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Selected Keyword: ‘Management’

Performance share plan


Average position in DJSI during performance period

%

Number of vested shares (DJSI part)

 

 

 

1

150%

(= 75% of total conditional grant)

2

125%

(= 62.5% of total conditional grant)

3

100%

(= 50% of total conditional grant)

4 – 6

75%

(= 37.5% of total conditional grant)

7 – 10

50%

(= 25% of total conditional grant)

11 – 15

25%

(= 12.5% of total conditional grant)

Below 15

0%

 

It is noted that a takeover would not influence the ranking of the company on the DJSI and therefore would dilute any share-based remuneration to be received by the Board members as a result of a takeover. AkzoNobel ranked second in the relevant DJSI in 2009.

The remaining 50 percent of the conditional grant of shares is linked to AkzoNobel’s Total Shareholder Return (TSR) compared with the performance of the companies in our peer group. Independent external specialists will conduct an analysis to calculate the number of shares that will vest according to the TSR ranking. The determination of the final ranking (and thus the vesting of shares) will be reviewed by the company’s auditors at the end of the performance period. In order to adjust for changes in exchange rates, all local currencies are converted into euros. The retention period for the shares expires five years after the conditional grant.

As of 2007, the relative TSR performance has been compared with the following peer group:

  • Arkema group
  • BASF
  • Ciba Specialty Chemicals
  • Dow Chemical Company
  • DuPont
  • Hercules
  • Kansai Paint
  • Kemira OYJ
  • PPG Industries
  • RPM Industrial
  • Sherwin-Williams
  • Valspar Corporation

In order to reflect both the delisting of Ciba Specialty Chemicals and Hercules, as well as the conclusion that the former peer group did not properly reflect the competitive environment in which we operate, the Supervisory Board decided to amend the peer group to be applied from 2009 onwards. Ciba Specialty Chemicals and Hercules have been replaced by Rhodia and Nippon Paint in the peer group from 2009 onwards. Considering the profile of Dow Chemical Company and BASF, the Supervisory Board decided to remove these companies from the peer group as of 2009.

As of 2009, our peer group has therefore been determined by the Supervisory Board as follows:

  • Arkema group
  • DuPont
  • Kansai Paint
  • Kemira OYJ
  • Nippon Paint
  • PPG Industries
  • Rhodia
  • RPM Industrial
  • Sherwin-Williams
  • Valspar Corporation


The following TSR vesting schemes apply for the conditional grants as of 2007 and 2009 respectively:

Rank

Vesting
(as % of conditional grant)

Rank

Vesting
(as % of half of conditional grant)

As from 2007

 

2009 onwards

 

 

 

 

 

1

150%

1

150%

2

135%

2

135%

3

120%

3

120%

4

100%

4

100%

5

85%

5

75%

6

70%

6

50%

7

55%

7

25%

8

40%

8 – 11

0%

9

25%

 

 

10 – 13

0%

 

 

The vesting schedule changed due to the peer group adjustment, ensuring that targets are no more difficult or easier to achieve. The value of the share and the threshold criteria did not change.

AkzoNobel’s performance over the period 2007 to 2009 resulted in a second position within the ranking of the peer group companies. Consequently, the final vesting percentage of the 2007 grant equaled 135 percent, resulting in a definitive grant of shares (including the compounded dividend yield until December 31, 2009 – 11.69 percent) of 34,680 shares for the CEO and 22,768 shares for the other members of the Board of Management, except for Mr. Nichols, who received a definitive grant of 6,408 shares, it being noted that this conditional grant was made when Mr. Nichols was not yet a member of the Board of Management. Mr. Gunning has received a conditional grant of shares from 2008 onwards.

The number of performance-related shares conditionally granted in 2009 amounted to 36,600 for the CEO and 27,400 for the other members of the Board of Management (face value method).

For the grants not yet vested, the following TSR performance can be reported:

  • For the two-year period ending 2009, AkzoNobel’s position is eighth (indicative)
  • For the one-year period ending 2009, AkzoNobel’s position is fourth (indicative).

In accordance with provision II.2.13d) of the Dutch Corporate Governance Code, the schedule on the following page sets out for 2005 onwards (i) the number of at target shares conditionally granted; (ii) the number of shares which have vested; (iii) the number of shares held by members of the Board of Management at the end of the lock up period; (iv) the face value at the conditional share grant, at vesting and at the end of the lock up period respectively.

In accordance with the company’s Articles of Association, the Dutch Corporate Governance Code and the rules of the performance share plan, the number of shares to be conditionally granted to members of the Board of Management is determined by the Supervisory Board using the face value method. The number of shares is set within the limits of the remuneration policy as adopted by the shareholders. The face value method means that the number of conditionally granted shares is set by dividing the policy level of shares by the share price at the beginning of the year of the conditional grant.

As stated in our 2007 Annual Report, the Supervisory Board has considered remuneration criteria which would apply in a change of control situation. It has been decided that where, in the event of a takeover, the pay-out under the performance share plan is between 100 percent and 150 percent, the Supervisory Board will, taking into account the performance of the company prior to the takeover bid, at its discretion decide whether the projected outcome is fair and may decide to adjust the pay upwards or downwards within the bandwidth mentioned. This undertaking does not affect the discretion the Supervisory Board has to correct the variable remuneration of the Board of Management upwards or downwards.

The Supervisory Board will propose to the 2010 Annual General Meeting of shareholders that a claw back provision be included in the remuneration policy for the Board of Management. This provision will provide the Supervisory Board with the option to claw back variable pay components paid to members of the Board of Management in the event that such variable pay components were based on financial information which is shown within a certain period of time to be materially incorrect. The members of the Board of Management have agreed to accept this proposed claw back provision.

Valuation1 shares Board of Management

Unconditional shares, vested

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series 2004 – 2006

 

 

 

 

Series 2005 – 2007

 

Conditional share grant

 

Number of vested shares

 

End of lock up period (2009)

 

Conditional share grant

 

Number of vested shares

 

End of lock up period (2010)

Number of shares

Number

Value at grant

 

Total

Value at vesting

 

Number

Value

 

Number

Value at grant

 

Total

Value at vesting

 

Number

Value

1

Values based on the share price on January 1 of the relevant financial year (face value).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hans Wijers

33,000

1,009,800

 

14,596

674,043

 

14,596

429,706

 

33,000

1,035,540

 

35,898

1,966,851

 

26,548

1,231,827

Leif Darner

22,000

673,200

 

9,731

449,378

 

7,236

213,028

 

22,000

690,360

 

23,932

1,311,234

 

20,342

943,869

Rob Frohn

22,000

673,200

 

9,731

449,378

 

9,731

286,481

 

22,000

690,360

 

23,932

1,311,234

 

11,794

547,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series 2006 – 2008

 

 

 

 

Series 2007 – 2009

 

Conditional share grant

 

Number of vested shares

 

End of lock up period (2011)

 

Conditional share grant

 

Number of vested shares

 

End of lock up period (2012)

Number of shares

Number

Value at grant

 

Total

Value at vesting

 

Number

Value

 

Number

Value at grant

 

Total

Value at vesting

 

Number

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hans Wijers

23,000

900,450

 

17,536

516,260

 

8,656

NA

 

23,000

1,062,140

 

34,680

1,609,152

 

 

NA

Leif Darner

15,100

591,165

 

11,531

339,473

 

7,470

NA

 

15,100

697,318

 

22,768

1,056,435

 

 

NA

Rob Frohn

15,100

591,165

 

11,531

339,473

 

11,531

NA

 

15,100

697,318

 

22,768

1,056,435

 

 

NA

Keith Nichols

4,198

164,352

 

3,055

89,939

 

1,943

NA

 

4,250

196,265

 

6,408

297,331

 

 

NA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conditional shares1, not vested

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series
2008 – 2010

 

 

 

 

 

 

 

Series
2009 – 2011

 

 

 

 

 

 

 

Conditional share grant at target

 

 

 

 

 

 

 

Conditional share grant at target

 

 

 

 

 

 

Number of shares

Number

Value at grant

 

 

 

 

 

 

 

Number

Value at grant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hans Wijers

16,800

920,472

 

 

 

 

 

 

 

36,600

1,077,504

 

 

 

 

 

 

Leif Darner

11,600

635,564

 

 

 

 

 

 

 

27,400

806,656

 

 

 

 

 

 

Rob Frohn

11,600

635,564

 

 

 

 

 

 

 

27,400

806,656

 

 

 

 

 

 

Keith Nichols

8,733

478,481

 

 

 

 

 

 

 

27,400

806,656

 

 

 

 

 

 

Tex Gunning

3,867

211,873

 

 

 

 

 

 

 

27,400

806,656

 

 

 

 

 

 

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