This report sets out the Company’s remuneration policy and how it has been applied for members of the Board of Management and the Supervisory Board for the financial year ended 31 December 2007.
In accordance with article 18 of the Company’s articles of association, determining the remuneration of the Board of Management is the responsibility of the Supervisory Board. In line with the Company’s internal regulations, the individual board remuneration and contractual terms of employment are in line with the Company’s remuneration policy, as adopted by the Annual General Meeting of shareholders held on 7 May 2004. Any material change to the Company’s remuneration policy will be submitted to the General Meeting of shareholders for adoption. The Annual General Meeting of shareholders held on 27 April 2007 approved the amendment to the annual bonus structure for members of the Board of Management, as described hereafter.
In accordance with article 26 of the Company’s articles of association, the remuneration of the Supervisory Board is determined by the General Meeting of shareholders.
Remuneration Committee
As referred to on this page, the Supervisory Board has appointed a Remuneration and Appointment Committee (‘Committee’). The Committee has its own regulations which include provisions concerning the Committee’s composition, duties, responsibilities and working methods.
Board of Management
Members of the Board of Management are appointed for a term of four years. They may be reappointed for successive terms of not more than four years.
To avoid a situation where more than two members of the Board of Management retire at the same time, the following resignation schedule has been drawn up by the Supervisory Board:
| Board member |
Date of resignation |
| Frits Vervoort |
Annual General Meeting 2008 |
| Brian Wilkinson |
Annual General Meeting 2008 |
| Greg Netland |
Annual General Meeting 2011 |
| Peter Valks |
Annual General Meeting 2011 |
| Tex Gunning |
September 2011 |
The present employment arrangements for the members of the Board of Management are as follows:
- Tex Gunning has been employed by the Company since 15 September 2007. He was appointed to the Board of Management on 19 September 2007 and consequently appointed Chief Executive Officer. His employment agreement is in force until September 2011 and can be terminated with three months’ notice given by Mr Gunning and six months’ notice given by the Company.
- Greg Netland has been employed by the Company since 4 November 1999. He was appointed to the Board of Management on 27 April 2007. His employment agreement is in force for an indefinite period and can be terminated with twelve months’ notice given by either party.
- Peter Valks has been employed by the Company since 1 January 2000. He was appointed to the Board of Management on 2 May 2003. His employment agreement is in force for an indefinite period and can be terminated with three months’ notice given by Mr Valks and six months’ notice given by the Company.
- Frits Vervoort has been employed by the Company since 1 October 1997. He was appointed to the Board of Management as Chief Financial Officer on 2 October 2001. His employment agreement is in force for an indefinite period and can be terminated with three months’ notice given by Mr Vervoort and six months’ notice given by the Company.
- Brian Wilkinson has been employed by the Company since 4 November 1999. He was appointed to the Board of Management on 2 May 2003. His employment agreement is in force for an indefinite period and can be terminated with three months’ notice given by Mr Wilkinson and six months’ notice given by the Company.
Severance pay The Company intends in all future contracts to set minimum notice periods for the members of the Board of Management of three months, and for the Company maximum notice periods of six months. Termination payments under employment contracts will be limited to a maximum of 100% of annual base salary. However, in exceptional circumstances, this payment may be increased to 200% of annual base salary during the first four-year term of appointment to the Board of Management.
Remuneration objectives
The current remuneration policy was prepared by the Committee and approved by the Supervisory Board effective 1 January 2002. Towers Perrin, an independent specialised international consultancy firm, advised the Committee in this process. When implementing the current remuneration policy for members of the Board of Management, the Committee took the following objectives into consideration:
- Attracting and motivating high level individuals.
- Ensuring that the remuneration package is competitive.
- Focusing on improving the performance and enhancing the value of the Company.
International aspects play an important role in this respect taking into account the international character of the Group and the number of non Dutch members of the Board of Management.
In order to encourage continued improvement in the Company’s performance, the remuneration of the members of the Board of Management includes a fixed base salary, annual variable cash bonus (up to a maximum of 100% of base salary) and long term stock incentives which are performance based (annual grant value up to 100-110% of base salary).
To ensure a competitive remuneration package, compensation is set at median level for base pay and at upper quartile level for variable pay relative to a reference group consisting of primarily European companies, which are active in the business services sector, as recommended by an independent remuneration consultant.
Base salary
Base salaries are reviewed annually and are set reflecting the level of experience and responsibility of each individual.
Annual cash bonus
Each year a cash bonus can be earned based on the achievement of targets which are set in advance by the Supervisory Board.
Up to and including 2007, the targets for the Chief Executive and the Chief Financial Officer have been based on budgeted Group operating income, and the targets for the other members of the Board of Management on the budgeted operating income of the companies for which they are directly responsible. These targets had been chosen as being the most objective measure of performance taking into account business development and variations in market conditions.
A proposal was approved by shareholders at the Annual General Meeting on 27 April 2007 to amend this arrangement and apply a new bonus policy for 2008 and subsequent years. Following external advice and after extensive discussion by the Remuneration and Appointment Committee, the Supervisory Board had decided to propose this amendment in order to introduce (1) additional performance targets, including non financial criteria, (2) a discretionary bonus adjustment decided by the Supervisory Board and (3) the possibility to withhold payment of the bonus in exceptional circumstances. In order to align their remuneration with the Group’s performance, it was also proposed that part of the bonus of each operational member of the Board of Management should be linked to the performance of the Group as a whole. The key elements of the adjusted annual bonus system are:
- Maximum annual bonus of 100% of base salary.
- For operational members of the Board of Management: 60% of the annual bonus to be based on the operating income of their zone, 20% on the Group operating income and 20% on other performance targets including non financial criteria.
- For Chief Executive and Chief Financial Officer: 80% of the annual bonus to be based on the Group performance and 20% on other performance targets including non financial criteria.
- Zone and Group performance are determined on actual performance against budgeted operating income. If less than 90% of the budget is achieved, no bonus is paid. If 110% or more of the budget is achieved, a bonus is paid equal to 100% of the annual base salary. Between 90% – 110%, a bonus is paid equal to part of the annual base salary extrapolated on a straight line basis. Consequently, a bonus equal to 50% of the annual base salary is paid at budget target performance. The Company does not disclose the budgeted amounts as these are considered commercially sensitive information. Bonus calculations are verified by the external auditors.
- The annual bonus may be increased or decreased by up to 10% of annual base salary at the discretion of the Supervisory Board, but may not exceed the maximum of 100% of base salary.
- The annual bonus may be withheld in exceptional circumstances, including dismissal for cause, suspension or in the event that the member of the Board of Management (1) is responsible for an act of omission which has a material detrimental impact on the profits, assets or liabilities of an operating unit in his zone or the Group, (2) is subject o or found guilty in a disciplinary, criminal or regulatory investigation or (3) is guilty of other serious misconduct which affects or is likely to affect in a substantially prejudicial manner the interests of an operating unit in his zone or the Group. Where an investigation will take some time to resolve, the bonus could be suspended and reinstated in the event that the Board member is exonerated.