To promote the right behavior and drive performance that creates sustainable value, Solvay’s compensation policy incorporates not only financial targets in line with Solvay’s G.R.O.W. strategy but also sustainability targets that are aligned with Solvay’s One Planet objectives.
Solvay’s approach to compensation has evolved over the years to reflect market best practice as well as investor feedback. The support given by shareholders to Solvay’s compensation policy and report at last year’s general meeting reflects the Board’s effort to ensure that management’s interests are aligned with all stakeholders, including shareholders.
People at all levels of the organization are rewarded with pay packages based on personal contributions as well as business and sustainability objectives. This balance supports both short-term business goals and sustainable value creation. 2020 was the sixth year of our Group-wide Global Performance Sharing program that applies to employees with grade below S15 who are not covered by the Group Short Term Incentive. This program has an 80% financial / 20% sustainability split. It aims to give our employees a stronger sense of belonging by involving them in Group results.
Covid-19 impact on compensation and solidarity
The compensation policy approved at last year’s general meeting demonstrated its resilience during Covid-19. Despite the uncertainty facing the business and the markets it serves, the compensation policy continued to promote the right behavior and drive the right performance from Solvay’s employees.
To ensure the management was focusing on the relevant short-term objectives to navigate Covid-19, the Board used its discretionary power to adjust the weight of the two financial criteria within the Short-Term Incentive plan to place greater importance on cash management. No other adjustments were considered necessary by the Board.
Salaries for all employees, including executives, were frozen in 2020. Furthermore, all of Solvay’s senior executives (including the CEO and Members of the Executive Committee) contributed 15% of their base salary, matched by Solvay, to the Solvay Solidarity Fund to support employees experiencing hardship as a result of Covid-19. At the end of 2020, all non-executive employees were awarded a special bonus for delivering steadfast performance throughout the crisis.
Leadership compensation focused on G.R.O.W whilst navigating Covid-19
Solvay’s compensation structure for its Executive Committee is designed in accordance with the “pay-for-performance” approach approved by the Board, focusing on the Company’s short-term and long-term performance. The level and structure of the compensation packages are aligned with market practices for similar functions at comparable companies.
CEO compensation structure in 2020
* Pre-Covid: Underlying EBITDA growth (70%); FCF to shareholders (20%)
Individual performance targets are linked to the long-term vision of the Group, the deployment and execution of the G.R.O.W strategy, and the deployment of enterprise leadership culture and human capital strategy among others. For 2020, mitigating the impact of Covid-19 has also been an important consideration when evaluating individual performance.