The objective of the company’s remuneration policy is to provide remuneration in a form that will attract, retain and motivate the members of the Board of Management as top managers of a major international company, while protecting and promoting the mid and long-term objectives of the company. The remuneration policy and the checks and balances that are applied in its execution are designed to avoid that members of the Board of Management – as well as senior executives for whom similar incentive plans apply – act in their own interest, take risks that are not in keeping with the company’s strategy and risk appetite, or that the remuneration levels cannot be justified in any given circumstance.
The total remuneration package of the members of the Board of Management consists of:
- Base salary
- Performance-related short-term incentive
- Performance-related shares
- Pension provisions.
It is the company’s policy to move gradually toward overall remuneration levels that are at the median level of the external benchmark of a peer group of companies which as of January 1, 2009, consists of:
Changes in the peer group are made only if companies no longer qualify to serve as a peer group company. ICI, Ciba and Royal Numico have been removed from the peer group as a result of being delisted. The Supervisory Board has decided to add Philips as a replacement for the delisted companies and to replace Aegon with Randstad as of January 1, 2009.
The Remuneration Committee consults professional independent remuneration experts to ensure an appropriate comparison.
To ensure that remuneration is linked to performance, a significant proportion of the remuneration package is variable and dependent on short and long-term performance of the individual Board member and the company.