28 Share participation plans

Share-based payments charged to personnel expenses

Restricted share unit plan settled in medmix shares

This long-term incentive plan covers the Board of Directors. Restricted share units (RSUs) are granted annually. Awards to members of the Board of Directors automatically vest with the departure from the Board. The plan features graded vesting over a three-year period. One RSU award is settled with one medmix share at the end of the vesting period. The fair value of the RSUs granted is measured at the grant date closing share price of medmix Ltd, and discounted over the vesting period using a discount rate that is based on the yield of Swiss government bonds for the duration of the vesting period. Participants are not entitled to dividends declared during the vesting period. Consequently, the grant date fair value of the RSUs is reduced by the present value of the dividends expected to be paid during the vesting period.

Restricted share units

Performance share plan settled in medmix shares

This long-term incentive plan covers the members of the Executive Committee and other selected individuals employed in defined roles.  Performance share units (PSU) are granted annually, depending on the organizational position of the employee. Given the spin-off of medmix from Sulzer in 2021, the first regular grant of the medmix PSP occurred in 2022.

Vesting of the PSP is based on the achievement of three pre-determined performance conditions:

• Growth: Measured by the revenue of medmix based on the consolidated financial statement, weighted with 30%.
• Profitability: Measured by the adjusted EBITDA margin, weighted with 30%.
• Share performance: Measured by the relative share price development in comparison to the Swiss Performance Index excluding dividends, weighted with 40%.

Share performance is measured with a starting value of the average share price over the first three months prior to the start of the 3-year performance period and an ending value of the average share price over the last three months of the vesting period. The number of vested PSUs will be determined by multiplying the number of originally granted PSUs by the total achievement factor, rounded up to the next full number of vested PSUs. For each vested PSU, one medmix share will be transferred to the individual plan participant on the share delivery date. 

The following inputs were used to determine the fair value of the PSUs at grant date using a Monte Carlo simulation:

The expected volatility of the medmix shares is determined by the historical volatility. The zero-yield curve from Switzerland was used as the relevant risk-free rate. Historical data was used to arrive at an estimate for the correlation between medmix and the Swiss Performance Index.

Performance share units — terms of awards

Performance share units

Performance share plan settled in Sulzer shares

Prior to the spin-off from the Sulzer group, employees of the group participated in the Sulzer long-term incentive plan. The share-based payment expenses have been calculated based on the number of performance share units (PSU) received under the Sulzer performance share plan (PSP) until the date of the spin-off. The PSP will vest at the end of the original vesting period on a pro rata temporis basis by comparing the effective service period until the date of the spin-off with the original service period of three years. The actual performance factors will be measured at the end of the vesting period. Accordingly, the group disclosed the relevant information for the Sulzer PSP.

Vesting of the PSP is based on three performance conditions: Sulzer operational income growth over the performance period before restructuring, amortization, impairments and non-operational items (operational profit) (weighted 25%), Sulzer average operational return on capital employed (operational ROCEA) (weighted 25%), and Sulzer’s total shareholder return (TSR), compared to a selected group of peer companies (weighted 50%).

TSR is measured with a starting value of the volume-weighted average share price (VWAP) over the first three months of the first year and an ending value of the VWAP over the last three months of the vesting period. The rank of Sulzer’s TSR at the end of the performance period determines the effective number of total shares. The exercise price of the PSU is zero.

The following inputs were used to determine the fair value of the PSUs at grant date using a Monte Carlo simulation:

The expected volatility of the Sulzer shares and the peer group companies is determined by the historical volatility. The zero-yield curves of those countries in which the companies and indices are listed were used as the relevant risk-free rates. Historical data was used to arrive at an estimate for the correlation between Sulzer and the peer companies. For the TSR calculation, all dividends paid during the vesting period are added to the closing share price.

Performance share units — terms of awards

Performance share units