Board compensation governance and levels

Board compensation governance and levels

In 2014, the CC was responsible for making recommendations to the Board on the level of compensation of Board members, while the Board took the final decisions (see Table 2).

The Board and CC regularly benchmark the levels and mix of compensation of Board members against the compensation of non-executive board members of publicly traded companies in Switzerland that are part of the Swiss Market Index.

In connection with the Board’s decision to increase the number of its committees from two to three by splitting the GNCC, the Board revised its compensation structure. As a result, overall Board compensation for the 2014–2015 term of office increased 3.7 percent, the first increase since 2007.

Board members are paid for their service over a 12-month period that starts with their election at the AGM. Payment is made in semi-annual installments. Board members do not receive pension benefits and are not eligible to participate in any of ABB’s employee incentive programs.

Half of each member’s compensation is paid in the form of ABB shares, though Board members can choose to receive all of their compensation in shares. The shares are kept in a blocked account for three years. Departing Board members are entitled to the shares when they leave the company.

2014−2015 Board compensation

In connection with the Board’s decision to increase the number of its committees, the Board decided to raise compensation of its members for the 2014−2015 term of office by 3.7 percent, the first increase in seven years. At least half of each Board member’s compensation is paid in the form of ABB shares kept in a blocked account for three years.

The number of shares delivered is calculated prior to each semi-annual payment by dividing the sum to which the Board members are entitled by the average closing price of the ABB share over a predefined 30-day period.

The Board is satisfied that the compensation structure aligns the interests of its members with those of ABB’s shareholders.

Table 2: Clearly defined roles and responsibilities
Board compensation – Clearly defined roles and responsibilities (graphic)Board compensation – Clearly defined roles and responsibilities (graphic)

The CC proposes the compensation both for the entire Board and its individual members; the Board takes the respective decisions.

The compensation amounts per Board member for the 2014–2015 and 2013–2014 terms of office are shown in Table 3 below.

Table 3: Total compensation per Board member

 

 

Board term
2014–2015

Board term
2013–2014

Name

Function

(CHF)

(CHF)

(1)

Member of the Governance and Nomination Committee since April 30, 2014.

(2)

Member of the Finance, Audit and Compliance Committee.

(3)

Member of the Governance, Nomination and Compensation Committee until April 30, 2014.

(4)

Elected as new Board member at ABB Ltd AGM on April 30, 2014.

(5)

Did not stand for re-election at ABB Ltd AGM on April 30, 2014.

(6)

Member of the Compensation Committee since April 30, 2014.

Hubertus von Grünberg(1)

Chairman of the Board

1,200,000

1,200,000

Roger Agnelli(2)

Member of the Board

330,000

300,000

Matti Alahuhta(1)(4)

Member of the Board

320,000

Louis R. Hughes(2)

Member of the Board and Chairman of the Finance, Audit and Compliance Committee

400,000

400,000

Hans Ulrich Märki(3)(5)

Member of the Board and Chairman of the Governance, Nomination and Compensation Committee

400,000

Michel de Rosen(3)(6)

Member of the Board and Chairman of the Compensation Committee

350,000

300,000

Michael Treschow(1)(3)(6)

Member of the Board and Chairman of the Governance and Nomination Committee

380,000

300,000

Jacob Wallenberg(2)

Member of the Board

330,000

300,000

Ying Yeh(3)(6)

Member of the Board

320,000

300,000

Total

 

3,630,000

3,500,000

For compensation amounts per Board member in the calendar years 2014 and 2013, see Table 9.