Remuneration report

The following Remuneration Report describes the principles of the remuneration policy at Flughafen Zürich AG as well as the associated decision-making powers and the components of remuneration.

1. Remuneration policy at Flughafen Zürich AG

1. Foundations and principles

The remuneration philosophy of Flughafen Zürich AG is geared to a corporate strategy oriented toward sustainable success. Market-based, performance-oriented remuneration is intended to create the conditions for recruiting and retaining qualified, committed employees in a competitive labour market. The remuneration system should be simply structured, clear and transparent. The basic structure of the company’s existing remuneration system has been unchanged for a long time; over the years there have merely been adjustments to individual aspects. The pension contribution system for the Management Board is essentially the same as for other salaried employees based at Zurich Airport. The only difference is that contributions to the pension fund for the variable salary component of Management Board members are paid in full by the employer. No severance payments are made to the Board of Directors or to the Management Board.

2. Components and methods of determination

For the remuneration of members of the Board of Directors

Remuneration of active members of the Board of Directors comprises an annual lump sum plus payments for attending meetings. Annual lump-sum payments are made in respect of their work on the Board of Directors and its committees (which it may form as and when required). The number of meetings of the Board of Directors and its committees and the number of committees are determined based on business requirements. The total amount to be proposed to the Annual General Meeting for prospective remuneration is designed to also cover financial years in which the Board of Directors faces exceptional situations. The attendance allowances are calculated on the basis of a member’s participation in meetings of the Board of Directors and its committees. The applicable amounts are defined according to the gross principle; that is to say the total amount of fees to be paid by the company is specified, including all statutory social security and occupational pension fund contributions payable by the company.

The applicable amounts are determined on a discretionary basis by the Board of Directors at the request of the Nomination & Compensation Committee. They remain valid indefinitely, that is to say until they are amended by a new resolution, if necessary. There are no bonus or participation programmes for members of the Board of Directors.

For the remuneration of members of the Management Board

Remuneration of members of the Management Board is based on individual employment contracts and comprises a fixed component (fixed salary and benefits) and a variable performance-related component plus employer contributions to social security and pension funds. Two thirds of the variable component is paid out in cash and one third in the form of shares in the company that are blocked for a period of four years, which ensures that the incentives include an element oriented to long-term perspectives.

The fixed component is determined on a discretionary basis, while the variable component is based on the degree to which the target for the company’s success set by the Board of Directors for the respective financial year was achieved. EBIT according to the budget (excluding the influence of aircraft noise) has been adopted as the target. The target bonus proposed for 100% achievement of the target amounts to 100% of the fixed salary for the CEO and 50% of the fixed salary for the other members of the Management Board. If the target is exceeded, variable remuneration is limited to 150% of the target bonus. In the event that achievement falls below 70% of the target, there is no entitlement to variable remuneration. In accordance with the Articles of Incorporation and the regulatory provisions, the Board of Directors can use its discretion to adjust the variable remuneration in justified exceptional cases, while bearing the upper limit of 150% of the target bonus in mind.

The amounts concerned are set each year by the Board of Directors as proposed by the Nomination & Compensation Committee. Members of the Management Board do not participate or have any say in these decisions of the Board of Directors.

3. Approval by the Annual General Meeting

Each year, the Annual General Meeting holds a binding vote on the aggregate amount of remuneration for the Board of Directors and the Management Board. On the basis of Article 26 of the company’s Articles of Incorporation, this vote is held prospectively; that is, the maximum aggregate amounts that could be paid to the members of the Board of Directors and the Management Board during the following reporting period are submitted to the Annual General Meeting for approval.

In accordance with Article 26 para. 2 of the Articles of Incorporation, an additional sum of 30% of the approved aggregate amount is available as necessary for the remuneration of any subsequently nominated members of the Management Board (per additional member); this sum does not require the approval of the Annual General Meeting.

As the amounts actually to be paid out depend in part on factors not yet known when these amounts are approved (for remuneration of the Board of Directors the actual number of meetings, for remuneration of the Management Board the consolidated result), this prospective method of approval requires that theoretical maximum amounts be used by the Annual General Meeting as a basis for their approval decisions. The remuneration actually paid out for a specific reporting period will be stated the following year in the Remuneration Report, which will be presented to the Annual General Meeting for approval on a consultative basis.