Our remuneration policy has the objective to provide remuneration in a form which 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 company’s objectives. The remuneration policy is aligned to the Value and Values strategy of the company (see the section of this Report 2011).
Both the policy itself, and the checks and balances that are applied in its execution, are designed to avoid incidents where members of the Board of Management – and senior executives for whom similar incentive plans apply – act in their own interest, take risks that are not in line with our strategy and risk appetite, or where remuneration levels cannot be justified in any given circumstance.
To ensure that remuneration is linked to performance, a significant proportion of the remuneration package is variable and dependent on the short and long-term performance of the individual Board member and the company. The Supervisory Board ensures that performance targets are realistic and sufficiently stretching and that – particularly in respect of the variable remuneration components – the relationship between the chosen performance criteria and the strategic objectives applied, as well as the relationship between remuneration and performance, are properly reviewed and accounted for, both ex-ante and ex-post.
In accordance with the requirements of the Dutch Corporate Governance Code, the Remuneration Committee, before setting the targets to be proposed for approval by the Supervisory Board, carried out a scenario analysis of the possible financial outcome of meeting target levels, as well as maximum performance levels.
It is our policy to maintain overall remuneration levels that are at the median level of the external market. For benchmarking purposes, the peer group consists of the following companies:
Rhodia and TNT N.V. no longer feature in the peer group. Rhodia has been been acquired by Solvay, while TNT N.V. was removed following the split of the company. The peer group will be reviewed further during 2012.
The Remuneration Committee of the Supervisory Board consults professional independent remuneration experts to ensure an appropriate comparison. It further reviews the impact on pay differentials within the company when the overall remuneration is determined.