Geberit AG Annual Report 2004

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Corporate Governance
Compensations, shareholdings and loans

Content and method of determining the compensations and of the shareholding programs
Upon recommendation of the Personnel Committee, the Board of Directors annually determines the remunerations of the Board of Directors and Group Executive Board.

Based on a regulation, there is an option to pay the compensation of the Board of Directors, in whole or in part, in the form of shares. In this case, the shares are subject to a lock-up period of two years and the Board member is granted a discount on the share price. Such discount depends on the results of the Group and corresponds to the discount granted to employees under the employee stock ownership plan (see Consolidated Financial Statements of the Geberit Group, Note 15, [share participation plans]).

The compensation of the Group Executive Board is paid on the basis of a regulation applicable to the entire Group management of the Geberit Group (approx. 150 persons). Such compensation is composed of a fixed salary and a performance-related bonus. The target salary (fixed salary plus medium bonus) is determined in line with market conditions and performance.

The bonus may be received, in whole or in part, in cash and/or in shares. In case of payment in shares, an additional incentive is granted in the form of options. The shares and options are subject to a lock-up period of three years and two years, respectively.

In addition to the salary, there is an annual option plan for the Group Executive Board and other management members (approx. 60 executives) corresponding to a market value of 10% of the target salary at the time of granting. These options are subject to a lock-up period of two and four years, respectively.

There are special pension fund regulations for the Group Executive Board and other management members. In addition, no other significant payments of like kind are made.

Compensations for acting members of governing bodies
Total compensations paid to non-executive members of the Board of Directors amounted to TCHF 670. Such payments will be made in the following year and may be received in cash and/or in the form of shares.

Total compensations paid to the executive member of the Board of Directors and the other members of the Group Executive Board in 2004 (fixed salary, bonus) amounted to TCHF 7,126. The bonus amounted to TCHF 3,476. Such bonus payments will be made in the following year and may be received in cash and/or in the form of shares. An additional amount of TCHF 735 relates to accruals for contractual salary payments through the end of the contracts which will be paid out in 2005 to members of the Group Executive Board who left during 2004.

Compensations for former members of governing bodies
No compensation was paid to former members of the Board of Directors and Group Executive Board in the year under review.

Share allotments and ownership in the year under review
In the year under review, the non-executive members of the Board of Directors acquired 910 shares at market value less 45% discount under the compensation ex 2003. Under the optional bonus scheme ex 2003, the executive member of the Board of Directors and the other members of the Group Executive Board acquired 4,184 shares at market value.

On 31 December 2004, the non-executive members of the Board of Directors held 47,717 shares, the executive member of the Board of Directors and the other members of the Group Executive Board held 180,106 shares of which 1,485 and 9,635 respectively are subject to lock-up periods.

Option allotments and ownership in the year under review
At the end of the year under review, the non-executive members of the Board of Directors held no options. The options of the executive member of the Board of Directors and the other members of the Group Executive Board as of 31 December 2004 are set forth in the following table:

Year of issue	End of blocking period	Maturity	Number	Exercise price	Knock-in price*
2000	lapsed	14.04.05	278	555.00
2001	22.01.05	22.01.06	3,369	480.00	523.00
2001	lapsed	04.04.06	501	458.50
2002	lapsed	21.01.07	656	386.00
2002	21.01.06	21.01.07	2,341	405.00	442.00
2002	lapsed	08.04.07	162	431.00
2003	23.01.05	23.01.08	3,638	429.50
2003	23.01.07	23.01.08	1,915	450.00
2003	27.03.05	27.03.08	4,662	393.50
2004	27.01.06	27.01.09	1,553	682.00
2004	27.01.08	27.01.09	1,198	714.50
2004	24.03.06	24.03.09	4,184	663.50

*If the knock-in price is not reached at the end of the lock-up period, the option will lapse irrevocably

One option entitles the purchase of one share. As of 31 December 2004 a total of 24,457 options were outstanding. In the year under review 10,155 options were exercised and 1,978 options lapsed as the knock-in clause was not fulfilled.

Convertible bonds ownership in the year under review
On 31 December 2004, the non-executive members of the Board of Directors held no convertible bonds, the executive member of the Board of Directors and the other members of the Group Executive Board held 200 convertible bonds.

Additional fees and remunerations
No additional fees and remunerations were paid to members of governing bodies in the year under review.

Loans to members of governing bodies
No loans to members of governing bodies are outstanding.

Highest total compensation
The highest individual compensation in the year under review (fixed salary, bonus) amounted to TCHF 1,596. The bonus amounted to TCHF 777. Such bonus payment will be made in the following year and may be received in cash and/or in the form of shares.

2,070 options were allotted to the member of the Board of Directors with the highest total compensation in accordance with the following table. Each option entitles to purchase one share:

Year of issue	End of blocking period	Maturity	Number	Exercise price
2004	27.01.06	27.01.09	501	682.00
2004	21.01.08	21.01.09	501	714.50
2004	24.03.06	24.03.09	1,068	663.50