Responding to shareholder expectations
The new design of executive compensation described above is the outcome of a thorough review of stakeholder expectations undertaken by the CC and the Board. It takes into account the feedback provided in dialogue with stakeholders as well as the goals of a new strategy fully focused on delivering value for shareholders in the form of higher earnings per share and cash return on invested capital.
Our independent consultant and the use of benchmarks have helped to ensure that the revised system is also well-aligned with practices at ABB’s peers and other companies of similar size operating in comparable markets.
Chart 7: Shareholders will have three separate votes on compensation at 2015 AGM
At the 2015 AGM there will be separate binding votes on maximum aggregate compensation for the Board in its 2015−2016 term of office and on maximum aggregate compensation for the EC in 2016. There will also be a non-binding vote on the 2014 Compensation report.
With its stronger emphasis on performance, on a balance of Group and individual objectives, on behavioral change and on metrics that directly reflect the Next Level strategy’s goals, the Board believes that the new system of executive compensation is fully aligned with the interests of ABB’s shareholders.
Finally, the Swiss Ordinance against Excessive Remuneration in Listed Companies Limited by Shares means ABB’s shareholders will have greater influence on compensation, as illustrated by Chart 7 above.