2019 actual remuneration

The following section provides insight in how our remuneration policy was implemented in 2019 for both our Board of Management and Supervisory Board. The presented figures are at market value, unless stated otherwise. For IFRS based figures on the remuneration see note 5.1 of the 'Consolidated financial statements'. Scenario analyses have been performed in confirmity with the Code.

Implementation of the remuneration policies

In 2019, we have overseen that all decisions made on Board of Management and Supervisory Board remuneration are in line with the remuneration policies as approved by the AGM in 2013 and 2005.

Decision making process

No deviations took place from the decision-making process for the implementation of the remuneration policies.

Temporary deviations from the remuneration policies

No temporary deviations took place from the remuneration policies.

Remuneration grant by subsidiaries or other companies

No remuneration has been granted and allocated by subsidiaries or other companies whose financials are consolidated by PostNL N.V. since all members of the Board of Management and the Supervisory Board are paid directly bij PostNL N.V.

Severance payments

No severance payments were granted to members of the Board of Management and the Supervisory Board.

Claw-back variable remuneration

No variable remuneration has been clawed-back.

Total remuneration of the Board of Management

External perspective

In line with our remuneration policy, we periodically review and benchmark all remuneration elements for the members of the Board of Management against a peer group. The peer group has not changed compared to 2018.

Internal perspective

Furthermore, we take the internal perspective into account in the execution of the remuneration policy in order to ensure internal consistency with the remuneration of our employees. In 2019, we monitored the development of our internal pay ratios. The ratio between the annual total remuneration for the CEO and the average annual total remuneration for an employee (on a full-time basis) was 24.8 for 2019. The ratio between the annual total remuneration for the CFO and the average annual total remuneration for an employee (on a full-time basis) was 18.8 for 2019.

We provide more detailed information on the development of Board of Management remuneration versus wider workforce remuneration in the section 'Information on the change of remuneration and company performance'.

Base salary

The base salaries for both members of the Board of Management remained unchanged in 2019 compared to 2018 (CEO: €625,000; CFO: €475,000). Since 2013, the base salaries have not changed.

The total remuneration of the Board of Management in 2019 (and 2018) is outlined in the following table:

PostNL Remuneration Board of Management in €
2018, 2019

Name of Director - position

Reported Year

Fixed remuneration

Variable remuneration

Total remuneration

Fixed-variable remuneration

Base salary

Other benefits1

Pension costs2

One year variable

Multi-year variable

Herna Verhagen - CEO

2019

625,000

185,135

46,614

140,625

107,742

1,105,116

78%-22%

2018

625,000

196,006

47,670

93,750

111,846

1,074,272

81%-19%

Pim Berendsen - CFO

2019

475,000

115,002

44,566

106,875

47,293

788,736

80%-20%

2018

333,819

77,039

28,405

50,073

47,431

536,767

82%-18%

  • 1 Other benefits include company costs related to tax and social security, pension allowances, company car and other compensation.
  • 2 Pension costs represent the cash out for defined benefit scheme (net of employee contributions), risk premium for a net pension plan and the unconditional indexation for pension benefits accrued before 1 January 2001.

PostNL Short-term Incentive
2019

Name of Director - position

Performance measure

Link to strategic objective

Relative weight of performance measure

Minimum threshold of performance measure

Actual performance

Actual remuneration (% of base salary)

Herna Verhagen - CEO
Pim Berendsen - CFO

Underlying cash operating income

Deliver profitable growth and generate sustainable cash flow

30%

€173m

€176m

11.25%

Adjusted net cash from operating & investing activities

30%

€144m

€202m

11.25%

Total Financial performance measures

 

22.50%

Employee engagement

Enhance sustainable employability

10%

66%

65%

0%

Customer satisfaction

Help customers grow their business

10%

30%

27%

0%

Quality score

Secure accessible and reliable postal services

10%

95.3%

94.3%

0%

CO2 reduction

Reduce environmental impact

10%

37.3

39.3

0%

 

Total Non-financial performance measures

 

0%

 

Total

 

22.50%

Short-term Incentive (STI) 2019

STI payout for the Board of Management is based on actual performance (against the 2019 targets on each of the performance measures) as assessed by the Remuneration Committee and summarised in the table above.

The financial targets have been adjusted for the impact of the acquisition of Sandd.

Long-term Incentive (LTI) 2019

The performance measures in our remuneration policy contain financial performance measures.

The Remuneration Committee assessed the achievements of the Board of Management over the three-year performance period. Targets on each performance measure versus actual performance are summarised in the table below.

PostNL Long-term Incentive
2019

Name of Director - position

Performance measure

Link to strategic objective

Relative weight of performance measure

Minimum threshold of performance measure

Maximum threshold of performance measure

Actual remuneration (% of base salary)

Actual remuneration (% of base salary)

Herna Verhagen - CEO
Pim Berendsen - CFO

Underlying net cash income

Deliver profitable growth and generate sustainable cash flow

33.33%

€480m

€540m

€410m

0%

Cost savings

33.33%

€380m

€420m

€301m

0%

New growth initiatives

Help customers grow their business

33.33%

Reasonable

Very Good

Very Good

12.50%

     

Total

 

12.50%

The applicable number of performance shares will vest in 2020 and are subject to a two year holding period which enhances the alignment of long-term interest of the Board of Management members and our shareholders.

The market value of shares granted, vested and those shares subject to a holding period are presented in the table below.

The market value of the shares is determined by multiplying the number of shares by the five-day volume weighted average share price of PostNL prior to 1 January 2020 ad €2.0208 (2018: €1.9597). For the number of shares we refer to note 5.1 in the chapter 'Financial Statements'.

PostNL Shares (market value) in €

Name of Director - position

Specification of plan

Value of shares held at 1 Jan 20191

Value of shares granted during 20192

Value of dividend shares3

Value of shares settled during 2019

Value of shares forfeited during 2019

Value of net shares under a holding period at 31 Dec 2019

Value of shares subject to a performance condition at 31 Dec 2019

Herna Verhagen - CEO

PSP 2019

 

204,519

9,154

   

213,673

 

PSP 2018

153,243

 

19,923

   

173,166

 

PSP 2017

112,930

 

14,683

   

127,613

 

PSP 2016

140,300

 

11,450

(107,742)

(44,007)

51,985

 
 

PSP 2015

55,416

    

55,416

 
 

PSP 2014

77,804

      
 

Total

539,693

204,519

55,210

(107,742)

(44,007)

107,401

514,452

         

Pim Berendsen - CFO

PSP 2019

 

155,436

6,958

   

162,394

 

PSP 2018

116,465

 

15,142

   

131,607

 

PSP 2017

51,302

 

6,671

   

57,973

 

PSP 2016

61,582

 

5,026

(47,293)

(19,315)

4

 
 

Total shares

229,349

155,436

33,796

(47,293)

(19,315)

 

351,973

Total Market value

 

769,042

359,955

89,006

(155,035)

(63,322)

107,401

866,425

  • 1 The shares held by Pim Berendsen up to and including 2017 reflect the number of shares that were granted in his duty as member of the Executive Committee.
  • 2 The number of conditional shares granted is based on 37.5% of the annual base salary divided by the five-day average Euronext Amsterdam share price of PostNL prior to the date of publication of the Q1 2019 results (€2.3158).
  • 3 Conditional dividend shares were granted following the final dividend 2018 and interim dividend 2019.
  • 4 The shares of PSP 2016 were granted to Pim Berendsen in his role as member of the Executive Committee and are not subject to a holding period.

PostNL Shares held by Board of Management in shares
2018, 2019

Board of Management

 

31 Dec 2018

31 Dec 2019

Herna Verhagen - CEO

Conditional shares

201,145

254,579

 

Unconditional shares under a holding period

57,623

53,148

 

Unconditional shares not subject to a holding period

190,217

220,417

  

448,985

528,144

    

Pim Berendsen - CFO

Conditional shares

113,494

174,175

 

Unconditional shares under a holding period

  
 

Unconditional shares not subject to a holding period

34,851

46,142

  

148,345

220,317

Shares held by the Board of Management

The conditional shares, unconditional shares under a holding period and unconditional shares not subject to a holding period are presented in the table above.

Information on the change of remuneration and company performance

The table below provides an overview on the change of remuneration, company performance, average remuneration per FTE and internal pay ratios over the last 5 financial years (IFRS based).

In line with the Code, the remuneration of the Supervisory Board is not related to the company performance and paid in cash only. Therefore, the Supervisory Board is excluded from this table. For an overview of the total remuneration of the Supervisory Board over the last five years, we refer to tabel 'Five year overview total remuneration Supervisory Board'.

Internal pay ratios

The ratios between the annual total remuneration for the CEO and CFO and the average annual total remuneration for an employee was 24.8 for the CEO in 2019 and 18.8 for the CFO in 2019. The average remuneration per FTE in 2019 decreased due to the acquisition of Sandd. The table below shows the ratio development over the last 5 years.

PostNL Performance/remuneration/internal pay ratio
(IFRS based)

  

2015

2016

2017

2018

2019

Underlying cash operating income

in million

305

254

241

188

176

 

Delta in %

 

-17%

-5%

-22%

-6%

Underlying net cash income

in million

165

108

154

138

135

 

Delta in %

 

-35%

43%

-10%

-2%

Revenue PostNL

in million

2,751

2,723

2,725

2,772

2,844

 

Delta in %

 

-1%

0%

2%

3%

Total remuneration CEO

in €

1,514,384

1,406,648

1,127,609

1,204,669

1,095,078

 

Delta in %

 

-7%

-20%

7%

-9%

Total remuneration CFO

in €

1,153,617

1,020,880

822,655

1,020,5811

831,273

 

Delta in %

 

-12%

-19%

24%

-19%

Average remuneration per FTE2

in €

46,606

46,292

45,939

48,998

44,108

 

Delta in %

 

-1%

-1%

7%

-10%

       

Internal pay ratio

      

CEO3

 

32.5

30.4

24.5

24.6

24.8

CFO1

 

24.8

22.1

17.9

20.8

18.8

  • 1 Jan Bos stepped down as CFO on 17 April 2018 and acted as advisor to the Board of Management until 1 June 2018; Pim Berendsen was appointed as CFO on 18 April 2018.
  • 2 Based on the total salaries, pensions and social security contributions (excluding the CEO and CFO) divided by the average number of FTE's minus two as reported in the chapter 'Financial Statements' of the relevant years.
  • 3 Herna Verhagen was CEO over the presented years.

PostNL Total remuneration Supervisory Board in €
2018, 2019

Supervisory Board member

Base compensation

Committee meeting fees

Total remuneration

Nomination

Remuneration

Audit

J. Nooitgedagt

55,000

9,000

4,500

 

68,500

J. Wallage

40,000

5,000

10,000

 

55,000

E. Blok

40,000

 

7,500

7,500

55,000

A.M. Jongerius

40,000

6,000

  

46,000

F.H. Rövekamp

40,000

6,000

  

46,000

M.E. Van Lier Lels1

28,242

  

6,000

34,242

T. Menssen

40,000

6,000

 

12,500

58,500

Total current members

283,242

32,000

22,000

26,000

363,242

J.W.M. Engel2

30,000

 

6,000

4,500

40,500

Total 2019

313,242

32,000

28,000

30,500

403,742

Total 2018

283,283

18,000

16,500

30,000

347,783

  • 1 Ms Van Lier Lels was appointed as per 17 april 2019
  • 2 Mr Engel stepped down as per 1 October 2019

Total remuneration of the Supervisory Board in 2019

The total remuneration of the Supervisory Board in 2019 (per individual member) and 2018 (as a total) is presented in the table above.

In line with our remuneration policy, the Supervisory Board members are only entitled to a base compenstation and an attendance fee per committee meeting. The members of the Supervisory Board receive no compensation related to performance and/or equity and accrue no pension rights with the company. As such, their total remuneration is 100% fixed. The members of the Supervisory Board receive no severance payments in the event of termination. PostNL does not grant loans, including mortgage loans, advance payments, guarantees and options or shares to any member of the Supervisory Board.

A five year overview of the total remuneration of the Supervisory Board is presented in the following table.

PostNL Five year overview total remuneration Supervisory Board in €
2015-2019

Supervisory Board member

2015

2016

2017

2018

2019

J. Nooitgedagt

   

43,736

68,500

J. Wallage

51,000

47,500

66,750

57,547

55,000

E. Blok

 

23,000

49,000

53,000

55,000

A.M. Jongerius

53,500

51,500

51,500

45,500

46,000

F.H. Rövekamp

51,000

51,500

52,000

44,500

46,000

M.E. Van Lier Lels

    

34,242

T. Menssen

58,500

56,500

58,500

49,500

58,500

Total current members

214,000

230,000

277,750

293,783

363,242

      

J.W.M. Engel

47,500

52,000

51,000

54,000

40,500

M.A.M. Boersma

55,000

60,625

16,042

  

P.C. Klaver

65,500

19,042

   

Total former members

168,000

131,667

67,042

54,000

40,500

Total remuneration

382,000

361,667

344,792

347,783

403,742

Proposed revision of the Board of Management and the Supervisory Board remuneration policies from 2020

(Representing bodies of) several internal and external stakeholders have been consulted in drafting the 2020 remuneration policies. The following section summarises our adjustments to the remuneration policies for the Board of Management and the Supervisory Board, which will be put forward for a binding shareholder vote at the 2020 AGM. Subject to shareholder approval, both policies will take effect from January 2020 onwards and intended to remain in place for a period of four years, in line with applicable legislation.

On 3 March 2020 the agenda for the AGM will be made public including the remuneration policies of the Board of Management and the Supervisory Board.

The remuneration policy for the Board of Management contains the following adjustments compared to the previous (2013-2019) policy:

  • Guiding principles: In order to attract, reward and retain qualified Board of Management members to set and implement our purpose , ambition, strategy, objectives and culture, we updated our guiding principles to: alignment, transparent, compliant, simple and sustainable.

  • Base salary: The possibility for a regular annual base salary increase is introduced. Which is capped at the salary increase of the broader PostNL workforce as agreed upon in the PostNL collective labour agreement to ensure alignment and transparency.

  • Variable remuneration: Variable remuneration levels used to be defined as ‘moderate’. For reasons of clarity, variable remuneration levels are now set with a reference to the 25th percentile of the peer group (the lower quartile).

  • LTI termination provision: Contrary to the previous policy, in case of termination, LTI performance is determined upon actual performance at the end of the respective performance period and is made payable thereafter. This way PostNL recognises and rewards a member of the Board of Management both for the contribution during the period in service, while ensuring an aligned, transparent and simple settlement.

  • LTI for new Board of Management members: As opposed to the previous policy, new Board of Management members will directly participate in the running LTI plans to achieve immediate shareholder alignment. Conditional shares under the running LTI plans will be granted pro rata in time, with the same performance measures and targets as applied to other Board of Management members.

  • Share ownership guidelines: Minimum shareholding requirements apply to all members of the Board of Management. This fosters the identification of the Board of Management members with PostNL’s strategy and its shareholders and aims to ensure a sustainable link to the performance of the company. Minimum shareholding requirements for the CEO and CFO are equivalent to 75% of base salary to be built up over a period of 7 years.

  • Derogation: In the previous policy, one-off payments could be granted in special circumstances. Now, for compliance and alignment purposes, temporary derogation from the policy is only allowed in ‘exceptional circumstances’, whereby ‘exceptional circumstances’ is defined in the Dutch Civil Code.

PostNL Short-term Incentives (STI) performance measures (incl. weighting)

Current Policy

Proposed Policy

Rationale

Underlying cash operating income (30%)

Profitability (30%)

Aligned with new externally communicated financial framework, closer to the income statement and improves comparative analysis with peers.

Adjusted net cash flow from operating and investing activities (30%)

Cash generation (30%)

Aligned with new externally communicated financial framework.

Employee engagement (10%)

Employee engagement (10%)

Unchanged

Customer satisfaction (10%)

Customer satisfaction (10%)

Unchanged

Quality Mail (10%)

Quality Mail (10%)

Unchanged

CO2 reduction (10%)

Quality Parcels (10%)

Ensures focus on operational excellence to support sustainable growth and complements the Quality Mail performance measure.

PostNL Long-term Incentives (LTI) performance measures (incl. weighting):

Current Policy

Proposed Policy

Rationale

Underlying net cash income (33.33%)

Earnings attributable to shareholders (25%)

To ensure consistency and alignment with the new, externally communicated financial framework, earnings attributable to shareholders is a proxy for dividend pay-out and therefore aligned with shareholders interest.

Costs savings (33.33%)

Cash generation Parcels (25%)

Since cash generation is an important indicator for long term value creation and to realise margin improvement, better cash conversion and expansion of infrastructure.

New growth initiatives (33.33%)

Cash generation Mail in NL (25%)

Cash generation is an important indicator for long term value creation and to realise synergy-effects of Sandd following the consolidation, while continuing to implement cost savings initiatives.

 

Climate impact (25%)

Strongly linked to our long-term strategic commitment to reduce our impact on the climate.

The remuneration policy for the Supervisory Board contains the following adjustment compared to the current policy:

  • In order to increase transparency, predictability, simplicity and align the policy with current market practice, fixed committee fees replace attendance-based fees for committee meetings. The remuneration level of these fixed committee fees are aligned with observed market levels. This change can be observed as cost neutral.