Post-contract compensation

The members of the Board of Management receive contributions towards post-contract benefits, which are defined as a percentage of income as determined by the Supervisory Board. Currently, they are based on age. For the CEO, the contributions are paid over the base salary in the current year and the short-term incentive of the previous year. The contributions will therefore vary depending on the performance during the previous year and the age of the Board member. For the CFO, these contributions are paid on base salary only.

Leaving arrangements and other special remuneration paid during 2014

In 2014, Mr. Nichols stepped down voluntarily from the Board of Management. In connection with this, and to retain him to ensure a bridging period towards finding a successor, it was decided to award him a short-term incentive over his active employment period. All entitlements to shares under the performance share plans were forfeited in connection with his voluntary departure.

Board contracts

Agreements for members of the Board of Management are concluded for a period not exceeding four years, in accordance with the Code. After the initial term, re-appointments may take place for consecutive periods of up to four years each. The notice period by the Board member is subject to a term of three months; notice by the company shall be subject to a six-month term.

Members of the Board of Management normally retire in the year that they reach the legal retirement age. The contractual arrangements allow the Supervisory Board to request the CEO to resign between the age of 60 and the regular retirement age for effective succession planning within the Board. In such an exceptional situation, the CEO will be entitled to the “fixed” remuneration component until the date of retirement.

See Note 22 of the Consolidated financial statements for an overview of the payments made to former Board members in 2014.

Remuneration policy planned by the Supervisory Board for the next financial year and subsequent years

No changes in the remuneration policy are currently foreseen. The Supervisory Board will continue to closely monitor whether the policy and its implementation are in line with the objectives of the company. The metrics applied for the STI in 2014 (ROI, OPI, OCF) will continue to be applied in 2015. As regards the ROI metric for the long-term incentive awards in 2015, the Supervisory Board has approved a more challenging performance range as stated in the table below.

ROI performance range series 2015-2017

 

 

 

 

 

 

 

 

 

Threshold

 

Target

 

Maximum

Payout opportunity

 

50%

 

100%

 

150%

Target

 

14.0%

 

16.5%

 

19.0%