Compensation Report

This compensation report has been prepared in accordance with the Swiss Code of Obligations, the principles of the Swiss Code of Best Practice for Corporate Governance of economiesuisse, as well as the corporate governance reporting directive of the SIX Swiss Exchange (its Directive on Information Relating to Corporate Governance).

The compensation report discloses the compensation and shareholdings of the members of the Board of Directors and Executive Committee for fiscal years 2024 and 2023. The expense for their compensation (disclosed in accordance with International Financial Reporting Standards) is presented in the consolidated financial statements of Comet Holding AG within note 30, “Compensation of the Board of Directors and Executive Committee”.

Compensation-related provisions are specified in the Articles of Association (which are published on the Group’s website at https://comet.tech/en/investors/downloads) and implemented in corresponding Group regulations. Articles 20 to 24 of the Articles of Association govern compensation approval, the compensation of the Board of Directors and Executive Committee, the composition of performance-based compensation, and the terms of shares awards.

Under the Swiss Code of Obligations and the Articles of Association of Comet Holding AG, the amounts of the respective aggregate compensation of the Board of Directors and Executive Committee require shareholder approval in a binding vote at the Shareholder Meeting. Under article 20 of the Articles of Association of Comet Holding AG, shareholders vote on the following:

The requirement of this binding vote provides shareholders an extensive say on pay.

The design, regular review and evaluation of the compensation system are the responsibility of the Nomination and Compensation Committee (NCC). The composition and responsibilities of the NCC are outlined in the corporate governance report.

Subject to the limits of the maximum aggregate amounts approved by the Annual Shareholder Meeting, the Board of Directors annually prepares the compensation proposals, as follows:

Every year, the Board of Directors submits its proposal for the maximum aggregate amount of Board compensation to the Annual Shareholder Meeting for approval. The amounts of Board members’ compensation are set to reflect the Comet Group’s industry environment and are regularly reviewed against benchmarks representing small and mid-sized publicly traded companies with the support from external experts. The latest such review was performed in fiscal year 2021.

The compensation details are specified in a Board-approved compensation plan in the form of a set of regulations. The compensation consists of a combination of a base retainer and fees for committee work. This structure is consistent with standard market practice for companies listed on the SIX Swiss Exchange.

Overview of Board of Directors’ compensation structure:

The sum of the base retainer and fees for committee work is split into a cash portion of 60% and a shares portion of 40%. The reported compensation in section 4.1 includes the cash portion of the retainer, the value of the shares portion and, additionally, the actual employer contributions to social security plans. In addition, a flat expense allowance is provided, which is paid in cash. This allowance qualifies as reimbursement of expenses and is therefore not considered part of the compensation itself.

The Board members’ normal term of office begins on the date following the day of the Annual Shareholder Meeting that elects them and ends on the date of the next Annual Shareholder Meeting. When a new member joins the Board of Directors, the compensation is paid on a pro-rated basis from the day of election. If a member leaves the Board before the end of a term, the retainer is calculated on a pro-rated basis to the date of departure. In the case of pro-rated retainers as well, 60% is paid in cash and 40% is paid in shares.

The compensation system is designed to attract and retain excellent management and specialist staff. Comet seeks to set compensation levels that reflect the individual levels of skills and responsibility in the Group and that bear comparison with other employers competing with Comet for talent. This aim is supported by a fair system of remuneration designed to match levels of pay offered by listed peer companies.

The compensation elements thus take into account short-term and long-term aspects of sustainable company performance and development. Comet believes that its remuneration architecture creates an effective link between compensation and performance that generates lasting value for shareholders.

The compensation of the Executive Committee is specified in Board-approved regulations. The CEO recommends the amounts of fixed compensation for the other Executive Committee members to the NCC. The NCC then prepares a specific proposal for the amounts of the individual fixed compensation of the CEO and each of the other Executive Committee members, for approval by the full Board of Directors. The NCC also bases its proposals on general experience and on levels of compensation at peer companies; the underlying benchmarking data is purchased from third party market data providers. The full Board of Directors periodically reviews, sets and approves the compensation levels, based on the proposal of the NCC.

Every year, the Board of Directors submits its proposals for the aggregate amounts of Executive Committee compensation to the Annual Shareholder Meeting for approval, specifically:

In accordance with article 735a of the Swiss Code of Obligations and the Articles of Association, the Comet Group is authorized to pay an additional amount to new external members joining the Executive Committee during a period for which the Shareholder Meeting has already approved the compensation, if the already approved maximum aggregate amount is not sufficient to cover the compensation. The aggregate additional amount per compensation period must not exceed 40% of the approved maximum aggregate amount of compensation of the Executive Committee.

The remuneration of the members of the Executive Committee consists of fixed component (“fixed compensation”) and a performance-related component (“variable compensation”). The total compensation takes into account the recipient’s position and level of responsibility. The variable compensation of the Executive Committee members is structured as a short-term incentive plan (STIP) and a long-term incentive plan (LTIP). It is designed to heighten the commitment of the CEO and the other Executive Committee members to the Comet Group. The variable compensation is based on the regulations approved by the Board of Directors.

The STIP is a profit-sharing arrangement based on the Group’s performance in terms of the combination of (i) its rate of sales growth year-over-year and (ii) its net income. The STIP is paid in cash (with some exceptions, which are explained in the table below).

The LTIP, which is in effect since January 1, 2023, is designed as a three-year performance share unit (PSU) plan based on three key performance indicators (ROCE; sales growth measured against the NASDAQ Global Semiconductor Index; and ESG scorecard). PSUs convert into Comet shares at the end of the three-year vesting period, which commences on the grant date in May. The number of Comet shares delivered at vesting ranges from 0% to 200% of the initial number of PSUs granted, depending on the achievement levels of the above-mentioned KPIs over the three-calendar-year performance cycle. The shares delivered under the LTIP do not have a holding period. The first payout will be in May 2026.

Since 2023, the relative level of entitlement of newly appointed Executive Committee members in the ongoing annual short-term incentive plan (STIP) was reduced in favor of a greater proportional entitlement to the long-term incentive plan (LTIP). For those four members of the Executive Committee who participated in the former LTIP, the reduction of the STIP entitlement will commence in 2025.

The compensation system for the members of the Executive Committee is structured as follows:

There are individual upper limits on the total variable compensation of the CEO and the other members of the Executive Committee. The upper limit caps the individual’s combined compensation under the STIP (profit-sharing) and LTIP. For the CEO this maximum (the upper limit for the combined total of STIP actual compensation and the LTIP grant value in the form of PSUs) is 200% of the fixed compensation. For each of the other members of the Executive Committee, this maximum (the upper limit for the combined total of STIP actual compensation and the LTIP grant value in the form of PSUs) is 150% of the fixed compensation.

The members of the Executive Committee have employment agreements with a notice period of not more than six months. There is no entitlement to hiring bonuses or termination benefits of any kind.

All members of the Executive Committee receive fixed compensation that is paid monthly, as well as a flat expense allowance. The fixed compensation is determined by the individual’s amount of responsibility, role, performance, experience, skills, and by local market conditions. These elements of compensation are paid in cash.

In addition to the fixed compensation, the Executive Committee members are eligible for annual profit-sharing compensation (this represents the STIP). The total pool of profit-sharing compensation for all eligible employees is calculated as a percentage of the Group’s consolidated net income. This percentage rate is dependent upon the Group’s rate of sales growth compared with the prior year. For fiscal year 2024, the percentage of Group net income was determined according to the following model, unchanged from fiscal year 2023:

In fiscal year 2024, 22.1% of the Group’s total consolidated net income (after profit-sharing) was accrued for distribution as short-term profit-sharing compensation (prior year: 15.0%).

The members of the Executive Committee and all employees eligible for profit-sharing are assigned to one of seven compensation groups. These seven groups consist of the CEO, the other members of the Executive Committee, and, subdivided into five groups, the other eligible employees. Each compensation group is assigned a different multiplier. The multipliers are set by the Board of Directors of Comet Holding AG. The product of this multiplier and the gross annual base salary determines the respective share assigned to the individual member of the Executive Committee or individual other employee in the allocation of the total profit-sharing pool. The individual share of the total profit-sharing pool is calculated using the following model:

The entire profit-sharing pool is allocated among the members of the Executive Committee and all other eligible employees, using the allocation formula presented above.

A precondition for paying any profit-sharing compensation is that, after the accrual of this distribution, the Group must still be able to report positive consolidated net income. Executive Committee members, or other employees, who join Comet intra-year participate in profit-sharing on a pro-rated basis. In the event of intra-year termination of the employment relationship, payment is made on a pro-rated basis, subject to prevailing termination conditions as applicable in the respective country. Any payment to the CEO and to the other members of the Executive Committee must be approved by the Board and is only made after ratification by the shareholders at the Annual Shareholder Meeting as part of the binding retrospective vote on the short-term variable compensation of the Executive Committee, and after shareholders’ approval of the consolidated financial statements.

Since January 1, 2023, the revised long-term incentive plan (LTIP) aims to foster long-term profitable growth, sustainability, shareholder return, and executive retention. It offers equity-based performance-driven rewards to the CEO, other members of the Executive Committee, and selected key employees across the Comet Group, thus reinforcing their focus on executing our strategy and aligning their interests with our objective of enhancing shareholder value.

The LTIP uses performance share units (PSUs), which are granted to eligible employees with specific performance conditions that result in a potential vesting into Comet shares after three years.

PSUs are granted once a year after the AGM. The number of PSUs to be granted is calculated by dividing the participant’s individual grant value by the 20-day average closing Comet share price preceding the grant. In 2024, the LTIP grant value corresponded to 64% (2023: 64%) of the base salary for the CEO and was between 38% and 39% (2023: 38%-39%) of the base salary for other members of the Executive Committee.

At the conclusion of the three-year vesting period, granted PSUs are converted into Comet’s shares, contingent upon the satisfaction of predefined service and performance criteria. Failure to meet the service condition due to termination of employment during the three-year vesting period results in partial or full forfeiture of the granted PSUs.

The achievement of three specific performance objectives over a prospective performance period of three years determine the number of shares to be delivered per PSU at the vesting date:

The performance targets for each performance measure are defined so as to encourage high performance while providing a realistic performance-related opportunity for vesting. The particular performance levels for threshold (0% vesting multiple), target (100% vesting multiple), and cap (200% vesting multiple) for each measure are recommended by the NCC and approved by the Board of Directors in line with the strategic goals of the Comet Group.

Achievement is assessed independently for each performance measure. However, the combined total of Comet shares delivered after vesting can never exceed twice the number of PSUs initially granted. Further, if performance of all three measures remains below the respective thresholds, the resulting combined conversion multiple is zero and consequently no PSUs will vest.

For the 2024 LTIP, the performance period started on January 1, 2024 and ends on December 31, 2026. The vesting curves for financial performance measures were set as follows:

The ESG performance is encapsulated within the ESG scorecard, which comprises objectives that are equally weighted across environmental and social criteria. The environmental criterion is tied to Comet’s commitment to sourcing 80% of its total electricity consumption from clean electricity by 2025 and 100% by 2030. The definition of clean electricity and the calculation methodology of the share of clean electricity are presented within the Sustainability Report in the section “Basis of calculations and definitions”. On the social side, the objectives are centered on enhancing employee well-being, as measured by the rate of voluntary turnover, and promoting diversity within leadership, specifically through achieving a balanced gender representation in management positions. Similar to financial metrics, specific threshold, target, and cap performance levels that are aligned with the company’s strategic goals were set for each ESG objective by the Board of Directors, following the NCC recommendations.

Vesting conditions are based on the following parameters (schedule: cliff vesting):

The compensation systems for the Board of Directors and the Executive Committee are covered in separate sections above.

The compensation system for Comet’s other employees has two main elements: All employees receive fixed compensation, and employees eligible for profit-sharing under the STIP may earn a performance-based pay component.

All employees receive fixed compensation that is paid periodically in cash. The fixed compensation is determined by the individual’s amount of responsibility, role, performance, experience, skills, and by local market conditions.

The calculation of an eligible individual’s effective profit-sharing compensation is based on the allocation formula shown in the preceding section (03.3). The STIP is settled in cash.

The following disclosures represent all compensation of the members of the Board of Directors and Executive Committee and their related parties¹ for fiscal years 2024 and 2023, disclosed in accordance with articles 732 et seq. of the Swiss Code of Obligations for companies whose shares are listed on a stock exchange. Further details on the included individuals and their positions in the Group are provided in the corporate governance report within this annual report.

The compensation of the Board of Directors is set at the Annual Shareholder Meeting for a period of one year. The Board’s term of office, and therefore its annual compensation period, does not match the fiscal year.

The Annual Shareholder Meeting prospectively approves the Board’s compensation for a period of one year ending at the subsequent Annual Shareholder Meeting. The following tables show the actual compensation for the Board of Directors for fiscal years 2024 and 2023. As can be seen from the tables, the Board compensation for the term of office ending at the 2024 Annual Shareholder Meeting will be within the maximum aggregate amount approved by the Annual Shareholder Meeting in 2023. The aggregate amount of the Board’s compensation in fiscal year 2024 is slightly higher than in fiscal year 2023 due to the fact that the number of Board members increased from six to seven at the 2023 Annual Shareholder Meeting.

In 2024, no payments were made to former members of the Board of Directors except as listed in the table above.

Article 23 of the Articles of Association, which are compliant with article 734e of the Swiss Code of Obligations, specifies the allowable number of other, external positions that members of the Board of Directors may hold on top management or supervisory bodies, as follows:

In fiscal year 2024, no member of the Board of Directors exceeded any limits for additional positions held. At December 31, 2024, the members of the Board of Directors had the following additional positions on top management or supervisory bodies of significant Swiss and foreign private sector and public sector companies, institutions and foundations:

Stepped down from his Board member position at Alphawave IP, London, United Kingdom and Chairman of the Board position at Unity Semiconductor, Montbonnot-Saint-Martin, France in 2024.

Board member, Chair of the Nomination and Governance Committee and member of the Audit Committee, SIG Combibloc Group AG, Neuhausen am Rheinfall; Board member and member of the Audit Committee, Komax Holding AG, Dierikon; Board member, MEXAB AG, Lucerne; Board member, The Schörling Foundation, Lucerne; Board member, Law & Economics Foundation, St. Gallen; Board member, Irene M. Staehelin Foundation, Zurich; Board member, Orpheum, Stiftung zur Förderung junger Solisten (a foundation), Zurich

Chairman of R&S Group Holding AG, Sissach; Board member, Variosystems AG, Steinach; owner, Kundert Consulting Establishment, Schaan, Liechtenstein

Supervisory Board member, ALH Group, Oberursel, Germany; Advisory Board member, Artificial Intelligence Center Hamburg (ARIC), Hamburg, Germany; Executive Board member, Fraunhofer Alumni e.V., Germany. Stepped down from the following positions in 2024: Supervisory Board member – Deputy Chair, Baufi24 Baufinanzierung AG, Hamburg, Germany; Advisory Board member, Bilthouse GmbH, Hamburg, Germany; Advisory Board member, Loanboox GmbH, Zurich; Advisory Board member, Suntrace GmbH, Hamburg, Germany; Advisory Board member, Neoshare AG, Munich, Germany.

Board member, JEP Holdings Ltd, Singapore; Board member, Key Point (Singapore) Pte Ltd, Singapore; Board member, Amethyst Micrometric (Singapore) Pte Ltd, Singapore. Joined Ying World Investments (Singapore) Pte Ltd as a Board member in 2024.

International Board of Directors, SEMI Inc., Milpitas, CA, USA

A total of eight persons served as Executive Committee members during fiscal year 2024 (including one interim member). On average for the fiscal year, this represented 8.0 full-time equivalents (prior year: 7.0). The total compensation of the current and former members of the Executive Committee, as well as the highest individual compensation, are presented in the table below. Former members of the Executive Committee are those members who were partly active during 2024, but no longer active as of the year-end, and received compensation in the respective fiscal year.

Article 23 of the Articles of Association, which is compliant with article 734e of the Swiss Code of Obligations, specifies the allowable number of other external positions that members of the Executive Committee may hold on top management or supervisory bodies, as follows:

Some members of the Executive Committee hold board positions at subsidiaries of the Group. In addition, Stephan Haferl was a board member of Belimed AG, Zug, until April 30, 2024, Michael Berger was a board member of Band Cooperative, Bern, until May 22, 2024 and Meike Boekelmann was a board member of the Pact for Skills. The other members of the Executive Committee did not hold positions outside Comet on management or supervisory bodies of significant Swiss or foreign private sector or public sector companies, institutions or foundations at the balance sheet date. Therefore, no member of the Executive Committee of Comet Holding AG exceeded any limits for additional positions.

The next two tables present a breakdown of the prospectively approved fixed compensation and the approved variable compensation of the Executive Committee members; approval is by the Annual Shareholder Meeting. For fiscal years 2024 and 2023, the fixed compensation was within the maximum aggregate amount approved by the Annual Shareholder Meeting. In addition, the third table below provides an overview of the compensation mix for fiscal years 2024 and 2023.

In fiscal year 2024, no signing bonuses were paid to present or former members of the Board of Directors or of the Executive Committee (prior year: nil). No termination benefits were granted or paid (prior year: nil).

In fiscal year 2024, no transactions with related parties were recorded and no interim management contracts were in place (prior year: nil).

No loans or other credits were granted to members of the Board of Directors or Executive Committee in the year under review (prior year: nil). No loans or other credits were outstanding at the balance sheet date (prior year: nil). As well, Comet did not provide any guarantees or other security in the year under review (prior year: nil).

No material changes related to compensation have occurred after the balance sheet date of December 31, 2024.

As of December 31, 2024, the members of the Board of Directors and Executive Committee held a combined total of 0.2% of the outstanding shares of Comet Holding AG (prior year: 0.3%).

The ownership interests in Comet Holding AG held by members of the Board of Directors and Executive Committee are disclosed below. This disclosure includes all persons who held positions on the Board of Directors or Executive Committee as of December 31, 2024. The shareholdings shown include those of respective related parties.

Each 10,000 registered shares of Comet Holding AG, of a par value of CHF 1.00 per share, represented 0.1286% of all voting power (prior year: 0.1286%). The members of the Board of Directors and Executive Committee held an aggregate total of 0.2% of voting rights (prior year: 0.3%). No material changes in ownership interests arose after the balance sheet date of December 31, 2024.

At the 2025 Annual Shareholder Meeting, the Board of Directors will propose the resolutions for the compensation of the Board and the Executive Committee. 

The detailed proposals and the supporting reasoning will be delivered to shareholders with the notice of the 2025 Annual Shareholder Meeting.

The implementation of a company-wide revised job grading in 2024 allowed the creation of a Group compensation framework that takes effect in 2025. This framework has been designed to support fair pay, market competitiveness and cost management.