siegfried annual report 2011

Annual Report 2011

+ 4.4 % Growth in CHF+ 15.6 % in LC

+ 9.6 m

82.5%One

Annual Report 2011 1

Overview

For 2011, the Siegfried Group reported pleasant resultsdespite a challenging environment. The company returned toprofitability, strengthened its market position, improved efficien-cy at high utilization levels and achieved important pre-condi-tions for profitable growth as part of our strategic efforts.

Siegfried noted sales of CHF 328.1 million in 2011, a 4.4%increase (in Swiss francs) over 2010. Growth reached 15.6% inlocal currencies.

Earnings of CHF 41.0 million (+11.9%) before interest, taxes,depreciation and amortization (EBITDA) represent an EBITDAmargin of 12.5%. Siegfried reported a significant jump (+116%)in earnings before interest & taxes (EBIT) of CHF 11.6 million,which corresponds to 3.5% of sales. In exchange rate adjustedterms, Siegfried achieved an EBIT of 4.6%, and net profits ofCHF 9.6 million.

Other key figures were also positive; net current assets wereheld at a low level (CHF 123.1 million) and the 14.5% return oncapital employed (ROCE) showed that satisfying results could bemade at that level of investment. Cash flow at the end of 2011was CHF 52.6 million.

The Siegfried facilities all profited from a substantiallyimproved order situation. Zofingen shifted large parts of its pro-duction to 24/7 work shifts. Malta significantly grew headcountin anticipation of an important upcoming production launch.Thanks to comprehensive cost control efforts, revenue growthhad a corresponding effect on profitability.

As part of our strategy implementation efforts, Siegfried man-agement focused on three key areas in 2011 to help improveour competitive position: backward integration to Asia, entryinto sterile filling capabilities and enhancement of our technolo-gy base. Zofingen and Malta invested in system upgrades toimprove their production potential for high potency drugs.

Zofingen outsourced waste disposal activities to EBM WaermeAG, Muenchenstein (Switzerland) in early 2011. Siegfried alsonegotiated an extensive land swap with the City of Zofingen andthe municipal works department (StWZ Energie AG) to securespace for future expansion on property adjacent to the currentsite; this transaction was made possible by a trade of non-essen-tial Siegfried properties. A letter of intent was signed in January2012.

The past year also saw numerous changes to Siegfried’s exec-utive management. Dr. Walter Kittl took over Technical Opera-tions on June 1, Arnoud M. Middel was named Head of HR onSeptember 1, and the Siegfried Group announced that Dr. Wolf-gang Wienand, already Head of R&D, also took on a new posi-tion as Head of Strategy and M&A on November 1.

After 21 years on the Board of Directors, Dr. Thomas Staehelin,current Vice-President of the Board, will not stand for re-electionat the General Meeting 2012. All Board members are up for re-election to another one-year term this year. The Board has nofurther nominations for the General Meeting.

Thanks to the positive financial results, the Board of Directorsrecommends that the General Meeting of Shareholders approvea pay-out of CHF 1.– per nominal share, to be paid for out ofcapital contributions.

2

Key numbers

Siegfried Group

2011 2010 Change CHF (LC)

Net sales (million CHF) 328.1 314.4 4.4% (15.6%)Gross profit (million CHF) 65.4 54.5 20.2%Gross profit margin (%) 19.9% 17.3%EBITDA (million CHF) 41.0 36.7 11.9%EBITDA margin (%) 12.5% 11.7%EBIT (operating income) (million CHF) 11.6 5.4 116.6%EBIT margin (%) 3.5% 1.7%Net profit/loss (million CHF) 9.6 –4.2Net profit/loss-margin in percentage 2.9% -1.3%Cash flow from operating activities before changein current assets (million CHF) 43.3 34.3 26.3%Investment in property, plant, equipmentand intangible assets 15.9 13.0 22.1%

December 31, 2011 December 31, 2010 Change

Shareholder’s equity (million CHF) 369.7 373.7 –1.1%Total assets (million CHF) 448.0 464.1 –3.5%Equity as a percentage of total assets 82.5% 80.5%Employees (number) 715 696 2.7%

Annual Report 2011

3

Table of Contents

4 Letter from the Chairman & the CEO

11 People – Markets – Strategies

38 Corporate Governance

38 General framework

40 1 Structure of the Siegfried Group

44 2 Capital structure

46 3 Board of Directors

54 4 Executive Management

59 5 Compensation, investments and loans

60 6 Voting rights and proxy

61 7 Change of Control and defensive measures

62 8 Auditors

63 9 Information policy

64 Compensation report

64 1 Introduction

64 2 Compensation system

71 3 Responsibilities

72 4 Compensation of the Board of Directors

74 5 Compensation of the Executive Management in 2011

76 6 Contractual agreements, loans and additional contributions

78 Sustainability Report 2011

78 Introduction

78 Corporate Principles

79 Compliance

82 Safety, Health and Plant Security

85 Environmental protection

89 Siegfried as Employer

Annual Report 2011

Annual Report 20114

Siegfried achieved notable results in 2011despite a very difficult environment. The companyreturned to profitability, improved its market posi-tion, increased efficiency (at high utilization levels)and, as part of our strategic efforts, implementedimportant steps for profitable growth.

Sales grew to CHF 328.1 million, an increase of4.4% and in local currencies a 15.6% increase.This continues a three-year growth trend.

Profitability continued to improve as well; earn-ings of CHF 41.0 million (+11.9%) before interest,taxes, depreciation and amortization (EBITDA) rep-resent an EBITDA margin of 12.5%. Siegfriedreported an EBIT (earnings before interest & taxes)profit of CHF 11.6 million, which is over twice ashigh as in 2010 (CHF 5.4 million). The EBIT marginwas 3.5%. Net profit came in at CHF 9.6 million.

The appreciation of the Swiss franc had a nega-tive effect on Siegfried Group results, reducingsales by CHF 35.3 million, EBIT by CHF 5.1 millionand diminishing the EBIT margin by about 1%.Siegfried is situated relatively well with a “naturalhedge” – where costs and income are booked inthe same currency – of 95% in Euros and 80% inUS dollars.

The Board of Directors and executive manage-ment continued to focus on cash management in2011 with a free cash flow of CHF 27.7 million.Thanks to careful management of inventory andour accounts payable and receivables, net workingcapital were held to a low CHF 122.2 million. Thecompany held net cash reserves of CHF 52.6 mil-lion at the end of 2011, which can be used tofinance our strategic efforts. The 14.5% return oncapital employed (ROCE) confirms that satisfactoryresults could be achieved at that level of invest-ment.

Well-positioned in the marketsAs a supplier and outsourcing partner to the Life

Science industry, Siegfried gets the largest part ofits revenue from the exclusive synthesis of activepharmaceutical ingredients and intermedias thatare sold to pharmaceutical companies. Siegfriedalso produces and sells active pharmaceuticalingredients (with expired patents and distinct pro-duction/distribution regulations) to various cus-tomers. This portfolio, in particular, includes con-trolled substances (incl. opiates), such asmethadone and nicotine, used in addiction treat-ments, and other substances that must meet strictguidelines. They are tightly controlled by regulatoryagencies. Finally, Siegfried also provides finisheddrugs according to customer orders, mostly in soliddosage forms. Product development and licensingare often carried out with partners.

Being able to offer both synthesis of active phar-maceutical ingredients and the development andproduction of finished drugs is an important mar-ket differentiator. In addition, we are an attractiveprovider of products set for market launch and pri-or to patent expiration, which also, along with ouractivities in controlled substances, helps dampenthe inherent volatility of the outsourcing business.

These capabilities allow Siegfried to profit fromthe growing outsourcing trend in the life scienceindustry. There are two reasons for this trend: first,many blockbuster drugs are facing patent expira-tion over the coming years and drug companieshave few equally promising products in thepipeline; second, regulators in almost every countryare putting pressure on prices to help relievestrained budgets. The pharmaceutical companieswith R&D activities and generics companies haveresponded with restructuring and efficiencyimprovements, rendering outsourcing an increas-ingly attractive and sustainable solution.

Siegfried continued to improve its market posi-tion in 2011, underlined by the climbing successrate of our contract offers. Siegfried also gainedthe “preferred supplier” status with a further largepharmaceutical company. Novartis honoredSiegfried with the coveted “Global Supplier Award2011”. Despite the good news, the enormous

Dear Shareholders,

Letter from the Chairman & CEO


price pressure characterizes the market, making itdemanding for Siegfried – with its current structure– to remain competitive.

In the area of exclusive synthesis, Siegfried pro-duces important active pharmaceutical ingredientsfor its customers. In 2011, sales grew by 10% andin local currencies by more than 20% – solid resultsin our industry. Because the pharmaceutical indus-try customer prefers to avoid supply bottlenecksand risks to company reputations, exclusive synthe-sis is based largely on long-term cooperative con-tracts, with a comprehensive focus on service,technical competence and a high compliance level.Siegfried is also able to align its own systems withthe often complex and diverse customer systems.

Activities for active pharmaceutical ingredientswithout patent protection (controlled substances)also showed pleasing growth in 2011. The portfo-lio continued to expand and led to a 10% growthin revenue, mainly due to positive results in our keyEuropean and US markets. Growth in local curren-

cies reached 20%. Two new products turned outto be very successful. After the success of opiatederivatives in Europe, demand in the US alsoincreased noticeably. The highly regulated US mar-ket is based on a quota system administered by theDrug Enforcement Agency (DEA), making revenuesdependent solely on the availability of quotas.

Siegfried saw its sales for finished drugs drop by18% (11% in local currencies) because previousrevenue drivers had reached the end of their prod-uct life cycle and new products did not yet makeup for the shortfall. The renewal of the portfolio,however, remains on schedule; sales of a newproduct doubled in 2011 and preparations for themarket launch of a further product were complet-ed on time; initial deliveries are set for 2012.

High utilization rates at the facilitiesIn Zofingen, utilization rates of the production

systems increased considerably during 2011, withnumerous systems switching to a 24/7 work shift.

Gilbert Achermann, President of the Board of Directors,

Dr. Rudolf Hanko, CEO

While system utilization was high, personnel rateswere around 100% and laboratories were also fullybooked. Siegfried looks for gains in flexibility, effi-ciency and cost transparency by outsourcing main-tenance (facility management, security, supply andwaste management) to Bilfinger Berger IndustrialServices AG and EMB. Initial feedback on theseefforts is positive; the expected level of savings wasexceeded. In addition to better cost transparency,improved efficiency and more precise processes arenow also possible.

Efforts to consolidate the Zofingen facility con-tinued; a letter of intent for a property swap withthe city of Zofingen and the municipal worksdepartment was signed in 2012. The contract tofinalize the exchange is expected for mid-year andwill allow an expansion of the facility site. Siegfriedtraded properties separated from the facility by amain road.

The Pennsville, New Jersey (USA) site successful-ly met several challenges in 2011, as our largestvolume single product is produced there. On aver-age, production systems ran 6 days per week.Siegfried will soon produce ‘green’ energy andsave costs as well. The launch of a solar energy(3 megawatt) project gained remarkable publicityin New Jersey and could contribute around 25% ofthe site’s total energy needs, with 100% coveragepossible during the summer.

Malta is an attractive location for Siegfried forthe production of finished drugs. Many companiesin this industry have settled there in recent years,creating a positive effect on the local labor market;salaries and related costs remain moderate for anEU member country, and decision paths are shortand manageable. The Siegfried team in Maltaexpanded significantly – from 56 to 72 full-timepositions – to ensure the successful ramp-up of animportant product launch. As the Siegfried compe-tency center for the formulation of drugs, the Mal-ta facility is also a key strategic strength. In sum-mary, the Malta investments have paid off and willachieve critical mass in the current year.

Siegfried introduced a new company claim –“Siegfried – expect more” – and a revised corpo-rate design at the CPhl 2011 industry trade show

in Frankfurt, Germany. Siegfried is convinced thatour customers can expect more, thanks to ourproven competencies, decades-long experience,significant flexibility and our proverbial reliability.The remarkable combination of long-standingchemical and pharmaceutical know-how is uniquein our industry – and highlighted by the new claimand corporate design.

Corporate value and return on capitalemployed clearly increased

Shareholder value increased significantly in2011. This value is calculated as EBITDA minuscosts for the equity ownership plan (EOP) and mul-tiplied by a margin-dependent multiple. Using thiscalculation, shareholder value at the end of 2011was CHF 312 million, compared to 230 million theprevious year, an increase of CHF 82 million, or again of about a third. Also, the return on capitalemployed (ROCE) – calculated as EBITDA minusEOP costs divided by the invested capital –increased considerably, from 10.4% to 14.5%, a40% jump. These figures show that Siegfried iswell on the way toward enhancing shareholder val-ue and ROCE. Our declared goal is to furtherimprove the company’s earnings potential for ouroperational activities and implement strategicmeasures to help grow these figures.

Strategy implementation on trackShortly after the General Meeting, the Board of

Directors called for a comprehensive strategyreview, completed by mid-2011 that confirmed our“Transform” strategy. Further meetings focused onthe ongoing implementation of this strategy.

The strategy goals for Siegfried are clear; enablethe continued strengthening of our competitive-ness and sustainable profitable growth.

One of the priorities is improving our technolo-gy base. Thanks to sizeable investments in Zofin-gen and Malta, Siegfried made substantial progressin this regard; systems to process high potencydrugs were installed at both facilities. The new pro-duction line in Zofingen for the development ofhigh potency drugs will be inaugurated in Marchafter inspections by the Swiss regulatory authori-

6 Annual Report 2011

ties. The new systems meet all of the particularlyextensive standards for product and personnelsafety. Siegfried is now in the position to enter thisvery attractive niche market; high potency drugsare used primarily in cancer therapies.

Siegfried is currently working on a backwardsintegration of Asia – a market with a lower costbase. This is an important step that Siegfried, as amid-sized company, is looking to achieve withexperienced partners. Despite various initiatives, noconcrete agreements were reached in 2011. Nego-tiations proved to be demanding and drawn-out; aproject was called off just before the contract wassigned due to unrealizable conditions. Siegfried iscurrently working on other projects. The companysecured a mainland presence with the acquisitionof rights for a production site at an industrial parkclose to Shanghai, China.

By working towards an improved cost structure,Siegfried will be able to offer high quality synthesisat a modest price to its customers. In addition,Siegfried will carry out pre-production stages thatwere previously supplied by third-party companies.This key strategic step, especially for Zofingen andPennsville, will ensure that products that wouldhave fallen away in the near future due to costscan now be maintained in our portfolio. The result-ing, more attractive offer will result in a higher vol-ume of contracts, which will profit all our facilities.

Further, Siegfried is working to present its USP –offering competency in the synthesis of chemicalactive pharmaceutical ingredients and finisheddrugs – in a tangible market offer. For customers,this combination is especially interesting in the areaof sterile filling. Siegfried plans to invest in the cor-responding production systems, alone or togetherwith partners. This is a top priority; the correspon-ding reviews are currently in process.

Thanks to our employeesNumerous changes in upper management were

not the only story in 2011; there were big chal-lenges at the operational level as well. The pleasinggrowth in order entry was managed by maintain-ing a stable level of fixed costs, which needed ahigh level of commitment and flexibility from all

our employees. In addition to taking care of dailybusiness, management was heavily involved instrategic projects (with the necessary travel time).We would like to take a moment to express oursincere thanks to all our employees for their enor-mous dedication, loyalty to the company and highlevel of availability. This commitment is the founda-tion for the continued success of the SiegfriedGroup.

Board of Directors and Executive ManagementThe 2011 General Meeting of Stockholders

saw big changes for the Siegfried Holding AGBoard of Directors. Gilbert Achermann succeededDr. Markus Altwegg as Chairman, Reto A. Garzetti,Dr. Beat In-Albon and Dr. Thomas Villiger replacedSusy Brueschweiler and Prof. Dr. Felix Gutzwiller,who both left the Board.

There were also numerous changes toSiegfried’s Executive Management. Arnoud M.Middel replaced the long-standing HR Manager,Hanspeter Brun, who retired. Dr. Walter Kittl, previ-ously the Pennsville (USA) site manager, took overTechnical Operations from Dr. Hubert Stueckler,who will work on strategic priorities, mostly in Chi-na, until his retirement in mid-2012. Dr. WolfgangWienand, already Head of R&D, added a new posi-tion as Head of Strategy and M&A.

In 2011, the Board of Directors met for six regu-lar meetings and a strategy seminar. There werealso numerous meetings of the Strategy,’ ‘Audit’and ‘Human Resources’ Committees.

Dr. Thomas Staehelin, current Vice-Chairman ofthe Board, will not stand for re-election. A memberof the Board of Directors since 1991 – 1991–1998as Chairman, 1998–2012 as Vice-Chairman –Thomas Staehelin made decisive contributions andactively accompanied many important phases dur-ing his tenure, acting as a calming influence, legalconscious and also a specialist for financialaccounting and corporate governance. Siegfriedprofited enormously from his vast experience andknow-how from his activities on important boardsof directors and expert committees of key associa-tions.



All other Board members are up for re-electionto another one-year term. The Board has no further nominations for the General Meeting.Dr. Andreas Casutt is designated as the new Vice-Chairman.

At this point we would like to thank the mem-bers of the Board and Executive Management fortheir immense commitment.

Recommendation for a dividendThanks to the positive financial results, the

Board of Directors recommends that the GeneralMeeting of Shareholders approve a pay-out ofCHF 1.– per share, to be paid out of the capitalcontribution reserve.

OutlookDespite the challenging market situation and

continued price pressure, Siegfried expects sales inlocal currencies to develop in a stable manner in2012. Our improved system utilization levels willhave a positive effect on the current year andSiegfried expects further improvement in the oper-ative results.

Gilbert Achermann Dr. Rudolf HankoChairman of the Board of Directors Chief Executive Officer


People – Markets – Strategies

Qualified employees are a precondition for innovative products and business success. Our customers, the environment and society as a whole are entitled to expect maximum performance from Siegfried. Four examples.


Success for our customers


“Success for our customers” – is morethan a passing comment. It is the pivotalpoint of Siegfried’s thoughts and actions,and it stands for the global strategy ofthe entire Siegfried Group. The pillars ofSiegfried’s global group strategy at all ofits locations worldwide are formed by itsunique competence in chemistry andpharmaceutics, the production of patent-ed active ingredients for the pharmaceuti-cal industry, and the production of con-trolled, strictly regulated substances andready-formulated drugs for the genericsindustry. Siegfried’s strategy applies asmuch to its subsidiary in Shanghai in theEast as to its European production plantsin Malta and Zofingen, and spreadsacross the Atlantic to Siegfried (USA) Inc.in Pennsville, New Jersey, in the West.Some 700 employees across the globecontribute and live up to this strategyevery day. Figuratively, the sun never setson the Siegfried universe.

Our contribution as a supplier of the life science industry


In close contact with the authorities When the world west of Asia is still fast

asleep, Ko-Lin Feng has long been up.She manages Siegfried’s Shanghai officein the city’s financial district and is respon-sible for sourcing and business develop-ment in Asia. Not that Ko-Lin Feng caneasily be reached at her office; she oftentravels to visit her customers in one of thetwelve markets in Asia or suppliers in Chi-na. A born Taiwanese, she is culturallyfamiliar with the Asian continent, andthanks to studying mathematics at YaleUniversity in the USA and professionalexperience in Europe, she is well-versed

with Western thinking. This is the perfectcombination for Siegfried’s corporateactivities in Asia. Wherever Ko-Lin Fengmakes new contacts with customers orsuppliers in the region, or whenever shemeets with the authorities, her personaland professional background always rep-resents a decisive advantage. This is espe-cially true when government agenciesbecome the customers as is the case formethadone in all Asian markets. “In sucha case”, she says, “Siegfried acts less as aseller of API but more as an advisor andconsultant to the customer to help buildup their methadone program.” Ko-Lin


Feng adds that “since we understand ourmarkets and customers well, we knowthe progress of addiction treatment pro-gram in each market and the bestapproach to build our business in the par-ticular local environment.” In a sense, Ko-Lin Feng represents an important part ofSiegfried’s strategy in building the Asianmarket by being a trustworthy partner oflocal authorities and customers workingin the area of controlled substances.

Production in a three-shift operationWhen Feng Ko-Lin’s workday slowly

nears its end, Vittorio Giromini has been

out and about on Siegfried business for aconsiderable time. Vittorio Giromini, theimpeccably dressed Italian, is site manag-er of Siegfried’s Malta location. His work-day starts at six in the morning when he checks his professional e-mails athome. “My brain at that time alreadyworks”, he says apologetically, “and Ican’t help being an early bird.” As aresult, when he sets foot on factoryground, he has taken care of his firsttasks, which allows him to focus fully onwhat the day has in store. Vittorio Giro-mini talks enthusiastically about his job inMalta, and usually his arms gesticulate insupport. He talks about Siegfried’s initialplans in 2004 of building a productionplant on this Mediterranean island andhow three years later the first productswere manufactured there. These areexciting times for someone like him,because the plant has since grown con-tinuously. In the beginning, he employedthirty staff members, today the workforcecounts eighty and by next year the num-ber may rise to about one hundred. Pro-duction is currently operating in threeshifts producing 450 million drug tabletsper year. Next year, Vittorio Giromini isconvinced he will be able to introduce a24-hour operation 7 days per week.


Siegfried is investing millions in expand-ing production in Malta because the loca-tion enjoys strategic importance for thecompany. “Cost advantages here arecombined with above-average productivi-ty”, says Vittorio Giromini while extend-ing his arms. What else could be moreexciting for a site manager? What is pro-duced needs to be sold. Thomas Müllertakes care of that. With a Ph.D. in chem-istry, the Business Development managerat headquarters in Zofingen considershimself to be “not a typical scientist”.Also not a typical salesman, one couldadd. His silver-grey hair, athletic figureand open features exude the trust thatcustomer relationships in the pharmaceu-tical industry are built on. In addition, Thomas Müller knows the company fromdifferent perspectives. As a former headof Chemical Development at Siegfried, hemeets and negotiates with customers onequal terms. Customers, on the otherhand, can rest assured that ThomasMüller will take their specific needs backto Siegfried where they will be translatedinto development projects. “I am aSiegfried ambassador toward the outsideand a work provider toward the inside”.He carries out his work in a pleasantlylaid-back manner that is evidence of

Cost benefits are combined with above-average high productivity‘ ’


healthy self-assurance. He knows that hisrole as a link between production andsales, production and development onthe one hand and sales on the other sideis important for corporate strategy.

I sell myself and my know-how to cur-rent and new customers, much of it alongexisting personal connections”, he

explains, “but in the end I sell Siegfried’scompetencies.”

Sales activities on the other side of theAtlantic begin with a time difference ofsix hours to Swiss headquarters in Zofin-gen. Early in the morning, before work,Craig Douglas takes his young son to daynursery. Then he immerses himself inwork. He manages one of the two salesteams at Siegfried’s USA headquarters.

His team is responsible for Sales and Busi-ness Development of Siegfried’s PortfolioProducts. Usually he steps into his officeat 8:30 a.m., and then “no day is like thenext”, as he says. He virtually sits at theinterface between the inside and outsideof Siegfried USA.

Speed is decisiveSiegfried founded Ganes Chemical

Works in Pennsville, New Jersey, in 1937.The company produces standard activepharmaceutical ingredients. In 2005,Siegfried acquired Penick Corporation,the largest manufacturer in the USA ofopiates such as morphine and codeine –in other words, strictly controlled sub-stances. Today, the two companies formSiegfried USA.

Outside: customers all over the UnitedStates. They consist of existing customers,that Craig Douglas cultivates, and newcustomers, which he has to find. Hespends half of his working time traveling.As the link between the inside and theoutside, his responsibility is to presentcustomer needs to the company. CraigDouglas spends much of his time negoti-ating with customers, and this is whereSiegfried USA’s significance for the groupbecomes visible.

The customer receives exactly the product he needs, in the quality that he requires and at the time he wants it at‘

’


Inside: Product Management. He sitsdown with interdisciplinary teams – pro-duction professionals, and quality andregulation experts – and as a result ofthese meetings customer needs are trans-lated into reality.

Production is the heart of the company

According to Craig Douglas, “speedand flexibility” are the two factors thatreally count. For customers in genericsproduction, speed is absolutely decisive:once a patent in the primary marketexpires, every producer aims to immedi-ately supply a follow-up product. ForSiegfried as a B2B producer, this requiresa high degree of flexibility in production,especially the production of controlledsubstances of which Siegfried USA pro-duces one hundred tons per year. Aftereach work day, which may last 21 hourswhen traveling, he knows what reallydrives him: “I want to be part of a win-ning team.” Then he has a hearty laughand adds: “And that’s what I am!”


Professionalism of our employees


Our contribution to the standards of a complex industry

They are the face of Siegfried. The DNAof the company, as human resourcesmanagers would say. Our most importantcapital, as the CEO will think. All of thatis correct. While our employees’ com-bined core competencies may not appear

in any balance sheet, they decide to ahigh degree on success or failure.

The calling card of the companyThe profiles of our employees give tes-

timony to much more than a thousandhigh-gloss brochures on strategy and per-

formance could ever do – even if theyrepresent only a small selection.

So, let’s start – in Zofingen, atSiegfried’s headquarters. At the reception,Beatrice Hänggi and Esther Waeber sharethe position and take turns at staffing thedesk. The official term for their function is“receptionist”, which requires a confidentand open approach to people. They areboth fashionably dressed and wear dis-creet makeup. “Everyone entering thereception is a Siegfried guest, and it is myresponsibility to make these people feelcomfortable”, says Beatrice Hänggi abouther work. “I consider the reception to bethe visiting card of our company.” Thewords cross her lips naturally, as if theypersonified her professional pride. EstherWaeber feels very similarly. “It’s as if wewere standing on a stage presenting thecompany to our visitors”, she says.“Friendliness is important, but we alsohave to be efficient.”

We stand on a stage and present the company‘ ’


Hardly surprising. In addition to wel-coming guests and taking telephone calls,many things pass the reception desk.Such as the time registration of employ-ees, updating entrance and withdrawallists, managing the schedule for the“Forum” function room and keeping thenotice board up-to-date. The most impor-tant aspect of their work, however, isgreeting by name about one hundredSiegfried employees passing the receptiondesk to their offices every day, recogniz-ing the needs of guests and helping themfind solutions. “We”, says Beatrice Hänggi

also for her colleague Esther Waeber,“provide services for Siegfried’s guestsand staff members.”

Fabrizio Mero works only a few stepsfrom the main reception in Zofingen. Hewears an overall in Siegfried’s corporateblue, identifying him as a productionemployee. His workplace is in the produc-tion area, amidst factory sheds, wheremasonry from Siegfried’s founding days inthe late 19th century stands next to state-of-the-art production buildings. A trainedmechanic, Fabrizio Merzo joined Siegfriedeighteen years ago. In this period, he


worked his way up from productionemployee to chemical employee andfinally to shift manager in TCR (technicalchemical reactions). Here, in the produc-tion phase that he is responsible for asshift manager, different raw materials areprocessed and by means of various chem-ical reactions forged into an intermediatestep used in the production of an anti-convulsant. He is joined by eight col-leagues in his team, and it is of greatimportance to him that this team func-tions smoothly in a three-shift operation.

A shift manager with professional pride

As shift manager, he controls produc-tion processes and ensures that the com-pany-wide rules of good manufacturingpractice (GMP) are complied with and theproduction process is orderly and safe.Fabrizio Mero also ensures that his col-leagues rotate tasks in the production

process to keep them motivated and pre-vent routine setting in. Occasionally, hehimself enjoys working on the machines,especially to solve problems. “Then,” hesays, “I can apply my professional experi-ence.” Fabrizio Mero acquired the otherqualities required by a superior, or “lead-ership skills”, as human resources man-agers like to describe them, in continuededucation courses. “I enjoy meeting newchallenges, and being a shift managermeans being confronted with a new chal-lenge every day.” He is not a man of bigwords – for him, deeds count. Hisachievements fill him with pride. Andwhen he looks into the future, he hopesfor more exciting challenges. This ambi-tion shows two things: someone like Fab-rizio Mero wants to advance professional-ly. And he is a production man. He feelshappy here, in close proximity to the pro-duction plant.

Knowing what figures stand forFrom production back to administra-

tion. She is young, communicative and –in an appealing way – self-assured. “Logicis my strength”, says Marianne Oberli, “I want to know what figures stand for.”Curiosity, coupled with a degree in busi-ness administration, has spurred on hercareer. A few months ago, MarianneOberli was appointed head CorporateAccounting. The job is an Eldorado forsomeone who enjoys interpreting sumsand numbers. Everything connected withfigures passes her desk: consolidation ofsubsidiaries, tax issues, earnings state-ments, the drawing up of financial state-


ments, share-based payments, outsourc-ing. “It’s an incredible range”, she says,“and that is what fascinates me.” Like adetective, Marianne Oberli gathers figuresto interpret them with a mercurial mindand cool logic. The finishing touchescome when she has completed putting

together all the parts: the entire set offigures is then transferred into so-calledIFRS (International Financial Reportingstandards). “My Bible,” she says, “theseaccounting standards require the highestpossible transparency, which is a chal-lenge to every controller.” Figures don’tlie. Until they all correspond to IFRS stan-

dards, extensive discussions are necessarywith the CFO, controllers and account-ants. It doesn’t take a great deal of imagi-nation to understand that in professionaldiscussions this woman is on the samewavelength as her counterparts. It seemsthat Marianne Oberli knows the laws oflogics but also trusts her common sense.

Next to the younger Siegfried emplo -yees there are ones that have served thecompany for many years, in fact, emplo -yees who have worked their entire pro-fessional life for Siegfried. Not becausethey were not promoted or were ignored,but professionals who have continued todevelop their skills across their workinglife. That is why they represent profes-sionalism at the highest level. Beat Bucheris one of them. “I’m a special case”, hesays with tongue in cheek. One thing isfor sure: Beat Bucher joined Siegfried33 years ago, was promoted laboratorymanager, project manager and finally

These accounting standards require the highest possible transparency‘ ’


head Analytical Development Drug Prod-ucts. He is responsible for twelve employ-ees in his team. Together with this dozenco-workers he develops analysis regula-tions; carries out stability analyses toensure that active ingredients do notdevelop decomposition products thatcould cause problems in the approvalprocess; provides support for new phar-maceutical developments; manages ownprojects; and he writes project plans, sta-bility reports and analysis reports for inter-nal and external developers. “Always

analysis, always chemistry”, is his com-ment on the work he performed the lastthree decades. And while he says it, laughlines form on his face. When asked aboutwhat has changed most in this long peri-od of time, Beat Bucher replies: “Regula-tions and controls have definitelyincreased worldwide. What has remainedis the creativity that characterizes thisjob.” What he doesn’t say, but probablythinks, is that human creativity is alwaysat the beginning of every new activeingredient intended for a new drug.Human creativity cannot be defeated byany regulation or control. That is probablythe reason why Beat Bucher remains fas-cinated by his profession.

Profound knowledge of export regulations

Active ingredients unfold their effectonly when the end product reaches thecustomer. Employees in Siegfried’s Cus-tomer Service department, such asSusanne Bertschinger, ensure that theproduct is correctly shipped. Susannejoined Siegfried ten years ago; in this timeshe worked her way up from clericalassistant to export specialist with Swissfederal certificate. When she talks abouther work, she uses chosen, precise lan-guage. Precision is an important require-ment for Susanne Bertschinger’s currentwork. She works in Customer ServiceDrug Products, a department responsiblefor a range of tasks starting with orderconfirmation by customers, invoicing andfinally preparing finished products forshipping. This implies that Quality Assur-ance has released the product and thenecessary packaging is available beforeexport documents are completed and theproduct shipped to the customer. “All ofthis requires profound knowledge ofexport regulations and of a sometimescomplex delivery chain”, says SusanneBertschinger, “and a good workingknowledge of SAP software is required.”And so is a good knowledge of valueadded tax. Siegfried is registered with anEU vat number in several European Unioncountries, and when products cross sever-al frontiers the procedure can becomevery complicated for Customer Service.These are challenges that SusanneBertschinger thrives on. For instance, whenpatent protection of a primary drug has

Human creativity is at the beginning of every chemical reaction‘ ’


expired and the follow-up generic productis to be delivered the following day. Then,all cogs in the machinery have to worktogether. “Otherwise”, says SusanneBertschinger, “business will suffer.”


Protection of our environment


Siegfried’s contribution to a world worth living in

These two men aren’t big talkers. Theirworld consists of things scientific: factsand environmental protection. WalterFiechter is head Safety, Health, Environ-ment at Siegfried headquarters in Zofin-gen. His colleague, Hans-Rudolf Ruchti, isresponsible for environmental protectionand industrial hygiene. It’s a wide fieldthese two chemists are responsible for:waste air, waste water, waste and pollut-ed sites.

Waste airHarmful substances in the air current

are measured. The resulting data formthe basis for action. Substances not per-mitted in waste air are filtered out asclose to their source as possible. Materialsthat cannot be eliminated are collected ina site-wide piping system connected withthe thermal waste air purification plant inoperation since the 1990s.

Waste waterSiegfried introduced a waste-water lab-

oratory in 1979. Here, waste-water sam-ples from various production processesare controlled in a simulated purificationplant for biological degradability. Shoulda waste-water sample not comply withrequirements, a suitable treatmentmethod at source will be considered. Thewaste-water laboratory carries out a con-trol function. On a daily basis, samplesfrom different waste-water effluents aretaken, analyzed and assessed for compli-ance with legal limit values.

Pollution sites Official regulations govern the handling

of contaminated areas. Certain parts ofthe factory site are considered polluted. Inorder to control the spread of ground pol-lution, groundwater is periodically con-trolled in accordance with a monitoringprogram. So far, samples taken have not


shown any reason for concern. However,any new construction activity on the sitewill require radical decontamination.

Waste Substances considered to be hazardous

waste are given special attention. Wastesolvents, for instance, are distilled and, ifpossible, recycled. As a result, some 40%can be re-used in the production process.The remainder is used as waste-derivedfuel for power generation. This process isprecisely defined and regulated. “Newproduction processes with new sub-stances are challenging”, says WalterFiechter. In such a case, the specialistslook for possible ways of disposal as earlyas in the pre-production process – whenthe laboratory produces small trial quanti-ties of a new pharmaceutical ingredient.The aim is to control the process of wastedisposal in detail before the start of serialand mass production.

New production processes with new substances are the real challenge‘ ’


Quality is an attitude


Our contribution toward drug safety

At four in the morning, when theworld is fast asleep, David Pulham hitsthe road jogging his customary five kilo-meters. At 6 a.m. he opens the door tohis office in Pennsville, New Jersey, whichhe usually locks at around 5 p.m. Thisman is used to making the most of hisday; after all, he holds a key positionwithin the Siegfried Group. David is Direc-tor Compliance, Siegfried (USA), Corpo-rate Counsel Compliance/Regulatory, anda member of the Corporate ComplianceCommittee. This committee assesses thecompliance posture of the Group andtakes relevant decisions. At Siegfried,quality is an attitude. Accordingly, compli-ance is stressed at all levels throughoutthe organization at all sites. Much of thisis connected with David’s career. He hasworked in the field of quality and regula-tory affairs in the global pharmaceuticalindustry, and in this regard there is proba-bly not much he has not been confronted


with. For 27 years he was an investigatorwith the US Food and Drug Administra-tion (FDA), which is responsible for theoversight of drugs in the United States.This powerful government agency reportsto the Department of Health and HumanServices in the US and performs inspec-tions of pharmaceutical companies world-wide. The last 15 years of David’s FDAcareer, he was one of six National ExpertInvestigators out of the more than 1,000investigators world-wide. During his timewith FDA, David inspected Siegfried’shead office in Zofingen twice. After leav-

ing FDA, David was a pharmaceuticalconsultant for two years, assisting com-panies to comply with FDA rules and reg-ulations.

A distinctive compliance cultureEleven years ago, David joined

Siegfried, a company he knew well fromhis FDA inspections. David remembersclearly why he accepted the position withthis reputable Swiss company. On the onehand, in addition to working in FDA andpharmaceutical consulting, he wanted togain experience in the industry. It is no

A comprehensive management system for quality‘ ’


coincidence that this should be withSiegfried. According to David, “Siegfriedimpressed me very much, especially thepeople I worked with during my inspec-tions.” In addition, he was particularly

impressed with Bernard A. Siegfried,grandson of the company founder andchairman of the company at that time,and now its honorary chairman. “An truly

remarkable person”, says David, thusconvincing him to join the company.

Work at Siegfried was cut out for himand waiting. At the end of the 1990s,Siegfried had introduced a distinctivecompliance culture that is now beingexpanded under David’s guidance. It is tobe transferred into a comprehensive man-agement system for quality applying tothe entire value-added chain. “The idea isto implement the same high quality stan-dards consistently and at every point ofproduction in all of the Group’s locationsworldwide”, says David, “thereby creat-ing a uniform compliance community.”

Quality conforms to very high standards

In taking stock of his work at Siegfriedand of his contribution to the company,

I have never seen a company with such an outstanding compliance record‘ ’


David can be proud of what he hasachieved. While in the past eight yearsFDA inspectors have performed thirteeninspections of Siegfried sites to check onproduction and processes from a compli-ance perspective, the results have alwaysbeen “No findings”, in other words, nonegative observations. Similar results arereported for the more than 60 audits peryear of Siegfried made by its customers.“Safety and quality across the entire sup-ply, production and added-value chain,therefore, conform to very high stan-dards”, says David. “In my 40 years incompliance, I have rarely seen a companywith such an outstanding compliancerecord.” The Director of Complianceemploys a beautiful metaphor when con-sidering why this is the case at Siegfried.Imagine the reverse side of a mirror with

the following question on it: “Who isresponsible for compliance?” In lookingfor an answer, the person concerned willinstinctively turn over the mirror and seeonly one thing: his own face!

Corporate Governance

Regarding corporate governance, the SiegfriedGroup is fully committed to stable and long-termrelationships with all shareholders and stakeholdersand to provide the necessary transparency.

Corporate governance at Siegfried is based onthe guidelines of the Swiss Code of Obligations(OR / Art. 663bbis and Art. 663c), rules and infor-mation about corporate governance of the SwissExchange (SIX) and the “Swiss Code of Best Prac-tice for Corporate Governance.” Compensation forthe Board of Directors and Executive Managementis reported in a separate compensation report onpage 64.

In accordance with the Transparency law (Art.663bbis and Art. 663c of the Swiss Code of Obliga-tions) compensation and stock ownership by themembers of the Board of Directors and ExecutiveManagement are also disclosed in the notes of thestatutory financial statements of Siegfried HoldingAG.


General Framework

1.1 Management structure of the Siegfried Group

1 Structure of the Siegfried Group


Board of Directors

Gilbert Achermann

Chairman of the Board of Directors

Dr. Rudolf Hanko*

Chief Executive Officer

Finance

Michael Hüsler*Chief Financial Officer

Corporate Compliance

David PulhamCorporate Counsel

Compliance/Regulatory

Research & Development

Dr. Wolfgang Wienand*Head Research & Develop-

ment,Head Strategy and M & A

Business Development & Sales

Marianne Späne*Head Business

Development & Sales

Technical Operations

Dr. Walter Kittl*Head Technical

Operations

Human Resources

Arnoud Middel*Head Human Resources

Global

Corporate Center

Peter Gehler*Head Corporate Center,

Secretary to the BoD

* Member of the Excecutive Management


1.2 Participation structure of Siegfried Holding AG

Currency Share Capital in LC Participation Comments

1. SwitzerlandSiegfried Ltd, Zofingen CHF 20 000 000 100.00%Siegfried International AG, Zofingen CHF 2 000 000 100.00%Siegfried Finance AG, Zofingen CHF 14 000 000 100.00%Sigamed AG, Zug CHF 500 000 100.00%

2. EuropeSiegfried GmbH, Munich EUR 25 000 100.00%Siegfried Malta Ltd., Valletta EUR 100 000 100.00%Siefried Deutschland Holding GmbH,Loerrach EUR 1 790 000 100.00%

3. North and Central AmericaSiegfried (USA), Inc., Pennsville USD 500 000 100.00%Penick Holding Company, Pennsville USD 2 100.00%Penick Corporation, Pennsville USD – 100.00%

4. AsiaListed on TaiwanStock Exchange

SCI Pharmatech Inc., Taiwan TWD 491 662 690 15.64% Code 4119Alpine Dragon Pharmaceuticals Ltd.,Huangyang, Gansu Province, China CNY 10 542 708 49.00%Siegfried Hong Kong Ltd. HKD 1 100.00%

1.3 ShareholdersMajor shareholders

The shareholders listed in the following tablehave reported holdings of 3% or more of the vot-ing rights of Siegfried Holding AG as of Decem-ber 31, 2011, based on the reports according toArticle 20 of the Swiss Federal Act on Stockbroking

and Securities Trading, and Article 9ff of the by-laws of the Federal Stock Exchanges and SecuritiesTrading regulators (BEHV-FINMA), and/or theSiegfried Holding AG share registry. In addition, theholdings of the Board of Directors and of theGroup Management are shown.


Conversion rightsNumber Participation Number (number of Participation Participation

of shares in % of shares underlying in % in %as of 31.12.2011 as of 31.12.2011 as of 31.12.2010 voting rights)1 as of 31.12.20102 as of 31.12.20103

With holdings over 3%Rainer Marc Frey, Freienbach 459 2354 12.094 379 5005 2 8605 13.665 12.95Tweedy Browne Company LLC (TBC LLC),New York, USA 374 7678 9.868 269 5319 92 4609 12.939 9.20SE Swiss Equities AG, Zurich 313 8506 8.266 343 0007 122 5007 16.637 11.71Kreissparkasse Biberach, Biberach, Germany(Bayerninvest Kapitalgesellschaft mbH, Münchenand LBBW Asset Management Investment GmbH,Stuttgart.) 128 16810 3.37 106 10610 3.7910 3.62Thomas Schmidheiny (BIH SA, Neuchâtel) <3% <3% 75 00011 40 00011 4.1111 2.56Total 1 276 020 33.58 1 173 137 257 820 – 40.04

Board of Directors and Group ManagementBoard of Directors, non-executive 41 135 1.08 31 289 1 740 – 1.07Executive Management 34 225 0.90 28 659 1 460 – 0.98Total 75 360 1.98 59 948 3 200 – 2.05

OthersPublic Shareholders 2 265 945 59.63 1 585 342 609 570 – 54.12Shares held by Siegfried Group 182 67512 4.8112 110 98313 —13 – 3.79Total 2 448 620 64.44 1 696 325 609 570 – 57.91Grand total 3 800 000 100.00 2 929 410 870 590 – 100.00

1 From mandatory convertible notes (see Section 2.5).2 Reported acquisition postions, including reported conversion rights, on the

basis of the share capital registred in the commercial register on the dateof the notification.

3 Shares only (not including conversion rights), on the basis of the issuedshare capital of 5’858’820 (2’929’410 registered shares with a nominalvalue of CHF 2 each) as of December 31, 2010.

4 According to share register of Siegfried Holding AG. According tonotification of May 27, 2011 Rainer Marc Frey reported holdings of12.63%, and Mai 12, 2011 of 16.12%. The notification of May 27 wasnecessary because, in the meantime, Siegfried Holding AG had adjustedthe company’s stock capital as recorded in the commercial registry.

5 According to notification of April 28, 2010.6 According to notification of June 15, 2011. According to a separat

notification, the acquisition group consisting of SE Swiss Equities AG andFrederike Knapp-Voith was dissolved. On May 12, 2011, this groupreported holdings of 13.88%.

7 According to notification of April 22, 2010. According to this notification,SE Swiss Equities AG and Frederike Knapp-Voith created an acquisitiongroup, which was dissolved (according to notification of June 15, 2011).

8 According to notification of May 27, 2011. Tweedy Browne company LLCreported holdings of 12.79% on May 13, 2011. The notification of May27 was necessary because, in the meantime, Siegfried Holding AG hadadjusted the company’s stock capital as recorded in the commercialregistry.

9 According to a notification of April 30, 2010.10 According to share register of Siegfried Holding AG. The holdings of

December 31, 2010, draws upon notification of October 3, 2009. There have not been notifications in the years 2010 and 2011.

11 According to notification from April 24, 2010. According to notificationfrom May 27, 2011, Thomas Schmidheiny (BIH SA) went below the 3%hurdle. He reported holdings of 3.47% on May 12, 2011. The notificationof May 27 was necessary because, in the meantime, Siegfried Holding AGhad adjusted the company’s stock capital as recorded in the commercialregistry.

12 As per December 31, 2011. On May 11, 2011 Siegfried Holding AGreported holdings of 4.04% and the break-up of all sales positions (due toconversion of the mandatory convertible notes; see Corporate vernance,Section 2.5). On June 15, 2011 Siegfried Holding AG reported falling belowthe 3% threshold, on August 17, 2011 holdings of 3.07% were reported.

13 As per December 31, 2010.

As of December 31, 2011, 2,204 shareholderswere registered in the Siegfried Holding AG share

registry, holding 75.0% of the total share capital.The share holdings include:


Number of shareholders Shareholders % Shares %

1–10 266 12.07 1 656 0.0611–100 942 42.74 52 299 1.84101–1000 802 36.39 267 516 9.381001–10000 158 7.17 487 689 17.1110001–100000 32 1.45 918 557 32.22100001–1000000 4 0.18 1 122 992 39.39

2 204 100.00 2 850 709 100.00

Treasury shares and non-registered shares n.a. n.a. 949 291 n.a.Total shares 3 800 000

Major shareholders as of December 31, 2011divided into segments Shareholders Shares %

Important shareholders (over 3%) 4 1 276 020 33.58Private individuals 2 020 746 459 19.64Institutional shareholders 180 828 212 21.80Treasury shares and non-registered shares n.a. 949 309 24.98

n.a. 3 800 000 100.00

The equity holdings by segment as ofDecember 31, 2011 include:

1.4 CrossholdingsThe Siegfried Group has not entered into any

crossholdings with other companies involving capital or voting.

2.1 CapitalThe share capital of Siegfried Holding AG

recorded in the commercial registry is CHF7,600,000 (as of December 31, 2011) and is divid-ed into 3,800,000 fully paid-up nominal shareswith a par value of CHF 2 per share. Each nominalshare authorizes the holder to exercise one vote atthe General Meeting, and is allotted an annual div-idend (depending on the Board of Directors resolu-tion). There are no priority claims.

The Siegfried Holding AG statutes make provi-sion for authorized capital (see section 2.2).

2.2 Authorized capitalThe Siegfried Holding AG General Meeting of

Shareholders, held on April 14, 2010, approved anamendment to create authorized capital of CHF2.8 million, divided into 1.4 million shares (par val-ue: CHF 2 per share). Of these, 1,000,000 nominalshares (par value: CHF 2 per share) were distrib-uted by December 31, 2011, leaving a remainderof CHF 800,000 in authorized capital, divided into400,000 nominal shares (par value: CHF 2 pershare).

Of the original 1.4 million nominal shares origi-nating from authorized capital, 1,050,000 nominalshares were created for discretionary use or formandatory exchanges of conversion rights oroption privileges in connection with bond/debtsecurities or other financial market instrumentsissued by Siegfried Holding AG or an affiliatedcompany. Holders of conversion rights or optionprivileges may acquire new shares; purchase bystockholders is not allowed. The Board of Directorssets the conditions for the conversion and/oroption conditions, and is also authorized to limit oreliminate stockholders’ primary subscription rightswhen issuing bonds, debt securities or other finan-cial instruments that are combined with conversionrights and option privileges – if the subscription isintended for financing (or refinancing) of acquisi-tions, corporate divisions or new investmentsand/or the emission takes place in national or inter-national capital markets. If the Board decides toneither directly or indirectly allow primary subscrip-tion rights, (i) bond/debt securities, other financial

instruments and new shares are to be issued atnormal market conditions and (ii) conversion andoption rights may be exercised up to seven yearsafter the emission date. The purchase of sharesthrough conversion or option rights, including anysubsequent transfer of shares, is subject to therestrictions listed under Article 5 in the statutes(see Section 2.4). All of the 1,050,000 nominalshares (based on authorized capital) describedabove were used to secure the mandatory convert-ible notes (see Section 2.5); of these, 1,000,000shares were issued due to conversions of mandato-ry convertible notes into shares (see Section 2.5).

Of the original 1.4 million nominal shares basedon authorized capital, 350,000 shares were createdfor distribution to members of the Board, Groupand subsidiary company employees. Companyshareholders are excluded from any primary sub-scription or purchase rights. Any allotment ofshares or related purchase rights to members ofthe Board and/or employees (of the Group or sub-sidiary companies) follow the regulation(s) set bythe Board and take performance, function, respon-sibilities and productivity criteria into account.Shares or purchase rights issued to members of theBoard and/or employees (of the Group or sub-sidiary companies) can be issued at a price lowerthan the current stock market valuation. Acquisi-tion of shares as part of the employee stock optionplan and any subsequent transfers of shares followthe restrictions described in Article 5 of thestatutes (see Section 2.4); the 350,000 nominalshares of authorized capital described thereinsecure in particular the employee stock option planand equity ownership plan offered to members ofthe Board, Executive Management and Manage-ment (see Section 5.2), and if need be, to othershareholding plans for members of the Boardand/or employees (of the Group or subsidiary com-panies). As of January 1, 2012, equity ownershipplan (EOP 2012) was offered to level 3 and 4 Man-agement.

2.3 Changes in capitalIn 2011, authorized capital was used to issue

870,590 nominal shares with a par value of CHF 2


2 Capital Structure

per share, leaving CHF 800,000 in authorized capi-tal, divided into 400,000 nominal shares with a parvalue of CHF 2 per share. As of December 31,2011, the actual Siegfried Holding AG share capitalamount distributed was CHF 7,600,000, dividedinto 3,800,000 fully paid nominal shares with a parvalue of CHF 2 per share (see Section 2.1). Thecapital increases based on authorized capital enact-ed in 2010 and 2011 were confirmed with a revi-sion of the statutes on March 9, 2011 and May 18,2011 and also recorded in the commercial registry.

In 2010, 129,410 nominal shares with a par val-ue of CHF 2 per share were issued out of author-ized capital confirmed by revisions in the statutesin the same year (see Section 2.2). As of December31, 2010, authorized capital of CHF 2,541,180remained, divided into 1,270,590 nominal shareswith a par value of CHF 2 per share. As of Decem-ber 31, 2010, the actually distributed share capitalwas CHF 5,858,820, divided into 2,929,410 fullypaid nominal shares with a par value of CHF 2 pershare.

There were no changes in capital in 2009.

2.4 Limitations on transferability and registration

Only persons entered in the share registry canexercise the right to vote and related privileges.Registration is subject to the following statutoryrestrictions:– Registration requests are considered granted if

the company has not denied them within 20 days after receipt.

– Petitioners must declare in writing that theyhave acquired the shares in their own name andaccount.

– The statutes do not allow any special conditionsfor nominee registrations.

2.5 Mandatory convertible notesOn May 5, 2010, Siegfried Holding AG issued

5% mandatory convertible notes in the amount of

CHF 80 million, with each note valued at CHF 800.The primary subscription rights of current share-holders were largely granted. The notes were dis-tributed at 100% of the issue price. The mandato-ry convertible note had a 5% p.a. coupon with acontract period of one year. The notes were con-verted into nominal shares of Siegfried Holding AGon the designated maturity date (May 5, 2011) at aconversion price of CHF 80. The conversion ratiowas CHF 800/conversion price, converting themandatory convertible notes into 1 million nominalshares of Siegfried Holding AG. The mandatoryconvertible notes were underwritten by 1,050,000nominal shares from the authorized capital ofSiegfried Holding AG (see Section 2.2). Up to theconversion date, the mandatory convertible noteswere reported as borrowed capital. At the time ofconversion, an amount equal to the par value of anominal share of Siegfried Holding AG was allocat-ed to share capital and the surplus amount (minusinterest payments) to the reserve of cash contribu-tions.


The Board of Directors of Siegfried Holding AGcomprises seven persons. During the three yearsprevious to 2011, none of the members of theBoard held an Executive Management positionwithin the Siegfried Group or a Siegfried Groupcompany, nor have they had a significant business

3.1 Members of the Board of Directors

Name Year of birth Position Entry Elected until

Gilbert Achermann 1964 Chairman, non-executive 2011 2012Dr. Thomas Staehelin 1947 Vice-Chairman, non-executive 1991 2012Dr. Andreas Casutt 1963 Member, non-executive 2010 2013Reto A. Garzetti 1960 Member, non-executive 2011 2012Dr. Beat In-Albon 1952 Member, non-executive 2011 2012Dr. Felix K. Meyer 1953 Member, non-executive 2006 2012Dr. Thomas Villiger 1951 Member, non-executive 2011 2012

Honorary ChairmanDr. Bernard A. Siegfried 1934

Secretary

Peter A. Gehler 1958 Secretary to the Board of Directors 2000


3 Board of Directors

relationship with Siegfried Holding AG or theSiegfried Group.

The following table gives information about thename, position, age and date of entry and durationof term in office of the members of the Board ofDirectors:

3.2 Profiles

Gilbert AchermannChairman

Gilbert Achermann (1964) joined the Board ofSiegfried Holding AG in 2011 as Chairman. He is amember of the Board of Directors of the Strau-mann Holding AG, since 2009, and Chairman sinceApril 2010. He began as CFO of the StraumannGroup in 1998 and took over as CEO in 2002, aposition he maintained until March 2010. Previous-ly, he worked for UBS for 13 years in investmentbanking.

Gilbert Achermann holds an MBA from the IMDLausanne (Switzerland) and a business economicsdegree from the University for Applied Sciences ofSt. Gall (Switzerland).

He also serves on the Board as Vice-Chairman ofthe Moser Group AG and was recently nominatedfor a position on the Board of Bank Julius Bär AG.He is on the Foundation Board of the InternationalTeam for Implantology (ITI), an independent aca-demic network, and a member of the Board forInternational Cooperation of Canton Basel-City.

Gilbert Achermann is a Swiss citizen.

Dr. Thomas StaehelinVice-Chairman

Thomas Staehelin (1947) was appointed Vice-Chairman of Siegfried Holding AG in 1999; previ-ously he served as Chairman of the Board from1991-1998. Thomas Staehelin is a partner atFROMER Law & Notary, a law firm in Basel. As alawyer, he specializes in tax, corporate, and con-tract law.

Thomas Staehelin completed his studies injurisprudence at the University of Basel (Switzer-land), where he also completed his Ph.D.

Thomas Staehelin is chairman of the BaselChambers of Commerce and a Board member ofthe “economiesuisse” Swiss business federation.He is the Chairman of the Board of the Associationof Private Joint Stock Companies and a member ofthe Expert Committee on Financial Reporting(SWISS GAAP FER). Thomas Staehelin serves asChairman on the Boards of Directors of the follow-ing companies: Swissport International AG, KühneHolding AG, Lantal Textiles and Scobag PrivateBank AG, and as Board member of Kühne & NagelInternational AG and Inficon Holding AG. In a fewof these companies he also chairs the AuditingCommittee.

Thomas Staehelin is a Swiss citizen.


Dr. Andreas CasuttMember

Andreas Casutt (1963) joined the Board ofSiegfried Holding AG in 2010. A partner of theNiederer Kraft & Frey law firm in Zurich since 2002,Andreas Casutt specializes in corporate law, con-tract law, mergers & acquisitions and stockexchange law. In addition, he is a Board memberof various privately held companies. AndreasCasutt studied in Zurich (Switzerland) and absolvedan LL.M. program at the University of Michigan,Ann Arbor (U.S.A.).

Andreas Casutt is a Swiss citizen.

Reto A. GarzettiMember

Reto Garzetti (1960) joined the Board ofSiegfried Holding AG in 2011. He is a partner andVice-Chairman of the Board of SE Swiss EquitiesAG, an investment consulting firm. He is also onthe Boards of Southeastern Technologies Inc. andSetech Inc. (both USA), and AGI AG and MeiliPeter Architects AG (both Switzerland) and otherprivately held companies.

Reto Garzetti studied business administration atthe University of Zurich (Switzerland) with a majorin banking/business & securities law, graduatingwith the equivalent of a Master’s degree in 1986.

Reto Garzetti is a Swiss and Italian citizen.


Dr. Beat In-AlbonMember

Dr. Beat In-Albon (1952) was elected to theBoard of Siegfried Holding AG in 2011. He was amember of Executive Management at the SGSGroup in Geneva, Switzerland from 2007 until Jan-uary 2012 and was responsible for the IndustrialServices department. During the previous 20 yearshe worked for the Lonza Group, lastly as a mem-ber of Executive Management and Head of theOrganic Fine & Performance Chemicals Division.Since February 2012 he is an independent Corpo-rate Consultant.

He completed his studies in 1983 at the Univer-sity of Fribourg (Switzerland) with a Ph.D. in eco-nomics.

Beat In-Albon is a Swiss citizen.

Dr. Felix K. MeyerMember

Felix K. Meyer (1953) joined the Board ofSiegfried Holding AG in 2006. He worked for Ciba-Geigy AG (later Ciba Specialty Chemicals) from1981-2004, and held various positions in Switzer-land and abroad, ultimately, as a Segment Manag-er and member of Executive Management. From2004-2010, Felix K. Meyer was CEO and advisoryBoard member at Baerlocher, a global specialtychemicals company with headquarters in Munich,Germany. During his career in the chemicals indus-try, he represented his employers in numerous jointventures in Europe, Asia and South America.

In 2010 he joined FKM Management ServicesGmbH as director (and partner), supporting clientsin the areas of strategy, international businessdevelopment and Management coaching.

He received his Ph.D. in chemical engineeringfrom the ETH Lausanne (Switzerland) and spent ayear in Stanford University (U.S.A.) as a post-doc-toral fellow.

Felix K. Meyer is a Swiss citizen.


Dr. Thomas VilligerMember

Thomas Villiger (1951) joined the Board ofSiegfried Holding AG in 2011 and has been a inde-pendent corporate consultant since 2010. From1986-2010, he worked for the Mepha Group, from1997 as CEO. In addition, he worked in variousfunctions for Sandoz in Basel (Switzerland) from1980-86, including two years in Japan. He is amember of the Board of Dolder AG, Reofin InvestAG and Sigvaris Holding AG.

He completed his studies with a Ph.D. in chemistry at the ETH Zurich (Switzerland) in 1979.

Thomas Villiger is a Swiss citizen.


3.3 Linking directorates3.3.1 Corporate linking directorates

Currently, there is no other mutual representa-tion between the Boards of Siegfried Holding AGand those of other listed companies.

3.3.2 Linking directorates within the BoardAll directorates of the members of the Board of

Siegfried Holding AG in other listed companies aredescribed under Section 3.2 “Profiles”.

3.4 Election and terms in officeThe Board of Directors of Siegfried Holding AG

is elected by the General Meeting of Shareholdersand subsequently constitutes itself. Members ofthe Board are elected in a staggered sequence.A resolution passed at the General Meeting ofMay 24, 2011 reduced terms for Board membersto a single year, which does not apply to previouslyappointed Board members serving out their terms.Reelection is allowed. Regulations specify thatmembers must retire from the Board at the General Meeting of Shareholders following their68th birthday. A special ruling can be made for theChairman or the Honorary Chairman.

3.5 Internal organizationThe Board of Directors is responsible for supervi-

sion of the Group and Divisions. The Board deter-mines Group strategy, the allocation of resourcesand the Management structure of the Group. It isalso responsible for setting the organizational

structure, accounting, financial control, and finan-cial planning. To the extent it does not exercisethese duties itself or delegate them to the Chair-man of the Board of Directors, the Board delegatesmanagement of the business to the CEO of theSiegfried Group.

Decisions are made by the entire Board of Direc-tors. Three Committees assist them:– Audit Committee– Human Resources Committee– Strategy Committee

The responsibilities and competencies of theCommittees are set forth on page 52 in the appen-dix of the Siegfried Group company regulations.

The committees of the Board of Directors evalu-ate important issues prior to Board meetings. TheChairman of the Board, the CEO and CFO, theresponsible Executive Management members andthe Secretary to the Board attend these meetings.The Committee submits recommendations on thepending issues to the Board.

During the business year, the Board of Directorsmet for six meetings, a strategy seminar and a spe-cial meeting. In addition, numerous teleconfer-ences were held. A majority of the Board wasalways present.

During the year, the Audit Committee met fourtimes, the HR Committee twice, and the StrategyCommittee four times. The following overviewshows the composition of the Board Committees:


Committee Chair Members

Audit Thomas Staehelin Reto Garzetti, Thomas VilligerHuman Resources Gilbert Achermann Andreas Casutt, Felix K. MeyerStrategy Thomas Villiger Beat In-Albon, Felix K. Meyer


3.6 Executive Management information and control instruments

Information is based on monthly reporting thatis structured as follows: revenues and companyearnings for the Group are presented in detail andcompared with the budget and the previous year’sresults – including a financial forecast for the entireyear. Quarterly comments focus on any deviationsfrom plan, important business incidents, and keyperformance indicators. A five-year plan is outlinedas part of the mid-term outlook.

The IKS internal control system and risk Man-agement (described in detail on pages 20-26 of theFinancial Statements) are additional aspects of theinformation and control instruments.

The results are discussed and evaluated with theCEO and CFO at the Board of Directors meetings.

Excerpt from the company regulations of the Siegfried Group

3.3.3 Committees appointed by the Board of DirectorsThe Board of Directors may appoint committees, at least for such top-ics as personnel (HR Committee), business development and strategy(Strategy Committee), and auditing and finance (Audit Committee).Such Committees do have a comprehensive right of information aswell as issuing recommendations to the Board of Directors but nopowers of decision (except SC HR: decisions on compensation for theCEO and Executive Management). They may request items to beincluded on the agenda at the next Board of Directors meeting, andreport on their activities at the Board meetings. As a rule, three mem-bers of the Board shall be included on a Committee, one of whomshall be Chairperson. The Committees meet as often as is necessary,at least, however, twice a year.

The issues to be covered include:

a)Human Resources: All human resources issues, in particularpersonnel policies and attractiveness as an employer, maintainingcompany know-how, training and continued education, all pensionplans and other social benefits.

Questions concerning nominations to the Board of Directors, BoardCommittees, CEO and CFO, Siegfried Group compensation policy,including compensation proposals for the Board of Directors asproposed to the Board.

Questions concerning bonus payments and stock option plans aswell as setting employment conditions and compensation for theCEO and members of Executive Management

b)Strategy: All questions concerning strategy, market and marketperformance, marketing, services products and pipelines, regionalpresence, M&A activities

c) Auditing/finances: All issues concerning accounting, external andinternal auditing, risk Management, budget, medium-term andlong-term planning, financial planning, legal.

The Chief Executive Officer (CEO) is responsiblefor managing the operations and performance ofthe Siegfried Group and business areas. Subject tothe competencies and instructions of the Board ofDirectors and/or the Chairman, the CEO reports tothe Board and is responsible for implementing and

achieving corporate objectives and for Manage-ment and control of the Group companies (respon-sibility for earnings and the balance sheet). Thepowers and tasks of the CEO are set forth in detailin the Siegfried Group company regulations.


4 Executive Management

4.1 Members of Executive Management

Name Year of birth Position Start In current position since

Dr. Rudolf Hanko 1955 Chief Executive Officer 2009 2009Peter A. Gehler 1958 Head Corporate Center 2000 2010Michael Hüsler 1972 Chief Financial Officer 2009 2009Arnoud M. Middel 1971 Head Human Resources 2011 2011Dr. Walter Kittl 1956 Head Technical Operations 2008 2011Marianne Späne 1962 Head Business Development & Sales 2004 2010

Head Research & Development,Dr. Wolfgang Wienand 1972 Head Strategy and M&A 2010 2010 / 2011

4.2 Management ContractsSiegfried Holding AG and the Group companies

have not concluded Management contracts withany third parties.

4.3 Profiles

Dr. Rudolf HankoCEO

Rudolf Hanko (1955) took over as CEO ofSiegfried in May 2009. Prior to Siegfried, heworked in the chemical-pharmaceutical industry invarious Management positions, at Evonik IndustriesAG (Germany) as Head of Custom Synthesis &Amino Acids. Rudolf Hanko also headed the phar-maceutical Division of Bayer AG as Head of Chemi-cal Research and as General Manager of the FineChemicals Division.

Rudolf Hanko received his Ph.D. in chemistryfrom the University of Goettingen (Germany) andcompleted post-doctoral studies at the Max PlanckInstitute (Germany).

Rudolf Hanko is a German citizen.

Peter A. GehlerHead Corporate Center and Secretary to the Board of Directors

Peter Gehler (1958) is Head Corporate Centersince 2010 and Secretary to the Board of Directorssince 2002. He is responsible for internal and exter-nal communications, facility management and theProject Management Office (PMO). He was a mar-keting and sales manager in the textile industry(1988-1992) and an independent consultant formarketing and communications from 1992 until1999 prior to joining Siegfried.

Peter Gehler graduated from the University forApplied Sciences, St Gall (Switzerland) with a busi-ness administration degree (major in marketing); in2006 he received his Master’s degree in economicsand marketing from the University of Basel(Switzerland). He is a member of the Board ofDirectors of the Aargau Chamber of Commerce &Industry (AIHK), and Chairman of the ZofingenRegional Chamber of Commerce & Industry (WRZ).Since 2008, he is also advisor to the Neue Aar-gauer Bank (NAB) and is involved in various charityorganizations in Canton Aargau.

Peter Gehler is a Swiss citizen.


Michael HueslerChief Financial Officer

Michael Huesler (1972) joined Siegfried as ChiefFinancial Officer in 2009. He completed his studiesin economics in 1997 at the University of Basel(Switzerland) and worked at PricewaterhouseC-oopers as an economic planner until 2000. From2000-2005 he was corporate controller and finally,Head of Corporate Controlling at Straumann Hold-ing AG. In addition, he completed his studies as aCertified IFRS Accountant in 2004. Michael Hueslerwas CFO and member of the Executive Manage-ment at Bachem Holding AG from 2005-2009.

Michael Huesler is a Swiss citizen.

Dr. Walter KittlHead Technical Operations

Walter Kittl (1956) took over as Head of Techni-cal Operations for Siegfried in May 2011 andappointed to the Executive Management. Prior toSiegfried, he worked at DSM Chemie Linz and at F.Hoffmann-La Roche, where he was Head of Chem-ical Production in Basel (Switzerland).

He studied at the University of Linz (Austria),where he graduated with a Ph.D. in chemistry.

Walter Kittl is an Austrian citizen.


Arnoud M. MiddelHead Human Resources

Arnoud Middel (1971) joined the SiegfriedGroup in September 2011 as Head of HumanResources. Previously, he worked for various com-panies in Human Resources, ultimately Head of HRSwitzerland and Global Headquarters for Syngentain Basel (Switzerland). He is a member of the advi-sory Board of the European Master in Strategic HRManagement (EMSHRM) at the Bocconi Universityin Milan (Italy).

Arnoud Middel completed his studies in biologyand biochemistry at the University of Basel(Switzerland).

Arnoud Middel is a Dutch citizen.

Marianne SpäneHead Business Development & Sales

Marianne Späne (1962) joined Siegfried in 2004and took over as Head of Business Development &Sales for the Siegfried Group in March 2010. Sheheaded the Siegfried Generics Division from 2008-2010 and was previously responsible for the Classi-cal Generics business unit. Between 2004 and Jan-uary 2008, Marianne Späne managed the BusinessDevelopment department and the Supply Chain forGenerics.

Prior to joining Siegfried, she worked in logis-tics, business development and as site manager forBoucheron, a cosmetics company. Later, sheswitched to the pharmaceutical industry and joinedthe Pharma Division of Schweizerhall as Head ofthe Sales and Marketing Department. Subsequent-ly, she joined Aceto, a U.S. company, where shedeveloped European expansion strategies. Mari-anne Späne holds degrees in finance, businessadministration and marketing from the Kaufmän-nische Führungsschule KFS in Basel and the Mar-keting & Business School in Zurich MBSZ (bothSwitzerland).

Marianne Späne is a German citizen.


Dr. Wolfgang WienandHead Research & Development and Head of Strategy and M&A

Wolfgang Wienand (1972) took over as Head ofR&D in August 2010 and was also appointed tothe new position of Head of Strategy and M&A inDecember 2011.

Previously in various managerial positions forEvonik Industries in Hanau and Munich (both Ger-many), Shanghai (China) and finally in Frankfurt(Germany), he focused on fine chemicals and con-tract synthesis for the pharmaceutical industry. Dur-ing this time, he was responsible for strategic andoperative development activities in the areas ofhomogenous and bio-catalysis.

He studied chemistry at the Friedrich-WilhelmsUniversity in Bonn (Germany) and graduated with aPh.D. in organic and bioorganic chemistry in 2002from the University of Cologne (Germany).

Wolfgang Wienand is a German citizen.



5.1 Contents and negotiation process for compensation and participation programs

See pages 64-67 of the Compensation Report.

5.2 Equity Ownership Plan (EOP) for the Board of Directors, Executive Management and Management

See pages 68-71 of the Compensation Reportand page 48-49 of the financial statements(appendix to the consolidated financial statementof the Siegfried Holding AG).

5.3 Compensation of the members of theBoard of Directors and Executive Management

See page 72 of the Compensation Report andpage 65-66 of the financial statements (appendixto the consolidated financial statement of theSiegfried Holding AG).

5.4 Allocation of shares during 2011As part of his compensation package, a mem-

ber of the Executive Management received 2,400shares of Siegfried Holding AG in 2011, with alock-up period of 3 years. No further SiegfriedHolding AG shares were allotted to any othermembers of the Board of Directors, Group Man-agement, or to persons associated with them dur-ing the 2011 business year.

Share allocations as part of the Equity Owner-ship Plan (EOP) are listed on pages 67-68 in theCompensation Report and on pages 72-75 of thefinancial statements (appendix to the consolidatedfinancial statement of the Siegfried Holding AG).

5.5 Share ownershipOwnership of shares by members of the Board

of Directors and Executive Management is listed onpage 75 of the compensation report, page 67 ofthe financial statements and in Section 1.3 of theCorporate Governance Report.

5.6 Additional fees and compensationNo members of the Board of Directors, Group

Management, or persons associated with themhave received any additional compensation fromeither Siegfried Holding AG or any Group compa-nies for additional services during the 2011 busi-ness year.

5.7 Loans to members of the Board of Directors, Executive Management and other persons

Members of the Board of Directors and Execu-tive Management and/or closely associated personsare/were not previously involved in any businessactivities beyond the normal activities of SiegfriedHolding AG or any Group companies, or in otherextraordinary business activities that are essentialto Siegfried Holding AG during 2011 or 2010.

As of December 31, 2011, Siegfried Holding AGand Group companies provided no guarantees,loans, advances or credits to members of the Boardor Executive Management, or to any person associ-ated with them.

5.8 Period of noticeThe period of notice for Executive Management

members of Siegfried Holding AG is six months.

5 Compensation, Investments and Loans

6 Shareholder Rights

6.3 Entry into the share register / invitation tothe General Meeting of April 20, 2012

The Board of Directors has set a deadline (Friday,April 13, 2012, 8:00 a.m.) to determine eligibilityof the shareholders and for participants to registerin the share registry. Admission tickets and votingmaterials can be ordered from Siegfried HoldingAG, Share Register, c/o Nimbus AG, Postfach, CH-8866 Ziegelbruecke (Switzerland) by April 16,2012. Upon receipt of the request, an admissionticket and the voting materials are sent to theshareholder. No entries will be made into the shareregistry from April 13, 2012, 8 a.m. until April 25,2012. Shareholders who sell their shares prior tothe General Meeting of Shareholders forfeit theirvoting rights.

The invitation to the General Meeting, the min-utes of the previous General Meeting, and the pro-posals of the Board of Directors can be viewed onthe website of Siegfried Holding AG(www.siegfried.ch).


6.1 Voting rights and proxyEach voting share registered at the General

Meeting of Shareholders of Siegfried Holding AG isaccorded one vote. Registered shareholders can berepresented by a legal representative or by anotherregistered shareholder, which requires a writtenpower of attorney.

Voting at the General Meeting of Shareholdersis decided by absolute majority of the shares voted.If no absolute majority is reached in the first roundof voting, a simple majority is decisive in the sec-ond round; a tie vote is decided by drawing lots.

At least a two-thirds majority of the shares vot-ed and an absolute majority of the representedshare value is required for decisions concerning:– Amendment of the corporate purpose– Introduction of voting shares– Amendment of the provisions concerning the

transfer of nominal shares– Conversion of nominal/registered shares into

bearer shares– An authorized or conditional increase in capital– An increase in capital from shareholder’s equity,

from a non-cash capital contribution or assetacquisition, or from the granting of specialprivileges

– Restriction or cancellation of stock options– Transfer of the company’s legal place of

business

6.2 Calling a General Meeting of Shareholdersand setting the agenda

The calling of a General Meeting of Sharehold-ers and setting of the agenda are subject to theapplicable legal regulations.

Shareholders with at least 250,000 shares withvoting rights, amounting to a total nominal valueof CHF 500,000 are authorized to propose agendaitems when submitted at least 45 days prior to theGeneral Meeting of Shareholders. Siegfried Hold-ing AG also inquires if these stockholders intend tosubmit any particular agenda items.


The EOP 2012, inaugurated on January 1, 2012for Management level 3 and 4 employees, foreseessimilar change of control clauses.

7 Control Changes and Defensive Measures

7.1 Compulsory biddingThere are no statutory regulations regarding

opting out or opting up (Art. 22 and 32 BEHG).

7.2 Change of control clausesThe Equity Option Plan (EOP) for the Board of

Directors, Executive Management and upper Man-agement (see Section 5.2) contains change of con-trol clauses that stipulate:– Distribution of the first or second portion of

leverage shares can be accelerated in the caseof an unfriendly public offer, if the party makingthe offer exceeds the marginal value limit asdefined by Article 32 of the Swiss Federal Acton Stockbroking and Securities Trading (BEHG).Distribution is carried out on the day the publicoffer becomes binding. A goal of 100% isassumed (using the multiplier 3 on a scale of 0-4.5) when calculating the number of leverageshare to be distributed. Immediately afterwards,the EOP is automatically liquidated (incl.possible blackout periods).

– In the case of an acquisition by the SiegfriedGroup, where a substantial part of the paymentis made in shares of the Siegfried Holding AGand the payee exceeds the marginal value limitas defined by Article 32 BEHG, the EOP shouldbe secured as far as possible. However, aprerequisite is that the strategic goals of theEOP remain unchanged. Any amendments bythe EOP administrator should be limited tochanges necessary because of applicable laws oradmission of new EOP participants.

– In other change of control cases, the EOPadministrator has the right to amend the planrequirements while securing, as far as possible,expectations of the plan participants and takinginto account the criteria defined by the EOP.

8 Auditors


8.1 Contract duration and lead auditor term length

Auditor for Siegfried Holding AG since 1920 isPricewaterhouseCoopers AG (PwC), Basel (or pred-ecessor organizations). The lead auditor, GerdTritscher, carried out the audits of both mandatesfor the second time in 2011. Election of the audi-tor is carried out annually by the General Meetingof Shareholders.

8.2 Audit fees PwC billed the Siegfried Group CHF 370,000 for

services in connection with auditing of the financialstatement of Siegfried Holding AG and of theGroup companies and the consolidated 2011financial statement of the Siegfried Group.

8.3 Additional feesFor tax consulting and other services during

2011, PwC billed the Siegfried Group CHF 205,000in additional fees. Further costs for tax consultingand other services by other auditors amounted toCHF 8,000.

8.4 Supervision and control instrumentsrelated to the audit

The Audit Committee of the Board evaluatesand discusses the performance, fees and independ-ence of the auditor every year. It reports to theBoard and proposes a motion at the General Meet-ing on the election (or re-election) of the auditorcompany and lead auditor. The contract is awardedbased on a budget presented to the Audit Com-mittee by the auditor company. There is an agree-ment with PwC that the lead auditor is regularlyrotated to ensure the necessary independence.

The auditor company regularly attends themeetings of the Audit Committee; there were fourmeetings in 2011. The auditor presents detailedauditing reports, which are also distributed to theBoard.

Assignments for PwC AG that go beyond theauditing mandate are subject to approval by theHead of the Audit Committee.


The Siegfried Group is committed to an openand consistent information policy. The media,financial analysts and other interest groups arecontinuously informed about important develop-ments and events. Shareholders are informed semi-annually on the state of the business and receivethe annual report and the semi-annual report uponrequest. The annual report, minutes of the previousGeneral Meeting, media releases, important infor-mation and the current share price can be found atwww.siegfried.ch. A news conference is heldannually for the media and financial analysts.

Siegfried Holding strictly observes the mandato-ry disclosure policies of the SIX Swiss Exchange (adhoc notification) regarding events that could affectthe stock price.

In 2012, the company will inform about thecourse of business as follows:– March 6, 2012: Publication of results for the

2011 business year at a media and analystconference in Zofingen (media) and Zurich(financial analysts)

– April 20, 2012: General Meeting ofShareholders

– August 30, 2012 (tentative): Publication ofsemi-annual results for 2012

9 Information Policy


Compensation report

Siegfried operates a compensation system,which is transparent, competitive and comprehen-sible. Both the fixed and variable compensationelements are geared to sustain added value andbusiness success. With the Equity Ownership Plan(EOP) Siegfried has created for management, Exec-utive Management and the Board of Directors aninstrument, which ensures for the long-term har-monization of the risks and interests of all stake-holders and contributes to an enduring perform-ance culture, to loyalty and to entrepreneurialthought and action.

1 IntroductionThis Compensation report describes the com-

pensation system, the general principles applied,the individual compensation elements and theresponsibilities in fixing the compensation ofemployees, management and the Board of Direc-tors. In addition the report contains detailed infor-mation about the compensation of the Board ofDirectors and the Executive Management of theSiegfried Group.

The Compensation report follows the require-ments of article 663bbis and article 663c of theSwiss Code of Obligations (CO), the guideline con-cerning information about Corporate Governanceof the SIX Swiss Exchange and the Swiss Code ofBest Practice for Corporate Governance.

In compliance with article 663bbis and article663c CO the compensation paid to the Board ofDirectors and the Executive Management and theshareholdings of members of the Board of Direc-tors and of the Executive Management are also dis-closed in the Compensation report on pages 72–74 and in the Notes to the audited financialstatements of Siegfried Holding AG on page 64.

2 Compensation systemCompensation principles

The Siegfried Group’s goal is to offer employeesat all grades a transparent, competitive perform-ance-related compensation system geared towardssustained added value.

The compensation system and the underlyingprinciples serve in particular to:– coordinate the interests of employees, Executive

Management, the Board of Directors, share -holders and other stakeholders

– to link compensation to sustained performanceand promote entrepreneurial action

– to recruit highly qualified, talented andsuccessful employees and to bind them to thecompany

– to reward individual loyalty and sustainedcontributions and excellence

The Siegfried compensation system links theperformance of the individual and the success ofthe company for the long-term. This link is one ofthe most important elements for a differentiatedassessment of the individual performances of allemployees and the leadership qualities of the man-agement. All employees, including managers, aretherefore covered by a formalized performanceassessment process. This process is based on clearguiding principles, which serve the purpose ofmatching individual goals, functional targets(departmental targets) and business targets, creat-ing performance incentives and promoting thedevelopment of the individual. For the manage-ment there also exists a Performance CommitmentPlan, in which the goals are divided into businesstargets and functional targets and individual tar-gets and, depending on the management grade,are differently weighted. The variable compensa-tion elements are impacted by the individual’sannual performance assessments

The annual base salary, the fixed element of theoverall compensation, is determined on the basisof individual professional experience and educationand competences. It is based on benchmarks foroverall compensation of similar positions in compa-

65Annual Report 2011

rable companies in the national market. Sex, originand similar criteria are not relevant.

The compensation of Executive Management isalso compared with the data of other relevant com-panies, which are specially chosen to create an opti-mal comparison basis of national and internationallabour markets that are relevant for Siegfried in thecompetition for qualified managers. Taking intoaccount these data, the company’s results and indi-vidual performance, the Human Resources Commit-tee of the Board of Directors (HR Committee) deter-mines the appropriate compensation framework forthe members of the Executive Management.

The compensation of the Board of Directors isfixed by the Board of Directors on a motion of theHR Committee. At the level of employees andmanagement the benchmark figures are gatheredand updated annually by our partner CEPEC. Atthe level of Executive Management and Board ofDirectors the compensation is reviewed from caseto case and as necessary.

Compensation structureThe compensation elements described in this

Compensation report concern primarily theemployees in Switzerland. In principle most of theelements are dealt with in a standard fashion at alllocations, but because of legal or regulatoryrequirements or because of different market condi-tions differences may arise.

Compensation componentsThree components are relevant for the Siegfried

Group’s total compensation approach: – fixed compensation – annual base salary– variable compensation – annual performance-

based bonus and long-term share ownershipprogrammes

– market-conform fringe benefits

An employee’s individual total compensationmix depends on the function, the job profile andthe location. The variable compensation sharedepends on the management level and the higherthe level, the greater it is. It is largest for the mem-bers of the Executive Management.

Fixed compensationThe fixed compensation is as a rule paid monthly

in cash as base salary and compensates theemployee for his expected contribution in a specificfunction. The amount of the base salary reflectsthe following factors:– Level and extent of responsibility – Skills, experience and performance of the

individual– Level or grade, to which the position is allocated– External market value of the position

The annual base salary also serves as the basisfor the variable compensation. In order to ensurethat they are appropriate, the annual base salariesare reviewed annually at 1 April; the review consid-ers factors, such as comparisons, market changes,economic and labour market considerations andthe performance assessment process.

Variable compensationThe variable compensation comprises the annu-

al performance-based bonus. It represents the vari-able part of the total compensation for the Execu-tive Management and the management. Thecontractually agreed bonus potential for the rele-vant management level is fixed as a percentage ofthe annual base salary and is reviewed periodically.

For the members of the Executive Managementand the employees in senior management, depend-ing on the management level, a larger or smallerpart of the annual performance-based bonus is paidin shares, subject to a restriction in period (seebelow Equity Ownership Plan). The intent of thisshare-based compensation is to motivate the Execu-tive Management and the senior management toloyal and entrepreneurial thought and sustainableaction. In this way the compensation of the deci-sion takers is linked to the interests of the share-holders and value created for the long-term.

With the performance-based bonus as a variablecompensation component the relevant employeescan participate in the success of the company andare also rewarded for their individual performance.In an annual process the specific financial targetsare set and approved by the HR Committee of the


Board of Directors. The business targets relevant forthe year under review (financial targets) are basedon the plan amounts for the Siegfried Group’s cor-responding year. As a rule they include measures,such as Enterprise Value, ROCE, EBITDA, Network-ing Capital in % of turnover, etc.

The sectoral measurement values (functional tar-gets) for the individual employees are formulatedby the competent member of the Executive Man-

agement, the individual targets by the immediatesupervisor in a performance dialogue. Dependingon the extent to which the functional and individ-ual targets are achieved, the performance-basedbonus actually paid varies between 0%–175%. I.e. the contractually defined bonus potential multi-plied by the three percentages of target achieve-ment relevant for the applicable year give thebonus actually payable for the relevant year.

Example for the calculation of the target achievement of a member of the middleManagement with a bonus potential of 10% of the annual base salary

Target category Weighting Achievement Target achievement

Business targets 30% 90% 27%Functional targets 40% 125% 50%Personal targets 30% 110% 33%Overall target achievement 110%Effective bonus: Bonus potential (10%) x Overall target achievement (110%) = Effective bonus 11%

The performance-based bonuses are paid out,only if the performance targets laid down – individ-ual, functional and business targets – have beenachieved. Depending on the applicable pro-grammes, as already mentioned, the performance-based bonus is paid in cash or shares. Details ofthe various ownership programmes are set out later in this Compensation report.

Fringe benefitsFringe benefits are chiefly retirement pensions

and insurance against disability, death and illness.They provide security for employees and their fami-lies in connection with retirement, illness, incapacityand death. The form and amount of such fringebenefits are governed by the circumstances, legis-lation and regulations specific to the location.


Compensation components / Compensation-mix

CEO andChairman and other members Upperother members of Executive to lowerof the board Management management Employees Description

Fixed compensation

Annual base salary/base fee Yes Yes Yes Yes Market conform compensation to recruitand retain highly qualified specialists –cash payment for all employees.For board members cash and shares

Variable compensation

Performance-based bonus No Yes Yes No Performance-based compensation forManagement and Executive Committein cash and/or in shares

Equity Ownership Plan Yes Yes Yes No Share ownership plan for board members,(Long term Incentive) Executive Management and management,

long-term and geared to sustainable businesssuccess

Employee Share Purchase Plan No No No Yes Instrument to promote identification with(ESPP) the company for purchase of shares at a 30%

discount. Participation possible for allemployees, who do not participate in the EOP.

Total compensation structure of the annual compensation of board members, Executive Management and management

OtherChairman and members of

other members Executive Upper Middle Lowerof the board CEO Management management management management

Fixed compensation (annual base salary) 100% 100% 100% 100% 100% 100%

Variable compensation(in % of annual base salary) 0% 40% 35% 20% 10% 5%

Of which dependent on business result 0% 50% 50% 40% 30% 20%

Of which dependent on individual target achievement 0% 50% 50% 60% 70% 80%

Fixed compensation satisfied in shares 80% 0% 0% 0% 0% 0%

Variable compensation satisfied in shares 0% 70% 70% 40% 30% 20%


Equity Ownership Plan (EOP) for the Board of Directors, Executive Management and Management

At the beginning of June 2010 the Equity Own-ership Plan 2010 or EOP 2010 was introduced forthe members of the Board of Directors, the Execu-tive Management and the senior management.The EOP was presented to the General Meeting ofSiegfried Holding AG on 24 May 2011 as part ofthe Compensation report in a consultative vote.The report was supported by an overwhelmingmajority of the General Meeting, with a Yes vote ofabout 97 per cent.

The aim of this long-term share-based compen-sation tool is to permit the members of the Boardof Directors, the Executive Management and thesenior management a greater participation inSiegfried Holding AG and to establish a linkbetween the total compensation and the perform-ance of Siegfried Holding AG. In this way the EOPmakes a direct contribution to strengthening entre-preneurial thought and action and thus to aligningthe contributions of the employees concernedmore closely with the interests of the shareholders.

The EOP 2010 requires of Directors, members ofExecutive Management and of managers con-cerned a substantial financial commitment, whichis provided out of private funds. If the objectivesrequired are not achieved, the plan involves per-sonal financial risk. The funds invested in the formof restricted shares are also not available to planparticipants for several years. In addition they bearthe Siegfried share price risk themselves. Followingthe core idea of harmonizing the risks and interestsbetween management and shareholders, on amotion of the Executive Management the Board ofDirectors decided to offer middle and lower man-agement the opportunity to participate in a similar-ly structured share ownership plan (Equity Owner-ship Plan 2012 or EOP 2012; together with EOP2010 referred to as EOP). In contrast to EOP 2010,participation at these two management levels isvoluntary.

EOP 2010 became effective on 1 June 2010 andEOP 2012 on 1 January 2012. The EOP will termi-nate in spring 2016 with the allocation of the final

tranche of Leverage Shares (see below) and withthe expiry of the last restricted in period in spring2019.

The EOP contains three components:– Initial Shares, which can be purchased with a

starting investment by the Director, the memberof Executive Management or the managementemployee.

– Bonus Shares, which result from the payment ofpart of the director’s fee or of the performance-based bonus of the member of ExecutiveManagement or of the management employeein restricted shares (that is Bonus Shares).

– Allocation of Leverage Shares in the years 2014and 2016, if specifically defined performancegoals are achieved in the years 2013 and 2015.

The three components of the EOP are linked toone another as follows: – Participation in the plan enables the purchase of

restricted Initial Shares.– With participation in the plan part of the annual

performance-based bonus is paid in restrictedBonus Shares.

– Leverage Shares are allocated to planparticipants, only if targets are achieved, and

– The number of Initial Shares and Bonus Sharespurchased and allocated determines in additionto the period of plan participation and achievingspecific goals the number of Leverage Sharesallocated.


In detail the EOP looks as follows:

Initial SharesOn joining the plan, a plan participant can pur-

chase Initial Shares up to a defined maximumamount. The purchase price per Initial Share isCHF 80. Every board member was able at the com-mencement of the plan to invest a defined maxi-mum amount of CHF 300 000, the members ofExecutive Management 40% to 100% of theirannual base salary. The senior management couldinvest at most 50%, the middle management atmost 25% and the junior management at most15% of their annual base salary in Initial Shares.Initial Shares are restricted for 4 years (EOP 2010)and 3 years (EOP 2012).

On joining after the corresponding EOP cameinto effect, the maximum investment in InitialShares is reduced. From 1 January 2013 (EOP2010) and from 1 July 2012 (EOP 2012) purchaseof Initial Shares is no longer possible.

Bonus ShareEvery board member is paid, for the years 2010

to 2014, 80% of the base fee in Bonus Shares. At the level of Executive Management for the years2010 to 2014, 70% of the effective annual per-formance-based bonus is paid in Bonus Shares, at the level of senior management 40%.

Plan participants in middle management are forthe years 2012 to 2015 paid 30% of the annualperformance-based bonus in Bonus Shares, planparticipants in junior management 20%.

The number of Bonus Shares allocated is givenin that the above mentioned share of the director’sfee or of the performance-based bonus is dividedby the share price fixed in the plan of CHF 80.

All Bonus Shares are restricted in for three years.

Leverage SharesDepending on whether business targets estab-

lished in the EOP for the first planning period (tar-gets defined as per 31 December 2013) and thesecond planning period (targets defined as per31 December 2015) are achieved in whole or part,at the end of March 2014 (first allocation) and the

end of March 2016 (second allocation) LeverageShares will be allocated. The Initial Shares andBonus Shares purchased and allocated form thebasis for the allocation of the Leverage Shares. Onthe first allocation the plan participant will be allo-cated at the end of March 2014 for each InitialShare and Bonus Share purchased or allocatedunder the EOP before the end of December 2013(EOP 2010) and the end of March 2014 (EOP2012) – depending to the extent the targets wereachieved – per target between 0 and 1.5 LeverageShares (EOP 2010) and between 0 and 1 LeverageShares (EOP 2012). On the second allocation theplan participant will be allocated at the end ofMarch 2016 for every Bonus Share acquired afterthe cut-off date relevant for the first allocation pertarget between 0 and 1.5 Leverage Shares (EOP2010) and between 0 and 1 Leverage Shares (EOP2012). Overall, per allocation period, this gives aleverage of between 0 and 4.5 shares for the EOP2010 and between 0 and 2 for the EOP 2012. TheLeverage Shares of the first and second allocationare locked in, as to 50 % each, for one or twoyears after allocation.

There will be an allocation of Leverage Shares atthe respective allocation date, only if the relevantplan participant is still in the employment of theSiegfried Group at the allocation date (exceptions:early withdrawal following retirement, death / dis-ability, if plan participation was at least 12 months)and the lock in provisions were observed.


Overview of the allocation of Leverage Sharesper objective for an Initial Share or Bonus Share

purchased or allocated in the corresponding planning period:

Overview of the allocation of leverage shares (number of shares per target andacquired Initial/Bonus share)

CEO andother members

of Executive Upper Middle and lowerBoard members1 Management1 Management1 management2

0-73% target achievement 0 0 0 074%-99% target achievement 0.40/0503 0.50 0.50 0.50100% target achievement 0.80/1.003 1.00 1.00 0.75> 115% target achievement 1.20/1.503 1.50 1.50 1.00

1 Under the EOP 2010 for the three defined targets (see below) Leverage Shares are allocated2 Under the EOP 2012 for the two defined targets (see below) Leverage Shares are allocated3 For the Board of Directors on the leverage on the base fee there is a discount

Value based performance targetsThe performance targets contained in the EOP,

which are applicable for the allocation of LeverageShares, are geared towards an enduring increase inthe Enterprise Value. The pre-defined performancetargets for both allocation periods cover theincrease in the Enterprise Value and the Return onCapital Employed – ROCE. Enterprise Value isdefined as EBITDA without costs of compensationfor the EOP multiplied by a multiple dependent onthe margin. This multiple in turn is comprised of45*EBITDA margin.

ROCE is defined as EBITDA without share-basedcompensation under the EOP divided by the capital

employed. Starting from the ratios at the time theEOP was introduced; both ratios must be signifi-cantly increased over the duration of the plan.Leverage Shares will not even be allocated until,for Enterprise Value, a target achievement of 75%is reached and, for ROCE, an achievement of 73%.If the achievement is less than these amounts, no Leverage Shares will be allocated.

The table below shows the starting and targetachievement figures for 2010 and 2011 and theEOP plan amounts for Enterprise Value (EV) andReturn on Capital Employed (ROCE) relevant forthe allocation of Leverage Shares.

EOP plan amountsEOP EOP

Initial value target value target value2009 2010 2011 2013 2015

Enterprise Value (EV) 101 230 312 600 800Return on Capital Employed (ROCE) 6.1% 10.4% 14.5% 15.0% 17.0%

For the Board of Directors, the Executive Management and the senior management, in addi-tion relevant as a business target defined in theEOP 2010 is the achieving and realiz ation of pre-scribed strategic objectives. In each of the alloca-tion periods at least one strategic measure must berealized.

Employee Share Purchase Plan (ESPP)The ESPP enables employees in all locations to

become a shareholder in Siegfried by purchasingSiegfried shares at a privileged price. The sharescan be purchased twice a year in May and Novem-ber at a discount of 30% to the defined purchaseprice and are subject to a restriction period of three


years. The defined purchase price is equivalent tothe average price of the Siegfried share over the6 months prior to the purchase. Employees mayinvest at most 10% of their annual base salary inthe ESPP.

Participants in the EOP are excluded from participation in the ESPP.

Employee pension plans and other long-termemployee benefits

The Group operates in Switzerland and abroada number of pension plans for employees, whomeet the relevant criteria for admission. Theyinclude both defined benefit and defined contribu-tion plans, which cover most of the Group’semployees against the risks of death, disability andretirement.

In addition there exist plans for anniversaries orother benefits dependent on years of service.

The amount of the pension benefits depends onthe number of insured years, age, the insuredsalary and the capital accumulated. The assets ofthe funded pension plans are held in separatefoundations or by insurances and cannot flow backto the employer.

Further information about the pension planscan be found in Note 21 to the audited financialstatements on page 43.

3 ResponsibilitiesThe Board of Directors nominates the members

of the HR Committee, determines its responsibili-ties and approves its decisions concerning theGroup‘s compensation.

The HR Committee is competent for designingthe compensation system for the company’s Direc-tors and top management. It evaluates the com-pensation principles and systems and ensures thatthe compensation paid by the company is basedon market-conform and performance-based crite-ria. At least once a year the HR Committee reportsto the Board of Directors on the compensation pro-cedures and on the compensation of managersand, if necessary, proposes changes in the compen-sation system.


4 Compensation of the Board of Directors

The members of the Board of Directors receive an annual fee, consisting of a base fee for the appointment as Director and additional fees for individual functions as Chairman, Deputy-

Chairman or Chair of a Committee of the Board. 80 % of the base fee is paid in Siegfried shares asBonus Shares under the EOP 2010. In addition in convenience compensation is paid in the form oflump-sum expenses approximating the effectiveoutlays.

Compensation structure Board of Directors

Ordinary memberChairman Vice-Chairman Chair of committee Ordinary member

Base fee 210 000 70 000 70 000 70 000Chairman/Deputy-Chairman 90 000 20 000 0 0Chair of committee 20 000 20 000 20 000 0Expenses 20 000 10 000 10 000 10 000Total 340 000 120 000 100 000 80 000

Compensation of the Board of Directors and of former Directors in 2011 (as tax values):

Compensation Share-based Expenditure forBoard of Directors Function cash payment social security Total 2011

Acting Board of Directors December 31, 2011

Gilbert Achermann (from May 24, 2011) Chairman 152 000 159 817 36 366 348 183Dr. Thomas Staehelin Deputy chairman 54 000 53 272 7 360 114 632Dr. Andreas Casutt Member 14 000 53 272 5 116 72 388Reto Garzetti (from May 24, 2011) Member 14 000 53 272 5 116 72 388Dr. Beat In-Albon (from May 24, 2011) Member 14 000 53 272 5 116 72 388Dr. Felix K. Meyer Member 14 000 53 272 5 116 72 388Dr. Thomas Villiger (from May 24, 2011) Member 34 000 53 272 5 320 92 592Former Board members December 31, 2011

Dr. Markus Altwegg (until May 24, 2011) Chairman – – – –Susy Brüschweiler (until May 24, 2011) Member – – – –Dr. Felix Gutzwiller (until May 24, 2011) Member – – – –Total 296 000 479 449 69 510 844 9591

1 The compensation of the Board of Directors shows annualized figures.


Compensation Share-based Expenditure forBoard of Directors Function cash payment social security Total 2010

Acting Board of Directors December 31, 2010

Dr. Markus Altwegg Chairman 50 000 205 391 12 131 267 522Dr. Thomas Staehelin Deputy chairman 12 000 50 506 3 844 66 350Susy Brüschweiler Member 10 000 40 085 3 080 53 165Dr. Felix Gutzwiller Member 10 000 39 590 3 050 52 640Dr. Felix K. Meyer Member 10 000 42 079 3 203 55 282Dr. Andreas Casutt (from April, 14 2010) Member 10 000 39 590 3 050 52 640Former Board members December 31, 2010

Dr. Bernard A. Siegfried Honorary Chairman(until April 14, 2010) and member – – – –Malcolm Perkins (until April 14, 2010) Member – – – –Total 102 000 417 241 28 358 547 5991

1 The compensation of the Board of Directors shows annualized figures.

In the year under review, Markus Altwegg wasChairman of the Board from 1 January until theGeneral Meeting on 24 May 2011. At the GeneralMeeting Gilbert Achermann was elected as thenew Chairman of the Board. At the same meetingSusy Brüschweiler and Felix Gutzwiller retired fromthe Board. They were replaced on the Board byReto Garzetti, Dr. Beat In-Albon and Dr. ThomasVilliger. The former Directors, who stood for re-election, were confirmed in office.

Loans to Board membersIn 2011 no loans were granted to a member of

the Board of Directors.


5 Compensation of the Executive Management in 2011

In 2011 the members of the Executive Manage-ment, including the CEO, received salaries, bonus-es and other compensation elements in accordancewith the compensation principles set out on page64. In addition inconvenience compensation waspaid in the form of lump-sum expenses approxi-

mating the effective outlays. The compensation ofthe Executive Management is conclusively deter-mined by the HR Committee (HRC) of the Board ofDirectors.

The highest total compensation was received in2011 by the CEO. The following tables show thecompensation of the Executive Management at taxvalues:

Share-basedCompensation Compensation payment Expenditure for

Executive Management cash fixed cash variable variable social security Total 2011

Highest individual compensation:Rudolf Hanko (CEO) 565 000 87 124 368 134 124 230 1 144 488Other members of theExecutive Management 1 892 236 329 299 580 880 376 701 3 179 116Total compensationExecutive Management 2 457 236 416 423 949 014 500 931 4 323 604

Share-basedCompensation Compensation payment Expenditure for

Executive Management cash fixed cash variable variable social security Total 2010

Highest individual compensation:Rudolf Hanko (CEO) 574 004 112 880 290 695 105 236 1 082 815Other members of theExecutive Management 1 925 026 483 410 460 796 322 023 3 191 255Total compensationExecutive Management 2 499 030 596 290 751 491 427 259 4 274 070

As a result of the different valuation approachfollowing tax principles, in comparison with IFRSthere results a different personnel cost for theshare-based compensation for the Board of Direc-tors and the Executive Management. As displayedin the table above, the share-based compensationof the bonus 2011 for the Board of Directors andExecutive Management together amount at taxvalues to CHF 1.4 million, under IFRS the corre-sponding accrual is CHF 1.8 million. In addition,under IFRS, CHF 4.9 million was accrued for theleverage shares (EOP) to be allocated in 2014 and2016 (see Note 22 to the Consolidated FinancialStatements). For tax purposes the expense for theLeverage Shares will not be recognized until finalallocation and therefore will not be considered aspart of the compensation until then.

Shareholdings of the Board of Directors and of the Executive Management

The non-executive members of the Board ofDirectors and persons related to them held at31 December 2011 a total of 41 135 registeredshares in Siegfried Holding AG (2010: 31 289). This represents 1.1% of the total share capital ofSiegfried Holding AG (2010: 1.1%). The membersof Executive Management (including related per-sons) held at the same date 34 225 registeredshares (2010: 28 659), i.e. 0.9% of the share capital of Siegfried Holding AG (2010: 1.0%).


December 31, 2011

Number of whichBoard of Directors Function of shares blocked1

Gilbert Achermann Chairman 13 750 3 750Dr. Thomas Staehelin Deputy chairman 12 763 5 060Dr. Andreas Casutt Member 4 920 4 250Reto Garzetti Member 3 750 3 750Dr. Beat In-Albon Member 1 500 1 500Dr. Felix K. Meyer Member 4 452 4 081Dr. Thomas Villiger Member – –

Executive Management

Dr. Rudolf Hanko CEO 13 231 12 641Michael Hüsler CFO 4 475 4 445Peter A. Gehler CCO 4 180 4 159Dr. Walter Kittl Head Technical Operations 3 114 3 114Arnoud Middel Head HR 1 500 1 500Marianne Späne Head Business Development & Sales 4 881 4 397

Head Strategy & M&A andDr. Wolfgang Wienand Head Research & Development 2 844 2 844

1 Number of blocked shares from Equity Ownership Plan (EOP) and Employee Share Plan

December 31, 2010

Number ofMandatoryConvertible Number of which

Board of Directors Function Notes2 of shares blocked1

Dr. Markus Altwegg Chairman 102 10 031 5 598Dr. Thomas Staehelin Deputy chairman – 11 583 4 603Susy Brüschweiler Member 10 531 293Dr. Felix Gutzwiller Member 20 1 192 886Dr. Felix K. Meyer Member 25 3 702 3 627Dr. Andreas Casutt Member 17 4 250 3 750

Executive Management

Dr. Rudolf Hanko CEO 59 8 709 8 709Michael Hüsler CFO 3 3 339 3 339Hanspeter Brun Head HR 40 3 579 3 229Peter A. Gehler CCO – 3 387 3 387Marianne Späne Head Business Development & Sales 24 3 434 3 319Dr. Hubert Stückler Head Technical Operations 20 3 711 3 519Dr. Wolfgang Wienand Head Research & Development – 2 500 2 500

1 Blocked shares from Equity Ownership Plan (EOP) and Employee Share Plan2 One note equals to 10 shares of Siegfried Holding AG


6 Contractual agreements, loans and additional contributions

The employment contracts of the members ofExecutive Management and of the CEO foresee anotice period of 6 months. The appointments ofthe Directors are not subject to notice periods andterminate ordinarily on expiry of the term of office.The employment contracts and related agreementsdo not contain clauses providing for settlements(«golden parachutes» or «handshakes» or compa-rable understandings) in respect of their termination.

The EOP contains provisions concerning changeof control, according to which:– in the event of an unfriendly public purchase

offer, under which the bidder exceeds the limitof Art. 32 of the Federal Act on StockExchanges and Securities Trading (SESTA), –depending on the timing – the allocation of thefirst or second tranche of Leverage Shares isaccelerated. The allocation takes place on thedate, on which the purchase offer becomesunconditional. In this case, for the calculation ofthe number of Leverage Shares to be allocated,a target achievement of 100% is assumed (seealso table on page 70). If this case occurs, theplan is then immediately and automaticallywound up (including any restriction periods);

– in the event of an acquisition by the SiegfriedGroup, under which a significant part of thepurchase price is satisfied by the delivery ofshares in Siegfried Holding AG, and as a resultthe recipient exceeds the limit of Art. 32 SESTA,the EOP is to be maintained to the greatestpossible extent. This is, however, conditional onthe strategic objectives defined in the EOP notbeing changed. Changes to the EOP by the PlanAdministrator are to be restricted to changesthat are necessary because of the applicable lawor because of the admission of new planparticipants;

– in other cases of a change of control the PlanAdministrator is entitled to change the terms ofthe plan while preserving as far as possible therights of the plan participants and taking intoconsideration various criteria laid down in detailin the EOP.

The members of the Board of Directors and ofthe Executive Management of Siegfried HoldingAG and persons related to them are not, and werenot, in the year under review and in the precedingfinancial year involved in transactions outside thenormal business activity of Siegfried Holding AG orof one of its group companies or in other transac-tions unusual in form or substance, but importantfor Siegfried Holding AG or one of its group com-panies.

At 31.12.2011 Siegfried Holding AG and itsgroup companies hold no securities,

No loans, advances or credits have been grantedto members of the Board of Directors or the Execu-tive Management of Siegfried Holding AG or topersons related to them.


Sustainability Report 2011

Introduction “Sustainability” is more than a buzzword in the

life science industry. Regulatory authorities, cus-tomers and users closely watch the activities ofevery company in this market. Sustainability is acentral competitive and reputation factor forSiegfried, and carries a high economic value. Wetake the expectations of all stakeholders for trans-parency and honesty seriously. The Board of Direc-tors and Group management contributed to thereport, and they will continue to implement improve-ments to ensure a high standard of information.

Within the range of relevant sustainability topics,Siegfried focuses on Compliance and Quality, Safety,Health and Environment (SHE), and our responsi -bility as an employer. As a relatively modest sizedcompany in the life science industry, Siegfried haslittle influence in how the ingredients produced atour facilities are used and consequently, has littlecontact with the end user. This limits our scope ofaction.

Siegfried offers a capability unique in our mar-ket: the development and production of activeingredients and dosage forms under one roof. Bothcompetencies are based on the same compliancesystem. The combination of synthesis and formula-tion represents an attractive market opportunity forthe long-term viability of the company and thejobs. These strengths form the key element of ournew “Transform” strategy. It will also become evi-dent with the significant infrastructure investmentsthat are planned.

Corporate PrinciplesSiegfried as a competitive player– We intend to remain an independent company.– We strive for market leadership in clearly

defined market segments – by differentiatingourselves from the competition and gaining asustainable competitive advantage through theintelligent use of our resources.

– We want to be seen as a service-orientedcompany; targeted development of technologyand know-how serve to enhance our ties to thecustomer.

Siegfried as a profitable company– We strive for profit rather than sales growth;

especially by sustainably increasing our returnon investment.

– We intend to grow from an internationallyactive company to a global operation.

Siegfried as an employer– We want to be an attractive employer for highly

motivated and talented people that are results-oriented, self-motivated, and work efficiently ina team.

– We strive to avoid risks to the health and well-being of our employees.

Code of ConductIn 2008, Siegfried introduced a Code of Con-

duct policy that specifies our most important poli-cies, such as the role of the employee in ensuringthe success of the company, how to deal with con-flicts of interest, honesty and trust, bribery and cor-ruption. The Code was distributed to everyemployee and is part of the introductory programfor new employees and valid for all Siegfried sites.See: http://www.siegfried.ch/about-siegfried/about-us/code-of-conduct/


Corporate governanceThe Siegfried Group takes an integrated

approach to corporate governance and is commit-ted to mutual trust and clarity toward sharehold-ers, employees, journalists and financial analysts.Corporate governance at Siegfried is based on thestatutes of Siegfried Holding AG, the rules of pro-cedure of the Siegfried Group, and the structure ofthe Group. The corporate governance report in thisannual report describes the principles of manage-ment and control of the Siegfried Group.See: http://www.siegfried.ch/about-siegfried/corporate-responsibility/corporate-principles/

Structural foundationThe Board of Directors and Executive Manage-

ment are the highest institutions responsible for theimplementation and maintenance of all sustainabili-ty policies and guidelines. The Compliance Com-mittee, along with the Chief Compliance Officer, isresponsible for the implementation of complianceand quality standards, and for the area of Safety,Health and Environment. The Secretary to theBoard of Directors supervises the Code of Conduct.

About the reportWhenever possible and relevant, this report is

based on the guidelines of the Global ReportingInitiative (GRI). If not noted elsewhere, the com-ments made in this report are valid for the entireSiegfried Group, exclusive of its holdings in Taiwanand China. The Sustainability Report is part of theannual report; important amendments will be pub-lished on our website at www.siegfried.ch. Links tothe website locations are listed throughout theannual report.

Any questions and comments about the reportcan be submitted to the Secretary to the Board ofDirectors:

Peter A. Gehler, Head Corporate Centerc/o Siegfried Holding AGTel: +41 62 746 11 [email protected]

Compliance Siegfried is committed to quality oriented

management and ongoing improvement of allcompany processes and activities. Our quality policyis an integral part of the corporate policy. Theresults of customer audits and regulatory inspec-tions, in particular by the U.S. Food & Drug Admin-istration (FDA) and the Swiss Health Authority(Swissmedic) confirm our capabilities.

PoliciesSiegfried has an overall quality management

system throughout the value chain. Based on theprocedures set by ISO 9001 (quality management)and ISO 14001 (environmental management)www.iso.org, it covers the following internationalguidelines:– Current Good Manufacturing Practice (cGMP)

http://ec.europa.eu/enterprise/sectors/healthcare/human-use orwww.fda.gov/cdrh/comp/gmp.html

– International Conference on Harmonization(ICH), defines standards by pharmaceuticalauthorities and industry associations in the U.S.,Europe, and Japan www.ich.org

– Guidelines of the World Health Organization(WHO) www.who.int

The Compliance Committee (ComCom), com-prised of Executive Management (ExeCom), all sitemanagers and the corresponding quality managers,meets every month on behalf of the CEO andunder the direction of the Chief Compliance Officer,Dr. Peter Kiechle, to discuss quality issues atSiegfried. Decisions on quality topic are made bythe ComCom, which also approves Siegfried’sguidelines. At the end of 2011, the SiegfriedGroup had 27 guidelines, dealing mainly with qual-ity issues but also areas of finance, safety, healthand environment (SHE), and pharmacovigilance,communications and employee conduct (Code ofConduct).


Inspections and auditsAs is customary in the pharmaceutical industry,

all Siegfried sites are constantly monitored,through inspections (by regulatory authorities),audits (by customers at Siegfried, or by Siegfried atsuppliers), and internal audits. Customer and sup-plier audits are planned weeks and months inadvance, inspections and internal audits can occurwithout notice.

In general, regulatory inspections are carriedout:– In the U.S. by the Food and Drug Administration

(FDA), and by the Drug EnforcementAdministration (DEA) when narcotics areinvolved

– In Switzerland by Swissmedic, which hasinspections carried out by Regional InspectorateNorthwest Switzerland (RHI) and the AmericanFDA; in 2011, the Korean Food and DrugAdministration (KFDA) carried out an inspectionfor the first time in Zofingen

– In Malta by the Medicines Authority Malta(MAM) and the American FDA

– In Germany by the regional authorities

Since 2002, the FDA has issued clear “NoAction Indicated” approvals for our sites; all licens-es have been approved or renewed, respectively.http://www.siegfried.ch/competences/compliance/compliance-history/?L=ifxxbfjbapuds

Undergoing hundreds of successful inspectionsand audits over the past years allowed Siegfried tomeasure itself against other companies’ systemsand regulatory demands – and draw instructiveconclusions about our application of the guide-lines. The results confirm our quality managementsystem and provide a persuasive argument withour customers.

2012 is expected to be another intense year forinspections:– For Siegfried Drug Products in Switzerland by

Swissmedic / RHI– For Malta by the Medicines Authority Malta

(MAM)– For Siegfried Drug Substances in the U.S. by the

FDA and DEA– For Siegfried Drug Substances in Switzerland by

the FDA, Swissmedic/RHI, and possibly theJapanese Pharmaceuticals and Medical DevicesAgency (PMDA)

Customer audits will continue to take place fre-quently in 2012.

Qualifying suppliers and service providersOften, raw materials, pharmaceutical excipients

and packaging materials, components for activeingredients and, less often, active ingredients arepurchased from foreign manufacturers and suppli-ers. Siegfried is responsible for the qualification ofsuch manufacturers and suppliers and maintains acorresponding audit system that meets bindingquality standards. This is done through manufac-turer and supplier questionnaires, ongoing qualitycontrol of the materials and also audits at the man-ufacturing site. Our manufacturers are locatedmainly in Europe, India, China and Taiwan. ForSoutheast Asia, we rely in addition on our col-leagues from the Siegfried Shanghai office. Thesame quality standards must also be applied andupheld among our service providers, such as exter-nal laboratories, specialized external technicians atthe Siegfried sites, or engineering services.

Quality demands and quality certificatesThe number of inspections and certificates /

statements carried out by the pharmaceuticalindustry continues to grow. This is due to increasedquality awareness and quality requirements as wellas accidents, counterfeiting, and sub-standard mix-tures. In addition to the traditional analysis certifi-cates (with information on appearance, content,purity, physical characteristics and the GMP-con-


form manufacturing of our products, data and cer-tificates are now also needed for: – Genotoxic impurities– Heparin adulteration– Presence of genetically modified components– Presence of TSE / BSE – Presence of melamine – Presence of benzene– Presence of phthalate

etc.

Cooperation with public officialsSiegfried works closely with the American FDA

to prevent product piracy to ensure safety for theend user. Siegfried provides material, certificates,chemical process documentation, analytical meth-ods, primary packaging material and labels to theFDA to aid in comparisons with potentially counter-feit products. In 2011, Siegfried delivered compre-hensive documentation and materials to the FDA’sForensic Institute in Cincinnati, Ohio, to help in thefight against counterfeiting of Siegfried products.

Pharmacovigilance(reporting system for pharmacological side effects)

The ongoing and systematic surveillance of drugsafety is done not only during clinical testing, butalso after registration to identify, evaluate, andunderstand any undesirable side effects, andimplement necessary risk minimizing measures.The Siegfried registration team in Munich, Ger-many, is responsible for these issues and registeredwith the regulatory authorities. Inquiries aboutundesirable side effects (ca. 1–2 annually) are usu-ally made by our customers (customer complaint)and not by the end user, as Siegfried is not recog-nizable to the end user as a producer.

Customer satisfaction Siegfried is a service-oriented company that

focuses on the customer and cultivates close, long-term relationships. The Siegfried customer com-plaint system (mandated by law for the pharma-ceutical industry) processes all inquiries andcomplaints. All questions and complaints are sys-tematically registered, whether justified or not, and

evaluated. The type and number of complaints arerecorded and the individual cases are evaluatedand discussed on a monthly basis by a QualityCommittee under the direction of the local qualityassurance manager. If necessary, changes areimplemented. The Compliance Committee is con-sulted on critical or strategic issues. The results ofthe investigation, or at least intermediate reports,are sent to the customer within 30 days. Our goalis to cultivate a quality system that eliminates cus-tomer complaints.

Despite the pronounced increase in the numberof customer audits, the number of observationsresulting from audits has dropped by almost halfover the past few years and remains stable at thatlevel. On average, Siegfried receives a customeraudit every week in Zofingen.

Quality contracts with customers The obligatory quality agreements between

Siegfried and our customers are a growing chal-lenge. Customer requirements continue to grow,which can include an increasing amount of dataand documents to be supplied by Siegfried, ortighter deadlines are set, or even the integration ofspecific customer standards is required. With over100 active customer accounts, running numerousquality management systems simultaneously is notpractical. For Siegfried, this means maintaining asophisticated quality management system thatmeets a range of customer demands.

Goals and outlook Our very high Good Manufacturing Practice

(GMP) standards and reputation for quality are rec-ognized around the world. Siegfried is well awarethat it’s better to maintain high standards thanhave to revive a compromised company image. Allour facilities work hard to uphold these standardsand to continue to be recognized as a dependableand quality conscious partner.

Despite this pressure, it is essential that Siegfriedremains quick, flexible, and customer-friendly tocontinue delivering “made in Switzerland” quality.


Safety, Health Introduction safety, health and plant security

The Safety, Health and Environment (SHE)guidelines are a priority and a central element ofour corporate mission. These guidelines help ouremployees and specialist teams strive to improvesafety and minimize adverse environmental effects.

Approximately 2.5% of our global personnelworks full-time in SHE areas. They are responsiblefor the risk management of processes, plants andthe workplace, as well as implementation of en -vironmental regulations. A team of subject matterexperts, engineers and chemists works closelytogether and is in constant contact with other sitesand partner companies.

As a chemical-pharmaceutical company andleading provider of controlled substances, Siegfriedputs great emphasis on plant security. Workingclosely with professional service partners, technicalspecialists monitor the factory area and supervisethe company’s central alarm system around theclock.

The total costs and investments in Safety &Health are considerable. In 2011, we were able tosuccessfully complete several projects. For example,modernization of the control systems improvedproduction safety and the renovation of productionareas and R&D labs led to improved workplaceergonomics and hygiene.

Policies & GuidelinesAs a member of the Science Industries Switzer-

land (previously: Swiss Society of the ChemicalIndustry / SGCI), Siegfried co-signed the Responsi-ble Care® program in 1992 along with numerousother Swiss chemical companies. Based on theseprinciples, our internal SHE guidelines were adapt-ed and completed. As part of the Siegfried qualitymanagement system, ISO 14001 was successfullyintroduced and certified in 1998. Our Pennsvilleproduction site qualified for the SOCMA Chem-Steward® program in 2006. During that year, ourvarious programs and systems were unified in aglobal SHE policy and implemented at all sites. Thispolicy describes the Siegfried SHE philosophy toour employees, third-party companies, customers,

shareholders, regulatory authorities, and the pub-lic. In 2009, SHE policies at Siegfried were docu-mented in a Code of Conduct that is mandatoryfor every employee.

For further information:http://www.siegfried.ch/competences/compliance/safety-health-environment/

Safety and healthRisk management

Siegfried introduced comprehensive proceduresfor all aspects of chemical process development toensure efficient and safe chemical processes, bothkey elements of process development.

All chemical procedures undergo a safety andenvironmental analysis during process developmentand production launch. Our internal safety lab haswell-trained specialists and the newest measure-ment instruments for physical and thermal sub-stance testing. Flammability, danger of explosion,and performance of reactions during normal ope -ration and in case of accidents are tested and eval-uated. The findings are summarized in a processsafety & environmental report. A team of develop-ment, production and SHE experts initially testsand evaluates all safety and environmental para -meters and issues as part of a process risk analysis.

As part of the precautionary accident measures,the process systems and the chemical substancesthey handle undergo a comprehensive risk analysis.The results are summarized in a report andreviewed by the regulatory authorities during theirannual inspection.

Siegfried maintains emergency response teamsin Zofingen to respond to explosions, fires or chemi-cal incidents. The Zofingen HAZMAT (hazardousmaterials) and firefighting teams have over 100volunteers from Siegfried and Swissprinters (anadjacent company). As mandated by the canton,this new organization is also the official HAZMATresponse team for incidents outside our facility.

The helpful cooperation with the local and can-tonal police continued in 2011.


Workplace safetyWe want to promote a company culture with

zero tolerance for accidents. The Siegfried SafetyProgram was launched in 2006 around the worldto realize this vision and raise safety awarenessamong every employee. The Zofingen productionsite (including Siegfried, third-party companies andservice providers) actively participated in the safetyprogram. Despite these efforts, the accident quotadid not meet expectations in 2011, with all pro-duction sites reporting a negative accident rate dueto a slight increase in accidents resulting in work-days lost.

Making the wearing of helmets compulsory in2008 once again proved sensible and effective, ashead injuries were substantially reduced since then.An “Alarm & First Aid” safety campaign accompa-nied by training for about 10% of the Zofingenstaff will ensure a quick and efficient first aid foraccidents. These efforts resulted in a distinct 60%drop in lost workdays; serious eye injuries werealso avoided in 2011 thanks to mandatory protec-tive eyewear and the site-wide availability of eyerinse stations.

“Lifting Loads” was the safety focus during thepast year, with the safety team launching anawareness campaign for lifting device maintenanceand testing, including maximum loads for storageracks and attachment points. Because of recurringforklift accidents, logistics specialists organized aninternal “refresher course”. Over 160 production

employees were able to get practical training byrunning forklifts through a training course.

Maintaining a safe and accident-free flow oftraffic on the Zofingen site demands caution andrespect from all: pedestrians, bicyclists, forkliftoperators, automobile and truck drivers. Improvedsignage across the facility should bring furtherimprovement and reduced speeds.

Audits During 2011, national and international regula-

tory agencies, insurance companies, and variouscustomers inspected the Siegfried facilities, whichwas an additional challenge for the Safety & Healthdepartment. The inspectors and customers certifiedthat Siegfried has a well-integrated risk and envi-ronmental management system. For example, theplant fire brigade met all building insurancerequirements during the inspections. Around-the-clock operational readiness is guaranteed. No irre -gularities were noted during two risk analyses car-ried out by HDI Gerling, an insurance company.Zofingen met all liability compliance guidelines;Pennsville was certified with a good safety systemand adequate fire protection.

A system of internal audits and safety walka-bouts in Zofingen and Pennsville has establisheditself since 2005. The audit teams suggested over450 corrective measures for Zofingen alone (85%were implemented in 2011).

Workplace accidents with lost workdays: 2007–2011Workplace accidents with lost workdays per 1,000 employees 2011 2010 2009 2008 2007

Zofingen (incl. partner companies) 1 15 (19) 10 9 10 11Pennsville 19 0 0 11 11Malta 2 33 0 0 0 0

Lost workdays per 1,000 employees 2011 2010 2009 2008 2007

Zofingen (incl. partner companies) 1 69 (78) 196 104 68 47Pennsville 84 0 0 17 155Malta 217 0 0 0 0

1 Third-party and partner companies with permanent staff2 Our Malta facility noted two workplace accidents with resulting absences, a rate of 33 accidents per 1,000 employees (Malta employs about 60 people).


In 2011, all our sites noted an increase in work-place accidents and absences. While both Maltaand Pennsville had no lost workday accidents andabsences in 2010, last year the rates climbed to 33(Malta) and 19 (Pennsville) workplace accidentswith lost workdays per 1000 employees, similar tothe rate (19) in Zofingen, clearly missing our goalof less than 8 lost workday accidents. The totalnumber of lost workdays for all three sites was inthe range of 78 – 217 lost workdays per 1,000employees, missing our goal of 125 lost workdays.As in 2010, last year saw all three sites avoid anyserious injuries with long-term absences. The sharpdrop (60%) in lost workdays in Zofingen, an aver-age of 4 lost workdays per accident, underlinesefforts to quickly rehabilitate – and reintegrate –injured personnel. Such cost- saving options are inthe interest of the employees, the employer, andthe insurer.

The workplace accident and lost workday totalsfor Zofingen include all personnel, including thestaff of third-party and partner companies withpermanent staff under contract at the facility.Approximately 25% of the accidents originatedwith the employees of these companies.

The number of workplace accidents and sickdays in Zofingen dropped by 10% over the previous year. Our rate of 36 accidents per 1,000employees is close to the Swiss chemical and phar-maceutical industry norm (2010: 33). As Siegfriedhas a first aid capability but no on-site MD, injuriesrequire treatment outside the facility. These treat-ments are covered by SUVA and reported in theinsurer’s statistics as accidents; the severity of theaccident is not recorded.

HealthTogether with the “Lungenliga Switzerland,”

a national respiratory awareness organization,Siegfried carried out an anti-tobacco campaign(“Smoke less, live more, do more”) to raise aware-ness among all employees. The Lungenliga pre-sented its range of stop smoking sessions andexperts discussed nicotine replacement productswith attendees. The event also featured a popularpresentation by Dr. Felix Gutzwiller, a well-known

health advocate and Siegfried Board member. Over10% of the Zofingen employees attended thisevent – a clear success.

The galenical development labs underwent atotal renovation to improve workplace hygiene forthe handling of highly active ingredients. Closedsubstance handling and multi-level containmentsystems protect staff from excessive contamination.The changing rooms, workplace and lavatories areall separated by an airlock system of double doors.In addition, workplaces are equipped with a venti-lation system to enhance freedom of movement toemployees dressed in protective suits and to pro-vide improved working conditions. Decontamina-tion zones and defined changing areas help mini-mize substance contamination.

A workplace hygiene expert answers questionsabout workplace hygiene; workplace evaluationsand classification of production systems are alsomonitored. When necessary, technical, organiza-tional, and personnel (TOP) measurements ensure asafer workplace. The effectiveness of these protec-tive measures is monitored by our in-house SHElab; the results are summarized in a systems eval -uation registry.

The correct use of protective equipment at theworkplace is constantly trained. Our in-houseworkplace safety department constantly evaluatesnew protective articles used in various applicationsand skin care products; the resulting information isdocumented in an internal “personal safety cata-log” and made available to all employees on ourintranet.

Rapid and correct first aid to injured staff wasthe focus of our first aid training. Guided by firstaid experts, over 50 participants practiced how tohandle chemical burns, regular burns and toxiccontamination, as well as the correct emergencyalarm procedures. As part of the in-house firedepartment, a paramedic team is available aroundthe clock to respond to emergencies.

This past year a few dozen employees tookadvantage of the annual flu vaccination campaign(at no charge).

Medical consultations and (SUVA-mandated)check-ups for about 200 employees were carried


out again this year by the Institute for WorkplaceMedicine (ifa Baden).

Activities such as soccer, tennis, hiking, targetshooting and bowling are offered to all employeesby the Siegfried Sports Club to promote fitness.

Goals & outlookThe activities and goals for our SHE program for

2012 include:– Less than 125 lost workdays resulting from

workplace accidents (per 1,000 employees)– Less than 33 accidents (per 1,000 employees)– Quick reintegration of injured employees

through interim “light duty” work– Information campaigns to promote health

awareness and reduce accidents– Optimize in-house health management efforts– Modernize fire alarm monitoring and building

evacuation procedures in Zofingen– Coordinate the information systems for

hazardous materials across all facilities– Revise the safety and environmental training

concepts in Zofingen– Implement evaluation software upgrades for

process safety analysis (based on kineticmodeling)

Environmental protectionCorporate environmental protection

Siegfried invests substantial resources in efforts tominimize the environmental effects of our business.

General observationsBecause the amount of final and intermediate

products generated from year to year fluctuateconsiderably, the final totals don’t tell the wholestory. The most important figures for total energyconsumption, water consumption, CO2 emissionsand waste at Siegfried show an increase over theprevious year. Emissions of volatile organic com-pounds (VOCs), which dropped significantly, arethe exception. It is helpful to compare all thesetotals with our increased production totals to bet-ter see overall falling trends for energy consump-tion, water consumption, CO2 emissions and wasteas well. The use of fuel oil has dropped continuallyover the past year and in 2011, for the first time, itwas replaced completely by significantly cleanernatural gas and alternative fuel sources.

VOC emissions have continued to drop over thepast years and are now at a very low level. Thepast year noted an almost 50% drop compared tothe previous year.

However, CO2 emissions have remained stable,fluctuating between 14,500 and 16,000 tonsannually. 2011 showed a gross increase in emis-sions, but a lower net level when compared to pro-duction totals for the year. We are currently work-ing on a concept to further reduce CO2 emissions.

Due to lower CO2 emissions compared to 1990levels, Zofingen sold 1,300 tons of CO2 reductioncredits to the “Climate Cents” (Klimarappen)Foundation. http://klimarappen.ch/

Water consumption trends are similar to CO2

emissions; a gross increase in consumption for2011, but a lower net level when compared to pro-duction totals for the year. While the amount ofwastewater generated remained constant, therewas a sharp increase in the amount of coolingwater over the year. There are plans to draw up aconcept to reduce cooling water consumption.


The total amount of waste increased by 16%over 2011. Due to significantly higher productionvolumes, the amount of waste solvents increased,even though the amount of reclaimed solvents alsogrew considerably. The ratio of internally reclaimedsolvents to waste solvents was improved again in2011 to 0.38.

The amount of waste delivered to an externalrecycling facility increased by 6%, representing a15% share of total waste. Solvents are classified aswaste by Siegfried and are tabulated in our overallwaste production.

In 2011, Siegfried Pennsville worked with asolar energy partner to launch a solar power proj-ect. The goal is to generate cheap electricity at ourUS facility, which will have a positive effect on ourbottom line.

A photovoltaic system, in simple terms, is madeup of solar panels that convert sunlight into elec-tricity. Our system uses “tracker” panels that tiltthroughout the day to best capture the sun’s rays –from early morning to late afternoon. Comparedto stationary panels, tracker solar panels substan-tially increase the total amount of power produced.A large portion of Siegfried Pennville’s energyneeds can be met with solar systems, which, dur-ing peak summer hours, may even generate mostof the site’s energy requirements. The installationof the solar system will start in 2012.

As usual, a 2011 VOC balance sheet was creat-ed for Zofingen and sent to local authorities andthe declaration of the SwissPRTR (Swiss Register forPollutant Emissions & Transfers) was updated.see: http://www.prtr.ch/

Energy consumption2011 2010 2009 2008 2007 Unit

Total energy 389 100 377 700 378 300 362 500 385 800 GJNatural gas 210 200 194 200 198 700 183 000 187 500 GJHeating oil 3 900 6 800 5 900 7 400 22 000 GJAlternate fuels (solvents) TAR 33 400 32 900 29 900 34 400 29 400 GJElectricity 131 000 130 800 131 500 124 800 132 500 GJ

Compared to the previous year, total energyconsumption for all three facilities (Zofingen,Pennsville and Malta) increased slightly by 3% in2011. Zofingen was the main contributor to theincrease, with a 4.2% jump, while Pennsville noteda modest 1.3% increase.

The growth in energy consumption in Zofingen –thanks to a 40% increase in production volumes –was achieved through a 9.8% jump in natural gasusage and a 5.4% climb in electricity. By eliminat-ing a heating boiler, heating oil consumption wasreduced by 50%. Diesel oil usage was 12.9% low-er as diesel-powered vehicles are replaced by elec-tric vehicles.

Pennsville switched from heavy fuel oil to extralight heating oil, which led to a substantial increasein the consumption of lighter oil. Overall, thisswitch is an environmental gain. Natural gas con-sumption also increased, by 5.8%, but electricitydemand dropped by 6.4%. Production volumesincreased by 35% over 2010; energy consumptionper unit of production (intermediate and finalproducts) increased significantly, which is duemainly to a different product mix.

Our goal to reduce electricity by 3% in Zofingenwas not achieved; instead, demand increased over2011.

The charts below provide the numbers from ourfacilities in Switzerland, the USA and Malta.


Emissions2011 2010 2009 2008 2007 Unit

CO2 emissions 15 900 15 400 15 300 15 000 15 800 TonsVOC emissions 15 28 26 39 48 Tons

The CO2 emissions for 2011 were 500 tonshigher than in the previous year, an increase of3.3%. Both Zofingen and Pennsville contributed tothis increase. The higher CO2 emissions are directlyrelated to high energy consumption. Largeramounts of natural gas were not offset by a dropin heating oil demand in Zofingen. Additionally,heating oil consumption grew in Pennsville. Zofin-gen was able to sell 1,300 tons in CO2 reduction

credits to the “ Climate Cents” (Klimarappen)Foundation, 200 tons more than in 2010.

VOC emissions (hydrocarbons) dropped consid-erably over the year, they were 45% lower than in2010. This emission reduction was made possibleby improved availability of the thermal exhaust fil-ter system in Zofingen, a different product mix inZofingen and an almost 50% drop in emissions inPennsville, where heavy fuel oil was eliminated asan energy source.

Water consumption2011 2010 2009 2008 2007 Unit

Siegfried Group 1 951 000 1 700 000 1 992 000 1 790 000 1 586 000 m3

Zofingen 1 847 000 1 583 000 1 887 000 1 679 000 1 490 000 m3

Pennsville 100 900 113 400 104 700 104 700 91 100 m3

TOC emissions2011 2010 2009 2008 2007 Unit

Siegfried Group 525 432 650 532 521 TonsZofingen 438 342 528 415 431 TonsPennsville 87 90 122 116 90 Tons

Last year saw a big jump in water consumption,due to increased demand in Zofingen. Pennsvilleactually noted an 11% drop in demand over theprevious year, including a drop in both industrialwaste water and sewage.

Higher demand in Zofingen was due to higherutilization rates of the production systems, leadingto a temporary switch from a 5-day shift to a 7-dayshift. We clearly missed our goal to reduce waterconsumption to 2007 levels. However, water con-sumption actually came in 7 – 16% lower per unitof production (of final and intermediate products)than 2007 levels if the total production volume for2011 is included.

The clearest increase for water in Zofingen wasfor cooling water, as levels for waste water andsewage remained stable compared to 2010.

The waste water pollutants (organic carbon orTOC) increased by 28% in Zofingen, and fell by3.5% in Pennsville, resulting in a total increase of21.5% in TOC for all facilities. The total increase inTOC levels looks more positive if correlated to thehigher production totals for the year – translatinginto a drop of 4.5%.


Waste2011 2010 2009 2008 2007 Unit

Total amount of waste 1 14 000 12 100 15 300 13 200 12 100 TonsChemical waste 13 200 11 200 14 200 12 400 11 200 TonsWaste for external recycling 2 180 2 050 1 840 1 820 1 370 Tons

1 Without sewage sludge

The total amount of waste increased by 16%,or 1,900 tons compared to 2010, but still below2008 levels. The levels of generated waste aredirectly related to the respective product mix. Dueto quality issues, certain products prohibit the re-use of solvents.

Almost all waste types increased in 2011, espe-cially for waste solvents, the largest single wastecategory. The acid wastes in Pennsville also

increased considerably, which was due to theexpanded production of an old product.

The amount of generated waste looks morepositive if the increased production volume for2011 is considered; waste actually decreased by13%. A further positive statistic is the increase ofmaterials – by 130 tons – that were processed atan external recycling center, a 6.4% increase.

Recycled solvents2011 2010 2009 2008 2007 Unit

Siegfried Group 4 230 2 960 2 240 3 160 2 230 TonsZofingen 4 100 2 860 1 906 2 880 1 880 TonsPennsville 131 107 336 280 350 Tons

The amount of solvents recycled internally in2011 grew by 1,200 tons, a 43% increase. BothZofingen and Pennsville increased their levels ofrecycled solvents by over 2010, a contribution tosaving valuable resources. The ratio of recycled sol-

vents to externally incinerated waste solventsincreased from 32% to 38%. This improvementappears even more impressive when the 2006 levelof 21% is considered.

Waste solvents2011 2010 2009 2008 2007 Unit

Siegfried Group 11 000 9 300 12 500 11 900 10 500 TonsZofingen 8 950 7 300 9 900 10 100 8 380 TonsPennsville 2 070 2 000 2 600 1 740 2 130 Tons

In 2011, the amount of waste solventsincreased by 19% to 1,700 tons. Both Zofingenand Pennsville increased their levels of waste sol-vents. Again, when considering the overall increase

in production volumes, these levels represent thelowest in the previous five years.

Fines and non-monetary penaltiesSiegfried had no fines levied in the SHE area.


Goals and outlookFor 2012, Siegfried will strive to limit total water

and energy consumption to current levels. In addi-tion, the levels should also be held at current levelswhen calculated per unit of production. Thesegoals also apply to CO2 emissions and waste. Specific goals include:– Complete the CO2 emission reduction concept– Analysis to reduce cooling water usage in

Zofingen– Implement quarterly evaluation reports for key

environmental data

Siegfried as EmployerOur employees

Our motto, “expect more”, is a commitmentnot only to our customers and suppliers, but espe-cially to our employees. Our success as a companyis due in large part to the efforts and know-how ofour employees, their excellent performance, cre-ative solutions and willingness to innovate for ourcustomers – day in and day out.

Siegfried is dedicated to creating a positive workenvironment to help our employees master com-plex contracts and future challenges – and increas-ingly stringent regulatory guidelines. We offer chal-lenging jobs and responsibilities that best promotethe personal and technical development of ouremployees – and allow them to profit from thesuccess of our company.

At the end of 2011, about 713 people (full-timejobs) around the world worked at Siegfried.

An attractive workplace – a Siegfried goal Well-qualified, experienced and motivated

employees are crucial for success in the chemicaland pharmaceutical industries. The quality of ouremployees defines the quality of our services andwho we are as a company. It is a Siegfried priorityto be recognized as an attractive and reliableemployer in all our markets – to find, develop andkeep talented and motivated people. A carefulselection process and a long-term commitment arekey; lost know-how is difficult to replace and theramp-up phase for new employees is significantlylonger than in other industries.


Key performance indicatorsEmployees as of December 31 2011 2010

Zofingen/Switzerland Total 482.3 492.0of which Production 175.4 177.1

Pennsville/USA Total 157.6 155.0of which Production 72.0 77.0

Malta Total 72.0 46.0Munich/Germany Total 3.5 3.5

Total Group Total 715.4 696.5

Full-time employees FTE / % 664.0 92.8% 649.5 93.3%Part-time employees FTE / % 51.4 7.2% 45.5 6.5%Apprentices /number of apprentices of the total stock Number / % 34.0 4.8% 37.0 5.3%

DiversityFemale employees FTE / % 181.8 25.4% 179.1 25.7%Male employees FTE / % 533.6 74.6% 516.4 74.1%Women upper managment FTE / % 4.8 0.7% 6.5 0.9%Male upper management FTE / % 25.0 3.5% 26.0 3.7%Women middle managment FTE / % 63.3 8.8% 65.4 9.4%Male middle managmenrt FTE / % 153.7 21.5% 153.1 22.0%

DemographicsEmployees up to age 30 FTE / % 125.3 17.5% 97.8 14.0%Employees between age 30 and age 50 FTE / % 404.5 56.5% 406.0 58.3%Employees above age 50 FTE / % 185.6 25.9% 191.7 27.5%Average age of employees Years 42.0 42.0

Attrition rateExits / Attrition rate female employees FTE / % 15.7 2.2% 18.1 2.6%Exits / attrition rate male employees FTE / % 35.7 5.0% 47.8 6.9%Total turnover rate FTE / % 51.4 7.2% 65.9 9.5%

Lost working days due to accidents and sicknessLost working days due to work related illness Number of days 2.0 0.0% 0.0 0.0%Lost working days due to illnes Number of days 3 420.0 79.8% 3 551.0 82.8%Lost working days work related accidents /quota of days lost Number of days / % 219.3 5.1% 119.1 2.8%Lost working days not work related accidents /quota of days lost Number of days / % 645.4 15.1% 617.3 14.4%Total lost working days Number of days / % 4 286.6 100.0% 4 287.4 100.0%Lost working days per FTE Ø day per FTE / % 6.0 2.7% 6.2 2.8%


Success factor – sustainable investment in personnel

The sustainable and entrepreneurial aspects ofour business determine our thinking and actions.The same principles guide employee development.It’s important to us to have qualified people willingto take on management, technical and projectcareers. An individually tailored training program isdiscussed and planned during the annual perfor -mance review between employee and supervisor.Such a program ensures a training curriculum thatmeets industry, job and employee needs. Siegfried’sgoal is to be able to recruit talented people – espe-cially managers and leaders – internally.

Leadership – results-oriented, open and respectful

The quality of management is crucial for thesuccess of the company and for positive levels ofemployee satisfaction and motivation. Our management follows clear goals and providescoaching to help employees respond entrepre-neurially to meet ambitious job goals. Siegfried cultivates an entrepreneurial approach to help ourpeople to better manage and even pro-activelyshape the coming changes in our markets.

Communication – transparency & opennesscreate clarity & acceptance

Clear and open information communicated atthe right time can enhance the employee’s under-standing of our strategy and the acceptance ofmanagement decisions. Informational events andworkshops are held at regular intervals to discussthe daily business and other important topics. Thispromotes the dialog and information exchangebetween employees and management.

Compensation – fair, market-driven and performance-based

Individual performance determines compen -sation. The Siegfried compensation policy considersindividual and technical capabilities as well as over-all performance. Salary guidelines focus on per-formance, and encourage an entrepreneurial mind-

set and behavior. For further details see the com-pensation report on page 64.

Work-life balanceAchieving the best possible work-life balance is

a key strategic goal for our personnel policy. Webelieve that well-adjusted employees are successfulemployees. Key elements are the possibility of flexible work hours (or “flex time”), 24 – 33 vaca-tion days per year (depending on age), part-timeemployment options, maternity and paternityleave, the possibility of unpaid leave of absence(arranged with management), day care services inZofingen (with a neighboring company), etc.

Building the next generationYoung people at Siegfried gain a solid career

foundation in our apprenticeship program. Theprogram also makes an important contributiontoward building the next generation of qualifiedemployees.

At our Zofingen site alone, there were34 apprentices in training in 2011:

11 chemical technologists15 lab specialists (synthetic and analytical)5 business apprentices3 logisticians

In addition to technical education, we also pro-mote team spirit, social skills, and self-confidencefor apprentices. The fact that over half of ourapprentices usually choose to stay with Siegfriedafter completing their training confirms the valueof our efforts.

Diversity and equal opportunity Working in a multi-cultural environment,

Siegfried is a globally active company in an interna-tional market. Diversity enriches our company anddiscrimination based on gender, race or ethnic ori-gin, religion, worldview or disability is not tolera -ted. Our regulations (“Respectful and ResponsibleToward Each Other”) inform how victims and wit-nesses can respond to discrimination and how wesupport them. We strive to prevent sexual harass-ment and mobbing at the workplace; various


trusted internal and external representatives aredesignated as contacts. The Siegfried Code of Conduct and country-specific regulations set highexpectations for employee behavior within thecompany.

Partnership with employee representativesAt Siegfried, every employee has the right to

participate in a general labor contract. We have along tradition, in Switzerland and in the U.S.A., ofcooperation – through direct, transparent and con-structive dialog – with elected employee represen-tatives. Monthly meetings provide a platform fordiscussions about Group developments, work-place-related measures and maintaining consensuson benefits.

Social responsibilitiesAs a responsible economic player and employer,

Siegfried is involved in social, cultural and sportsevents across Switzerland, with a particular focuson the Zofingen (Aargau) region. Siegfried dedi-cates a considerable annual budget to sponsorSwiss social projects, culture and sports organiza-tions in the region, and youth employment pro-grams. The company is a member of Swiss Chemi-cal Pharmaceutical Society (SGCI) and the SwissSociety for Health Policy. An executive manager isalso a Board member of the Aargau Chamber ofIndustry & Commerce and President of the Zofin-gen Regional Economic Association (WRZ).

In partnership with the University of Zurich,Siegfried sponsors the biennial Siegfried Medal aspart of the international Siegfried Symposium. Theaward recognizes outstanding research in the fieldof chemical process development.

Cautionary statement regarding forward-lookingstatementsThis Annual Report contains certain forward-looking statements identified by words such as

“believes”, “expects”, “anticipates”, “projects”, “intends”, “should”, “seeks”, “estimates”,

“future” or similar expressions or by discussion of, among other things, strategy, goals, plans or

intentions. Various factors may cause actual results to differ materially in the future from those

reflected in forwardlooking statements contained in this Annual Report, among others:

(1) pricing and product initiatives of competitors; (2) legislative and regulatory developments

and economic conditions; (3) delay or inability in obtaining regulatory approvals or bringing

products to market; (4) fluctuations in currency exchange rates and general financial market

conditions; (5) uncertainties in the discovery, development or marketing of new products or new

uses of existing products, including without limitation negative results of clinical trials or

research projects, unexpected side-effects of pipeline or marketed products; (6) increased

government pricing pressures; (7) interruptions in production; (8) loss of or inability to obtain

adequate protection for intellectual property rights; (9) litigation; (10) loss of key executives or

other employees; and (11) adverse publicity and news coverage.

The statement regarding earnings per share growth is not a profit forecast and should not be

interpreted to mean that Siegfried’s earnings or earnings per share for 2012 or any subsequent

period will necessarily match or exceed the historical published earnings or earnings per share of

Siegfried.

Publisher’s noteThis Annual Report is also available in German, being the original version.

Annual General Meeting of ShareholdersFriday, April 20, 2012, 10 a.m.in the Stadtsaal, Zofingen

Siegfried Holding AGUntere Brühlstrasse 4CH-4800 ZofingenPhone + 41 62 746 11 11Fax + 41 62 746 11 03

www.siegfried.ch

Editor:Peter A. GehlerMarianne Oberli-Abderhalden

Idea, Concept, Layout:BBF AG, Basel

Photos:Marion Nitsch, ZurichRoger Resele, GelterkindenJulian Salinas, BaselMarkus Senn, WinterthurAlbert Zimmermann, Zurich

Production:MDD Management Digital Data AG, Lenzburg

Print:Swissprinters Zürich AG, Schlieren

Headquarters U.S.AProduction facility for APIs and controlled substances

33 Industrial Park Road Pennsville, NJ 08070 U.S.A.

Tel. +1 877 763 8630 Fax +1 856 678 8201 [email protected]

Group HeadquartersDevelopment and production facilities for APIs, intermediates and drug products

Untere Brühlstrasse 4

Switzerland

Tel. +41 62 746 1111 Fax +41 62 746 1204 [email protected]

Pharmaceutical production facility

HHF070 Hal Far Industrial Estate Hal Far BBG 3000 Malta

Tel +356 222 777 11 Fax +356 222 777 [email protected]

Sourcing and Asia Business Development

31B, Pu Fa Tower 588 South Pudong Road Shanghai 200120 China

Tel +86 21 5876 5019 Fax +86 21 5840 4753

Production facility for intermediates and APIs

186-2, Hai-Hu-TsunLu-Chu-Hsiang338 TaoyuanTaiwan

Tel +886 3 354 1700 Fax +886 3 354 3137

siegfried annual report 2011

Documents

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