015 financial year.

Compensation committee

The Compensation Committee consists of four members of the Board of Directors who are elected individually on an annual basis by the Annual General Meeting. The members of the Compensation Committee are listed on pages 29 and 30 of the Annual Report. The Compensation Committee and Board of Directors follow the same procedures in terms of convocation, procedure of the meetings and decisionmaking.

The Compensation Committee deliberates on matters of compensation policy, especially at the highest corporate level, and prepares the compensation policy on behalf of the Board of Directors. In doing so the Compensation Committee makes sure that the company offers compensation in line with the market and performance to attract and retain people with the requisite skills and character. The Compensation Committee also prepares the motions to be put before the Annual General Meeting relating to the total compensation paid to the Board of Directors and Executive Board, and bears responsibility for ensuring that the employment contracts with the members of the Executive Board are in compliance with the law and contain provisions that are appropriate to the market and protect the interests of the company. The Compensation Committee decides the pay and pay components of individual members of the Executive Board within the scope of the total amount set by the Annual General Meeting.

Procedure of setting compensation

Every year the Annual General Meeting approves the motions of the Board of Directors in relation to the maximum total compensation to the Board of Directors and Executive Board for the current financial year. The Board of Directors can submit divergent and additional motions related to the same or other time periods to the Annual General Meeting for approval. The procedure for the event that the Annual General Meeting does not approve a motion of the Board of Directors is set down in the Articles of Association. Further, Art. 21 of the Articles of Association sets down the procedure for the payment of an additional amount of compensation to members of the Executive Board appointed after the Annual General Meeting has voted on the maximum total compensation. The rules governing loans, credits and pension benefits to members of the Board of Directors and the Executive Board are set down in Art. 25 of the Articles of Association. There are no share- or option-based compensation plans.

Principles for compensation to the members of the Board of Directors

On 31 December 2015 the Board of Directors consisted only of non-executive members. The members of the Board of Directors receive compensation based on the work they have performed and their responsibilities in accordance with the remuneration rules. It consists of a flat fee set according to the function of the respective member of the Board of Directors. Out-of-pocket expenses will also be reimbursed. The flat fee is calculated on the basis of the average estimated annual time involved as a percentage of full-time equivalent multiplied by an industry-standard salary appropriate to the qualifications required, and is set down in remuneration rules approved by the Board of Directors. This compensation does not depend on the company's earnings. The current remuneration rules have been in force since 1 January 2015. The remuneration rules are reviewed by the Board of Directors at indefinite intervals and adjusted if necessary. The Board of Directors also checks each year to make sure that the compensation set down in the remuneration rules lies within the total amount approved by the Annual General Meeting.

Principles for compensation to the members of the Executive Board

The compensation paid to members of the Executive Board comprises a fixed and a variable component. The fixed component consists of the base salary, and can also contain other compensation components and benefits. Depending on achievement of operational targets, the variable component may amount to a maximum of 40 per cent of the annual base salary. The fixed and variable components are set by the Compensation Committee on an annual basis. The fixed component is based on a proposal made by the CEO on the basis of the development of the group. The Compensation Committee weights this reference figure to set the fixed component at its discretion. The variable component depends on achievement of the Repower Group's financial targets and the member's personal performance targets. To set the variable component, the following figures are combined and given an overall weighting of 50 per cent: Repower Group EBIT, economic value added and net debt to EBITDA. For each member of the Executive Board, between three and a maximum of five personal performance objectives are set, which are likewise weighted 50 per cent to calculate the variable component.

The CEO submits his proposal for the variable components for each individual member to the Compensation Committee. Personal performance is evaluated in a meeting with the CEO at the end of the reporting period on the basis of the objectives agreed at the beginning of the financial year. All compensation components are paid in cash. The Compensation Committee informs the full Board of Directors of the status of the process of determining and paying compensation by submitting the minutes immediately after each meeting; the chair of the Compensation Committee also informs the Board of Directors orally at its next meeting. The members of the Executive Board and the other members of the Board of Directors do not attend meetings of the Compensation Committee where their compensation is being decided. However, the CEO will be called to attend certain parts of these meetings in an advisory capacity. The CEO is not present for the evaluation of his own compensation. No external advisors were involved in designing the compensation system.

Compensation for the 2015 financial year

The entire section that follows is subject to review by the auditors.