Remuneration Report

1. Responsibilities and authorities with respect to remuneration

1.1 Introductory remarks relating to the specific structure of BB Biotech AG as an investment company

The Board of Directors of BB Biotech AG has not made use of its competence to delegate the executive management of all or part of the Company’s business pursuant to article 716b CO and therefore manages the business of the Company itself, to the extent it has not been delegated to Bellevue Asset Management AG as investment manager and administrator within the framework of the management contract. Accordingly, BB Biotech AG does not have an executive management pursuant to article 716b CO.

For details, please refer to note 9.

1.2 Responsibilities and authorities with respect to the remuneration

The Remuneration and Nomination Committee is responsible for ensuring that the process relating to the determination of the remuneration is held on a fair and transparent basis and that such process is controlled effectively. The adopted remuneration process shall serve as a basis for an adequate decision with respect to services rendered as well as an appropriate incentive to the individual members of the Board of Directors, taking into account the long-term interests of the shareholders and the Company’s success. In addition, the Remuneration and Nomination Committee assists the Board of Directors in determining the principles of the remuneration strategy of BB Biotech AG.

The Remuneration and Nomination Committee submits proposals to the Board of Directors for resolution in the following areas:

• Amount and composition of the aggregate remuneration of the Board of Directors;
• Amount and composition of the remuneration of the Chairman of the Board of Directors;
• Amount and composition of the remuneration of the Vice-Chairman as well as the other members of the Board of Directors;
• Amount and composition of the additional remuneration of the members of a Board of Directors Committee.

Furthermore, the Remuneration and Nomination Committee assists the Board of Directors in resolving on conclusion, termination, or amendment of contracts entered into with external asset managers and thus in particular on the amount of the compensation to be paid under the respective contracts.

The Remuneration and Nomination Committee meets as often as necessary but in any event at least once a year. The meeting minutes are included in the board pack of the next meeting of the Board of Directors. The chairperson of the Remuneration and Nomination Committee reports to the Board of Directors at the next meeting.

BB Biotech AG last mandated in 2021 two reputable service providers to provide an external review of the Board of Directors’ compensation. Willis Towers Watson (WTW) and Mercer independently benchmarked the compensation of the Chairman, the Vice-Chairman and the ordinary members of the Board of Directors as well as the Board committees regarding level and structure against two pre-defined peer groups. One peer group consisted of 19 (Mercer) resp. 27 (WTW) distinct companies included in the SMIM Index. This group reflects the local market practices for Swiss listed companies, similar in size as BB Biotech AG. The second peer group consisted of 17 (Mercer) resp. 22 (WTW) listed financial industry companies with a similar structure (no bank and insurance companies, most of them included in the FTSE250 index). This group of listed investment trusts and investment companies reflects the structural specialties of BB Biotech AG.

Based on the results of the benchmarking studies and in line with the recommendation of the Remuneration and Nomination Committee, the Board of Directors decided to propose an adjusted overall amount to the General Meeting in March 2022.

In line with the results of the benchmarking studies, the Board of Directors decided to decrease the amount of compensation awarded for Board membership and increase the amount of compensation awarded for membership and, in particular, chairmanship of a Board committee.

During the period under review, no external advisors were consulted on the determination of the compensation program and no changes to the remuneration system or compensation amounts were made.

2. Remuneration of the members of the Board of Directors

2.1 Principles

The remuneration of the members of the Board of Directors is based on the scope of activity and responsibility of the individual members (Chairman of the Board of Directors, Vice-Chairman of the Board of Directors, member of the Board of Directors; involvement in committees: chairmanship of a committee, member of a committee).

The remuneration of the Board of Directors consists of the following elements:

• Fixed remuneration (disbursement by cash compensation);
• Social insurance contributions and duties.

The limitation to a fixed remuneration ensures that the focus of the Board of Directors lies on the long-term success of BB Biotech AG. Its amount takes account of the workload and responsibility of the individual members of the Board of Directors. Therefore, the remuneration of the Board of Directors has been separated from the compensation of the investment manager; thus, the Board of Directors does not have an incentive to take excessively high risks.

Upon request of the Remuneration and Nomination Committee, the entire Board of Directors resolves once a year on the amount of the remuneration of the members of the Board of Directors and the committees.

The Board of Directors had determined the fixed remuneration of its members (as a member of the Board of Directors or a committee) as follows:

2.2 Remuneration of the individual members of the Board of Directors in the reporting year (audited)

In the reporting year 2023, the six members (2022: six members) of the Board of Directors received a total remuneration of CHF 1 724 921 (2022: CHF 1 595 935). From this amount, CHF 1 680 000 (2022: CHF 1 550 000) have been paid in the form of a fixed remuneration for the work on the Board of Directors and on the committees of the Board of Directors. The social insurance contributions and the duties amounted to a total of CHF 44 921 (2022: CHF 45 935).

The individual members of the Board of Directors were paid the following remuneration:

Fiscal year 2023

Fiscal year 2022

3. Remuneration of related parties at non-market conditions (audited)

In the reporting year 2023, no remuneration which was not at arm’s length terms was paid to related parties (2022: none).

4. Remuneration of former members of the Board of Directors (audited)

In the reporting year 2023, no remuneration was paid to former members of the Board of Directors (2022: none).

5. Loans and credits to the members of the Board of Directors or related parties (audited)

The articles of incorporation of BB Biotech AG do not provide that loans and credits may be granted to the members of the Board of Directors. Accordingly, no loans or credits which BB Biotech AG has granted to current or former members of the Board of Directors or to related parties were outstanding as of December 31, 2023 (December 31, 2022: none).

6. Participation rights and options on such rights

As at December 31, the members of the Board of Directors held the following positions in BB Biotech shares:

None of the members of the Board of Directors held any options.

7. Activities in other undertakings

Pursuant to Article 734e CO, all mandates or functions held by members of the Board of Directors in entities within the meaning of Article 626 para. 2 no. 1 CO that are not part of the BB Biotech Group must be disclosed in the Remuneration Report, provided that such mandates are comparable to board of directors or executive committee mandates and the entity has an economic purpose. As at December 31, 2023, the members of the Board of Directors held the following such mandates:

The disclosure of mandates and functions in accordance with the DCG is included in Section 5 of the Corporate Governance Report.

8. Contractual terms at retirement from BB Biotech AG

No member of the Board of Directors has a contract with BB Biotech AG providing for a severance payment in the event of leaving BB Biotech AG.

9. Management contracts

On behalf of the Company, the Board of Directors has entered into a management contract with Bellevue Asset Management AG (investment manager). In this contract, the investment manager commits to carry out management services relating to the investment activity and management of BB Biotech AG. The management contract is valid for an indefinite period and can be terminated by either party with a notice period of twelve months with effect as per the end of the following calendar year. The remuneration of the investment manager is determined by the respective contract and corresponds to a fixed fee of 1.1% p.a. on the average market capitalization of BB Biotech AG without any additional fixed or performance-based elements.