The Remuneration Committee has overseen the execution of the remuneration policies as approved by the shareholders at the AGM in 2005 and 2013 and continued to ensure that decision making is in line with those policies, PostNL's performance and strategic priorities.
The Renumeration Committee consists of:
Chairman: Jacques Wallage
Member: Eelco Blok
Member: Marc Engel (stepped-down as per 1 October 2019)
Member: Jan Nooitgedagt (joined per 13 December 2019)
Member: Agnes Jongerius (joined per 13 December 2019)
The main responsibilities of the Remuneration Committee are:
Make a proposal for a clear and understandable remuneration policy for the Board of Management and the Supervisory Board to be pursued
Make a proposal for the remuneration of the individual members of the Board of Management
Prepare the remuneration report
Make a proposal for targets on performance measures included in the remuneration policy and measure achievements against those targets for variable remuneration components
Make a proposal for the grant of (conditional) company shares
Dear reader,
On behalf of the Supervisory Board, I am pleased to present our 2019 remuneration report. This report includes a brief summary of our current remuneration policies for the Board of Management and Supervisory Board. In addition, it includes an overview of the execution of the remuneration policies in 2019.
The 2019 remuneration report is our first report under the new EU Shareholders Rights Directive which is transposed into Dutch national law. Since a final set of EU guidelines on the standardised presentation of the remuneration report is not yet available, we have decided to draft this report in the spirit of the latest version of the draft guidelines. We intend to further update our report next year, when we expect the final EU guidelines have been published.
The 2019 remuneration report will be subject to an advisory vote at our AGM on 14 April 2020.
In 2019 we acquired Sandd and divested Postcon and PostNL Communicatie Services. Furthermore, we updated our strategy for the parcels business and presented a new financial framework as from 2020. PostNL will manage its financial performance based on normalised EBIT and free cash flow (FCF). These new key financial metrics have been chosen in order to improve the visibility and comparability of PostNL’s financial performance.
2019 was a challenging and dynamic year. Our underlying cash operating income of €176 million came in at the top-end of our outlook range. This was the result of strong focus on our strategy with a solid performance in the last quarter and several one-off impacts throughout the year.
The improvements we realised in our net working capital contributed significantly to our net cash flow in 2019 compared to 2018. Adjusted net cash from operating & investing activities exceeded target level and amounted to €202 million.
Considering the magnitude of the changes that were implemented in 2019, particularly within the mail organisation and the impact this has had on the daily work of tens of thousands of employees, we are pleased with the promising uplift of employee engagement scores in the second half of 2019 compared to early 2019. In addition, the previously downward trend was stabilised at 65%.
At Mail in the Netherlands, we missed our delivery quality target (95%) with around 1%, ensuring that 94% of consumer mail was delivered the next day. The implementation of the New mail route and preparations for the integration of Sandd temporarily impacted our quality levels. In addition, the continuing tight labour market in the Netherlands made it challenging to attract sufficient qualified people in certain areas of the business.
Across the company, the percentage of highly satisfied customers was 27% in 2019. Whilst we did not meet our 2019 target of 30%, we did manage to bend the downward trend during the year, with the percentage of highly satisfied customers increasing to 28% in the fourth quarter from 26% in the second quarter. In the first six months in particular we were operating at peak network capacity for extended periods in our Parcels business, and made a number of changes across our logistics network. Together, these developments impacted customer satisfaction.
We implemented our new CO2 emission reduction targets and monitoring on our new indicators. 2019 was the last year we monitored our CO2 efficiency index, a combined metric for our CO2 efficiency of buildings and fleet. Limitations in availability of biogas vehicles and strong growth in large truck transport resulted in a performance of 39.3 versus a target of 37.3.
We are very pleased with the progress made with respect to growth initiatives, particularly the introduction of new (digital) services to make online shopping easy and various initiatives in the growth sectors health and food.
Remuneration levels for the Supervisory Board remained stable compared to 2018.
In 2019, we reviewed the remuneration policies for the Board of Management and Supervisory Board to ensure both are compliant with the new EU Shareholders Rights Directive and the implementation thereof in Dutch national law as per 1 December 2019.
We have further aligned the remuneration policy of our Board of Management with the long-term interests of all stakeholders taking into account our new financial framework as of 2020 and included share ownership guidelines. In addition, we have simplified the remuneration structure for the Supervisory Board.
During this process, we consulted multiple internal and external stakeholders and took their feedback into account. The new remuneration policies will be subject to binding votes at the AGM on 14 April 2020.
In 2020 we expect to finalise the integration of Sandd and conclude the divestment of Nexive.
Upon approval by the AGM, 2020 will be the first year the new remuneration policies will be effective. We intend to update our 2020 remuneration report in line with the final EU guidelines and taking into account the advisory vote of shareholders regarding this remuneration report on 2019.
The Hague, the Netherlands, 24 February 2020
On behalf of the Remuneration Committee
Jacques Wallage, Chairman
The remuneration of the Board of Management is based on the remuneration policy as adopted by the AGM on 16 April 2013. The remuneration of the Supervisory Board is based on the remuneration policy as adopted by the AGM on 7 April 2005. More detailed information can be found in the chapter 'Remuneration' of the 2018 Annual Report.
The objective of the remuneration policy is to attract, retain and motivate qualified members in the Board of Management of the highest calibre essential for the successful leadership and effective management of a large company.
The main principles of PostNL's current renumeration policy are:
sobriety
a base salary based on median market levels
moderate variable remuneration with focus on both short-term and long-term objectives
long-term compensation supportive to the attainment of PostNL's strategy
transparency
alignment with multi-stakeholder interests
responsible and risk-controlling
performance-related for reasonable variable remuneration with payout in cash and in shares
The main elements of the remuneration policy are as follows:
Element | Purpose | Operation | ||
|---|---|---|---|---|
Base salary | Provides a fixed level of earnings to attract and retain the Board of Management to execute PostNL's strategy |
| ||
Short-term Incentive (STI) | Rewards the delivery of short-term performance and takes the interest of multiple stakeholders into account |
| ||
Long-term Incentive (LTI) | Rewards long-term value creation to PostNL's strategy and reinforces alignment with shareholders interest by granting shares |
| ||
Pension and benefits | Remain competitive with the market |
|
The remuneration of the members of the Supervisory Board reflects the time spent and the responsibilities of their role. The remuneration of the members of the Supervisory Board comprises base pay and a meeting fee linked to attendance of the meetings of the committees of the Supervisory Board. The members of the Supervisory Board receive no compensation related to performance and/or equity and accrue no pension rights with the company. The members of the Supervisory Board receive no severance payments in the event of termination. PostNL does not grant loans, including mortgages loans, advance payments, guarantees and options or shares to any member of the Supervisory Board.
Annual base fee | ||
|---|---|---|
Chairman | 55,000 | |
Member | 40,000 | |
Committees | Meeting fee | |
Audit and remuneration | Chairman | 2,500 |
Member | 1,500 | |
Nomination | Chairman | 1,500 |
Member | 1,000 |
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