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.
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.
No deviations took place from the decision-making process for the implementation of the remuneration policies.
No temporary deviations took place from the remuneration policies.
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.
No severance payments were granted to members of the Board of Management and the Supervisory Board.
No variable remuneration has been clawed-back.
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.
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'.
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:
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% | |
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 | 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% | |||||
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.
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.
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 | 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'.
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 |
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 |
The conditional shares, unconditional shares under a holding period and unconditional shares not subject to a holding period are presented in the table above.
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'.
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.
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 |
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 |
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.
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 |
(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.
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.
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. |
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. |
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.
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