Compensation

Our Compensation Philosophy follows three fundamental principles: being competitive in the markets where we operate, respectful of our employee’s internal equity and boost a pay for performance culture. Those principles are regulated in the form of guidelines clearly explained in our Corporate Compensation Framework. Compensation and Rewards at Mexichem follow a standard job evaluation process that takes into consideration each business unit size, complexity and financial performance. Our merit increases are based on the achievement of individual objectives and development of competencies.

Board compensation

Compensation for members of the Board is established in the Company’s statutes and is approved in the Corporate Practices Committee once a year. Occasionally, the Company instructs a specialized firm to analyze the remuneration of Board members and ensure that is competitive in the market. The chosen company for this purpose in 2017 was Willis Towers Watson.

Our Annual Report (p. 232-233) presents further details on the amount paid during 2017.
https://www.mexichem.com/wp-content/uploads/2018/05/Reporte-anual-2017-FINAL.pdf

CEO and Executive compensation

The Board’s Corporate Practices Committee has among its responsibilities to evaluate the performance of the relevant executives and review the compensation granted to them. Compensation of CEO and the relevant executives is reviewed in the Corporate Practices Committee meeting on April every year.

Compensation components
1. Fixed salary
2. Short-term variable compensation, linked to EBITDA, Trade Working Capital, and Return on Equity.
3. Long -term variable compensation, share price-based incentive program linked to Return on Invested Capital (ROIC).
4. Non-monetary compensation and fringe benefits
5. Company’s health insurance and pension plan

Long Term Incentives (LTI)

Starting on 2015, Mexichem established a Long Term Incentive Plan, whose purpose is to align shareholder interests with executive compensation and reward the company leaders for achievement of strategic objectives that will ensure the continued success of Mexichem.

Mexichem grants a certain number of phantom shares annually aligned with the value of the real shares of the Company, and carries it out through two vehicles: 1-year performance based phantom shares and 3-years performance based phantom shares, which may be exercised for payment as long as the financial objectives of Mexichem are achieved under the conditions established in the plan.

The award of the LTI is granted annually to the selected active executives who have at least six months of continuous service at the time of the grant.
The methodology used to report an estimate the total value of the plan is in accordance with the Black & Scholes model.

Our Annual Report (pp. 323-324) presents further details on the amount paid during 2017.
https://www.mexichem.com/wp-content/uploads/2018/05/Reporte-anual-2017-FINAL.pdf

CEO & all Employees compensation

Given the number of operations across the regions with different currencies, payment schemes and labor agreements, and because of General Data Protection Regulation compliance in Europe, Mexichem does not have exact data that indicates the ratio between the CEO and all employees compensation. However, an estimated value to this figure can be calculated for all operations within the Americas.

This estimation covers data from 16 countries from Canada to Argentina, showing that we have an average of 18 times ratio when comparing the Top Executive compensation of each Business Unit vs. the average compensation of our operative employees.

 

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