— Compensation report — Overview of the financial year 2022
Paying for sustainable performance
2022 was the first full financial year for medmix following the spin-off from Sulzer. With the completion of the spin-off, the size of the Board of Directors was increased from three to seven members. In addition to Greg Poux Guillaume and Marco Musetti who remain members of the Board, Barbara Angehrn, Daniel O. Flammer, Rob ten Hoedt, David Metzger and Dr. René Willi were appointed to the Board of Directors following the Shareholders’ Meeting on April 12, 2022. Jill Lee has decided to retire from the Board.
In April 2022, medmix operations were significantly impacted as a consequence of the decision made by the Polish government to place medmix Poland sp. Z.o.o. under sanctions. medmix firmly believes this decision is erroneous and is contesting it in courts. To minimize the impact of the unexpected halt in production in Poland, the medmix team deployed a strong mitigation plan. medmix increased production in its plants in Haag (Switzerland), Elgin (USA), and Shanghai (China). The company also acquired the plastics business of Universal de Suministros, S.L, and leveraged this acquisition to commence work on a new Industry manufacturing hub in Valencia (Spain). Reflecting its strategic path in healthcare, medmix also announced a long-term lease agreement for a new manufacturing facility near Atlanta, Georgia, USA, that will support the medmix Healthcare growth strategy for all related segments: Drug Delivery, Dental and Surgery. Further, in support of its ambitious growth plans, medmix also signed an agreement to acquire a majority stake in Qiaoyi, a Chinese beauty manufacturing business, thus bringing to life a local-for-local strategy for this key market.
These acquisitions and planned expansions will have a positive impact in the future but are not reflected in 2022 results. In the meantime, the forced closure of our operations in Poland has had a considerable impact on the short-term incentive compensation (STI) of the Executive Committee and the nearly 500 employees who are eligible for variable compensation.
The adverse political situation in Poland was neither foreseeable at the time of target setting nor caused by the management or the company. Since April 2022, when the sanctions were first announced, medmix management team have worked intensively and pursued every available measure to convince the Polish authorities to withdraw the sanctions and allow the reopening of the Wroclaw facilities. Weighing up all the relevant factors, the Board of Directors agreed to neutralize the impact of the local sanctions in Poland on the Short-Term Incentive 2022. Details on this adjustment for the Executive Committee can be found in this report in the respective chapter on the Short-Term Incentive.
Supporting transparency and good governance in medmix’ compensation system, the clawback clause has been extended and now includes the payments made for STI from 2022 onwards. In case of a clawback, a granted bonus, or a vested award will be recovered in full or in part in the following situations: material misstatement of the financial results, error in assessing a performance condition or in the information or assumptions based on which the award was granted or vested, serious reputational damage to the company, gross negligence or willful misconduct on the part of the participant.
Furthermore, share ownership guidelines (SOG) have been implemented. According to these SOG, the members of the Executive Committee are obliged to hold a defined number of medmix shares until the end of their service period.
As a result of the spin-off in the last financial year, there was no medmix performance share plan (PSP) for the financial year 2021. The Executive Committee received a first regular grant of the medmix performance share plan (PSP) in 2022.