Board remuneration

Governance and principles

The Board sets and periodically reviews compensation for its members based on a comparison of the compensation of non-executive board members of publicly-traded companies in Switzerland that are part of the Swiss Market Index. The Governance, Nomination and Compensation Committee (GNCC) is responsible for making recommendations to the Board.

Components of compensation

Members of the Board are paid for their service over a 12-month period that starts with their election at the Annual General Meeting. Payment is made in two installments: one following the first six months of the term and one at the end. Board members do not receive pension benefits and are not eligible to participate in any of ABB’s employee incentive programs.

To align the interests of Board members with those of ABB’s shareholders, half of each member’s compensation is paid in the form of ABB shares, though Board members can alternatively choose to receive all of their compensation in shares. The shares are kept in a blocked account for three years. Departing Board members are entitled to the shares when they leave the company unless agreed otherwise.

The number of shares awarded is calculated prior to each semi-annual payment by dividing the sum to which the Board members are entitled by the average closing price of the ABB share over a predefined 30-day period. Compensation for Board members is outlined in the table below and has been unchanged since the 2007/2008 term of office.

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Board term

Function

2013–2014
(CHF)

2012–2013
(CHF)

Chairman of the Board

1,200,000

1,200,000

Member of the Board and Committee chairman

400,000

400,000

Member of the Board

300,000

300,000

Board compensation in 2013

The compensation amounts per individual are listed in the table below:

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Paid in 2013

 

 

November
Board term 2013–2014

May
Board term 2012–2013

 

Name

Function

Settled
in cash(1)

Settled in
shares –
number of
shares
received(2)

Settled
in cash(1)

Settled in
shares –
number of
shares
received(2)

Total compensation paid 2013(3),(4)

 

 

(CHF)

 

(CHF)

 

(CHF)

(1)

Represents gross amounts paid, prior to deductions for social security, withholding tax etc.

(2)

Number of shares per Board member is calculated based on the net amount due after deductions for social security, withholding tax etc.

(3)

For the Board terms 2013–2014 and 2012–2013, all members elected to receive 50% of their gross compensation in the form of ABB shares, except for Hubertus von Grünberg and Hans Ulrich Märki, who elected to receive 100% in shares.

(4)

In addition to the Board remuneration stated in the above table, in 2013, the Company paid CHF 147,290 in employee social security payments.

(5)

Member of the Finance, Audit and Compliance Committee.

(6)

Member of the Governance, Nomination and Compensation Committee.

Hubertus von Grünberg

Chairman of the Board

19,616

19,739

1,200,000

Roger Agnelli(5)

Member of the Board

75,000

2,419

75,000

2,442

300,000

Louis R. Hughes

Member of the Board and Chairman of the Finance, Audit and Compliance Committee

100,000

3,233

100,000

3,264

400,000

Hans Ulrich Märki

Member of the Board and Chairman of the Governance, Nomination and Compensation Committee

8,966

9,018

400,000

Michel de Rosen(6)

Member of the Board

75,000

2,629

75,000

2,646

300,000

Michael Treschow(6)

Member of the Board

75,000

2,629

75,000

2,647

300,000

Jacob Wallenberg(5)

Member of the Board

75,000

2,629

75,000

2,647

300,000

Ying Yeh(6)

Member of the Board

75,000

2,460

75,000

2,474

300,000

Total

 

475,000

44,581

475,000

44,877

3,500,000

Consistent with past practice, no loans or guarantees were granted to Board members in 2013.