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The Kuoni Group strives constantly to recruit, motivate and retain professionals and executive talent who are of the calibre that is essential to the Company’s continued success. Kuoni Group’s compensation policies are an integral part of this strategy and have been designed to encourage all employees to drive the business to outperform competitors and create value for shareholders over the long term.

This Compensation Report provides a summary of the compensation structure and amounts paid to the Group Executive Board (GEB) and the Board of Directors (BoD) and will be put to a consultative vote at the 2014 Ordinary General Meeting. This Compensation Report contains all information required under the Swiss Code of Obligations (Article 663b bis and Article 663c, Paragraph 3) and Section 5.1 of the Annex to the Corporate Governance Directive issued by SIX Exchange Regulation. The Kuoni Group has also observed the Swiss Code of Best Practice issued by economiesuisse, the umbrella association for Swiss business and industry.


The Nomination and Compensation Committee (NCC) of the Board consists of four independent members and is chaired by Heinz Karrer. All members of the NCC are experienced and familiar with regulatory requirements and compensation practices and trends. In 2013, the Chairman of the BoD attended all NCC meetings.

The main duty of the NCC is to monitor the organisation, qualification, performance and compensation of the GEB and BoD, to ensure that they are compensated fairly, appropriately, and competitively, in accordance with the strategic goals of the Kuoni Group.

The NCC annually reviews the structure and the amounts of compensation to be paid to members of the GEB and BoD, and recommends modifications to the full BoD for approval. This includes (but is not limited to) review of basic salaries and benefits, performance-based short-term compensation and share purchase plans. Other tasks performed by the NCC include assessing the individual performance of GEB members, arranging succession plans and submitting recruitment proposals.

GEB members do not participate in the determination of their own compensation. The Chief Executive Officer (CEO) is, however, consulted on the compensation proposed for the other members of the GEB.

Recommendations regarding BoD compensation must comply with the Company’s regulations and be approved by the full BoD. In any vote on the compensation to be paid to a particular member of the BoD, the Board member concerned must observe the relevant general withdrawal/abstention procedures.

The NCC utilises independent external consultants when required. External consultants are generally utilised to benchmark compensation and assist with the design of compensation plans. In 2013, EY was consulted to advise on Compensation Report disclosure requirements. In addition, Mercer provided benchmarking data for the GEB and PricewaterhouseCoopers benchmark data for the BoD.

A Target Setting Committee (TSC) consisting of the Chairman of the BoD, the Chairman of the NCC and the Chairman of the Audit Committee (AC) was established in 2012. The purpose of the TSC is to annually assess and propose the long-term incentive performance targets for the long-term incentive plan.

The table below summarises the role of the NCC, TSC, BoD and certain members of the GEB in proposing and approving compensation for the GEB and BoD:

  Proposed Consulted Approved
Decisions on Payout levels      
Basic salary and deferred fixed compensation for the GEB NCC CEO 1 BoD
Target payout level for short-term incentives for the GEB NCC CEO 1 BoD
Target payout level for long-term incentives for the GEB NCC CEO 1 BoD
Compensation for the BoD NCC   BoD 1
Decisions on Performance targets      
Short-term incentive performance targets for the GEB (excl. CEO) CEO NCC BoD
Short-term incentive performance targets for the CEO Chairman of the BoD NCC BoD
Long-term incentive performance targets for the GEB (incl. CEO) TSC CEO, CFO BoD

1 In accordance with the general withdrawal/abstention procedures.


In 2012, the BoD decided to make several amendments to the GEB future compensation approach to improve the alignment between long-term compensation, Kuoni Group’s business strategy and shareholder value creation. The new compensation approach, which was implemented in 2013, is summarised below and detailed in the following sections of this Compensation Report. Other key changes, including changes to the composition of the GEB during 2013 and the approach to the disclosure of equity-based compensation, are also detailed below. Other than these key changes, all other compensation arrangements remained unchanged for 2013.

Deferred compensation – Restricted Share Plan (RSP):

  • New deferred compensation arrangements in the form of restricted shares were introduced to further link executive compensation to shareholder value creation and to assist with retention of GEB members. 
  • PricewaterhouseCoopers was tasked with the mandate of assisting with the design of this plan in 2012.

Long-term Incentive – Performance Share Plan (PSP):

  • For 2013 grants of performance shares under the PSP, new performance measures were introduced to improve alignment with Kuoni Group’s business strategy and the creation of shareholder wealth.
  • The payout performance factor was also amended. Payouts under the 2013 PSP will range between 0 and 2.5 times the number of awards initially granted. As a result, participants will not receive payouts if performance does not meet certain stringent thresholds.
  • PricewaterhouseCoopers was tasked with the mandate of assisting with the introduction of the new performance measures and changes to the payout performance factor in 2012.
Award year
Performance measures Measuring/vesting period Payout performance factor
2013 PSP Free cash flow, Turnover Three years 0.0 – 2.5 times the number of shares initially granted
2012 PSP Kuoni Economic Profit Three years EBIT gateway 1 0.25 – 3 times the number of shares initially granted
2011 PSP Kuoni Economic Profit Three years EBIT gateway 1 0.25 – 3 times the number of shares initially granted

1 If EBIT gateway not achieved payouts reduced to zero.

Composition of the GEB:

Chief Executive Officer, Peter Rothwell, ceased employment with the Kuoni Group at the end of June 2013 and his employment contract ends in June 2014. The BoD appointed the Chief Financial Officer, Peter Meier, as interim Chief Executive Officer with effect from 21 June 2013. The annual basic salary, the deferred compensation (RSP), the target amounts for the short-term incentive and the long-term incentive (PSP) were raised as of the assumption and for the duration of performing the additional role to the amount of the remuneration of Peter Rothwell.

Chief Executive Officer Outbound Europe, Leif Vase Larsen, ceased employment with the Kuoni Group in March 2013 and his employment contract ends in March 2014.

Chief Executive Officer VFS Global, Zubin Karkaria, was appointed to the GEB in March 2013.

The employment contract of Chief Executive Officer Outbound and Specialists, Stefan Leser, was amended as of 31 December 2013. The leaving settlement agreed was removed without compensation and his retirement age of 58 was put on par with that of the other members of the GEB in Switzerland, who retire regularly at the age of 62. The Welfare Foundation paid Stefan Leser the net present value of his reduced pension benefit of CHF 862 000 to an account at a Vested Benefit Foundation by the end of 2013.

Disclosure of equity-based compensation:

For share-based disclosures in the past, shares have been discounted by 16% in view of their restricted availability at the time of grant and in line with the approach of the Swiss tax authority. For this Compensation Report, the undiscounted market value has instead been disclosed to increase comparability with the market. The 2012 figures have been adjusted accordingly.


There are no major changes to compensation levels or structure anticipated for 2014.

The performance measures and weightings under the short-term incentive plan will change. This means that the weighting of financial targets will increase from 50% to 75% and the personal targets decrease accordingly from 50% to 25%. The maximum payout increases from 80% of base salary to 90% of base salary. The financial targets will furthermore be based on 50% Group EBIT and 25% Divisional EBIT targets. The BoD is convinced that the increasing weight of the financial performance targets supports the alignment with shareholders’ interest.

The exit rules under the Restricted Share Plan (RSU) are amended for future grants such that in the event of termination by the company (without cause) – as in the Performance Share Plan (PSP) – the share units awarded to the eligible participants do not lapse; i. e. unvested awards will vest in part having regard to the relevant service period. Exit rules of existing plans remain unchanged.

The Swiss pension scheme will change from a defined benefit to a defined contribution plan as of 1 January 2014. This will apply to all employees in Switzerland, including some GEB members. Employer’s contributions will in future be determined based on the age of the insured. This may lead to an increase of employer’s contributions. However, employer’s overall costs will not be increased because of this change.


Kuoni Group’s compensation approach is based on the following principles:

  • Alignment of interests: Rewarding employees for their contribution to the future development of the Kuoni Group in performance and profitability terms, thereby aligning employee and shareholder interests.
  • External competitiveness: Compensation should be comparable to compensation at companies of a similar size and complexity, enabling Kuoni Group to recruit, motivate and retain professionals who are essential to the Company’s continued success.
  • Internal consistency: Compensation should reflect the impact, communication requirements, innovation and knowledge level of the relevant position. Kuoni Group uses Mercer’s international position Evaluation (IPE) system to assist with this assessment.

Total compensation for GEB members consists of a fixed component and a performance-based component. The fixed component is comprised of basic salary, benefits and deferred compensation (delivered in restricted shares awards). The performance-based component is comprised of a short-term incentive and a long-term incentive (delivered in performance shares awards). The chart below illustrates the general compensation mix policy for GEB members in 2013 and outlines the split between cash and equity-based compensation.