Key facts 2015 and Compensation Committee activities

For the 2015-2016 term of office, aggregate Board compensation increased by 2.8 percent compared with the previous year, following the appointment of a vice chairman for the first time since 2007.

Aggregate EC compensation was higher in 2015 than in 2014, principally due to the addition of one EC member and the higher performance-based payout on short-term variable compensation. The other main factor was the higher grant reference value of the P2 component of the long-term incentive plan for the CEO in 2015, compared with the reduced value he was awarded for his first full year in office. EC membership was subsequently reduced in January 2016 to the same size as in 2014 as part of the organizational realignment under the second stage of the Next Level strategy.

Exhibit 1: Overview of total compensation (in CHF)

 

 

Board term

2015–2016

2014–2015

Board of Directors

3,730,000

3,630,000

 

 

 

Calendar year

2015

2014

Executive Committee

45,521,908

38,699,707

CC activities in 2015

The CC, on behalf of the Board, regularly reviews the compensation policy and structure, and makes specific recommendations to the Board on Board and EC compensation to ensure consistency with ABB’s compensation principles. For an overview of the CC’s activities in 2015, see Exhibit 2.

Exhibit 2: Topics discussed during 2015

Items relating to past performance cycle

Performance assessment of short-term variable compensation plan

Approval of payout of long-term variable compensation plan

Look-back assessment of ABB’s performance over past three years

 

Items relating to upcoming performance cycle

Setting of performance targets for short-term variable compensation

Setting of performance targets for P1 and P2 components of long-term variable compensation

 

EC compensation and performance

Performance assessment of the prior year

Discussion of EC compensation relative to external benchmarks

Approval of individual compensation for EC members

 

Overall EC compensation review and planning

Quarterly updates on status of various performance plans

Review of EC pay mix

Review of pensions and benefits

Review of shareholding levels of each EC member

 

Compensation of Board of Directors

Review level of compensation of Board members

Comparison of compensation levels against external benchmarks

 

Compliance and regulatory

Approval of Compensation report for publication

Decision on maximum aggregate EC compensation for following financial year to be proposed at AGM

Decision on maximum aggregate Board compensation for following Board term to be proposed at AGM

Further information on responsibilities of the CC can be found in section "Compensation Committee" of the Corporate governance report, and in sections "Compensation principles and governance" and "Compensation governance" of the Compensation report.