2022 actual remuneration

The following section provides insight into how our remuneration policy was implemented in 2022 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 Remuneration of Supervisory Board, Board of Management and senior management' to the consolidated financial statements for more information.

Implementation of the remuneration policies

In 2022, we have overseen that all decisions made on Board of Management and Supervisory Board remuneration are in line with the remuneration policies and decision-making process (no deviations took place) as approved by the AGM in 2020 and 2022. All remuneration is paid directly to the Board of Management and the Supervisory Board by PostNL N.V. As such, no remuneration has been granted and allocated by subsidiaries or other companies whose financials are consolidated by PostNL N.V.

Furthermore, PostNL did not grant any severance payments to the Board of Management or the Supervisory Board in 2022. Lastly, the Supervisory Board did not claw-back any variable remuneration from the Board of Management.

Total remuneration Board of Management

Scenario analysis

In conformity with the Corporate Governance Code (hereafter: the Code), scenario analyses have been performed regarding the possible results of the variable remuneration elements and the impact thereof on the remuneration of the Board of Management members. Based on the analyses, the Supervisory Board deems the remuneration levels to be appropriate in view of the performance, respecting contractual agreements. Hence, no further measures are required in this regard. The analyses, amongst others include a minimum performance scenario (0%) and a maximum performance scenario (100%) and share price variations (between 50% and 300%).

External perspective

In line with our remuneration policy, we benchmark our remuneration against a reassessed peer group at least every four years. The 2020 peer group, as defined in our remuneration policy, has not been altered since.

Internal perspective

We take the internal perspective into account in the implementation of the remuneration policy in order to ensure internal alignment with the remuneration of the Executive Committee, other senior management and employees who fall under a collective labour agreement. In 2022, we continued to monitor the development of our internal pay ratios. The ratio between the annual total remuneration for the CEO and the average annual total remuneration of an employee was 21.5 for 2022.

The ratio between the annual total remuneration of the CFO and the average annual total remuneration of an employee was 16.1 for 2022. The Supervisory Board is committed to the guiding principles as laid down in the remuneration policy and deems the alignment with the broader workforce important, as demonstrated by the relatively consistent development of the internal pay ratios over the years. In the 'Performance/ remuneration/internal pay ratio' table, we provide more detailed information on the calculation method and the development of the Board of Management remuneration versus the wider workforce.

Base salary

The base salaries for both members of the Board of Management were indexed in 2022 in line with the 2021 CLA increase of the wider workforce and as further laid-down in the remuneration policy. The total remuneration of the Board of Management in 2022 (and 2021) is outlined in the following table:

PostNL Remuneration Board of Management in €
2021, 2022

• 1 Base salaries 2022 were indexed with 3.0%.
• 2 Other benefits include company costs related to tax and social security, pension allowances, company car and other compensation.
• 3 Pension costs represent the cash out for defined benefit scheme (net of employee contributions), and risk premium for a net pension plan and the unconditional indexation for pension benefits accrued before 1 January 2001. Against the backdrop of the pension plan adjustment as per 31 December 2022 and in line with the wider workforce,Herna Verhagen received a one-off compensation (€ 31,514) in 2022 for the termination of the unconditional indexation for pension benefits accrued before 1 January 2001. As reported in the 2021 remuneration report, the elevated pension costs in 2021 of Herna Verhagen result from a settlement payment towards Stichting Pensioenfonds PostNL for a conditional pension plan based on transitional rules.

Short-term Incentive (STI) 2022

PostNL Short-term Incentive
2022

• 1 Reference is made to the section Policy Framework.
• 2 In line with our strategic objectives, PostNL intends to measure this performance measure through Net Promoter Score (NPS) as from 2023 onwards. More information in this regard can be found in chapter 6 Customer value.

The STI, which rewards the delivery of short-term performance taking into account the interests of multiple stakeholders, is based on annual financial and non-financial performance measures. Only fully achieved targets on these performance measures contribute to the STI pay-out, which means there is no threshold and no stretch.

STI pay-out is based on actual performance as assessed by the Remuneration Committee and summarised in the table above. The 2022 STI realisation amounts to 0% out of a maximum of 37.50%, which equals a pay-out ratio of 0%.

Full year profitability (normalised EBIT) came in at €84 million, significantly lower than target level, which is mainly explained for by Covid related effects in 2021, lower volume growth within Parcels and increased organic costs. Aforementioned is strongly related to the current geopolitical situation causing economic uncertainty, low consumer spending and high levels of inflation.

Although PostNL maximally implemented cost measures to scale down costs, these measures could not counter the full impact of the shortfall of volumes and higher organic costs.

Cash generation (free cash flow) this year came in at €40 million, which is significantly lower than target level. This decline is mainly caused by a lower normalised EBIT.

Following the 2020 step up in customer satisfaction across the board, related in part to the continuation of service during the pandemic, we observe customer satisfaction tending towards, but substantially above, pre-COVID levels. 2022 customer score of 33% highly satisfied customers was slightly below target level. Higher inflation and a decrease in spending power could have negatively impacted the view of customers on companies. Furthermore, the tight labour market lead to longer waiting times for customers. 

The employee engagement score remained relatively high in 2022, with more than 80.8% engaged employees, in line with the benchmark figure in the Netherlands. However, we scored slightly under target level 81.5%, amongst others, caused by work pressure as result of the challenging labour market. Improvement areas relate to available systems and tools, collaboration between departments and internal communication.

PostNL failed to reach the 95% target level for Mail in NL. For Parcels, delivery quality remained very high during the year, with a score of 97.7% just below target level. Quality levels at Mail in the Netherlands and Parcels were mainly affected by a very tight labour market.

By introducing a new employment model for parcels (i.e. offerings thousands of parcel deliverers an employment contract with PostNL over the next few years and actively encourage delivery partners to grow, further professionalise and to green their services), permanent contracts for all mail deliverers, granting surcharges to mail deliverers in specific areas and mail delivers extending their contracts, PostNL combatted the tight labour market throughout 2022. Despite these numerous tailored interventions, both quality levels were not reached. As performance on quality is key to our strategic objectives, quality improvement has continuous attention going forward.

Long-term Incentive (LTI) 2020-2022

PostNL Long-term Incentive
2020-2022

• 1 Reference is made to the section Policy Framework.

The LTI rewards long-term value creation to PostNL’s strategy and reinforces alignment with shareholder interests by granting shares. The plan is based on financial and non-financial performance measures on which targets are set for a 3-year performance period. Since vesting schemes are being applied, a non-fully met target can still contribute to the LTI pay-out although overperformance against target does not lead to an upside (no stretch).

Year-end 2022, the LTI 2020-2022 performance period ended. The Remuneration Committee assessed the achievements of the Board of Management over the three-year performance period. Relative weight, threshold level, target level and actual performance per performance measure are summarised in the table above. The LTI 2020-2022 was granted in 2020 and as such, originates from the previous remuneration policy as adopted by the AGM in 2020, with renewed financial performance measures as part of the adjusted financial framework and by introducing climate impact as non-financial performance measure linked to our strategic objective to improve environmental impact.

Earnings attributable to shareholders (cumulative normalised comprehensive income) of €575 million exceeded target level, resulting in a pay-out ratio (% of annual base salary) of 9.375%. Furthermore, both cash generation Parcels and cash generation Mail in NL (free cash flow) exceeded target levels, resulting in a pay-out ratio of 9.375% each. The aforementioned results were, given the multi-year character of the LTI, mainly caused by a considerable outperformance throughout the business in 2020 and 2021.

Since 2020, the remuneration policy of the Board of Management includes climate impact as a performance measure under the LTI plan, to strengthen alignment with PostNL's sustainability goals. The climate impact performance measure was evaluated for the first time in 2022. Climate impact is defined as CO₂ efficiency of our own operations and measures the relative reduction in grams per kilometre compared to base year 2017. Besides a threshold level and a target level, the climate impact performance measure also contains a qualifier. The qualifier for the LTI 2020-2022 was defined as ‘absolute CO₂ 2022 is lower than 2019’. With lower absolute CO₂ emissions in 2022 than in 2019 and a 32.7% CO₂ reduction compared to 2017 (= base year), both qualifier and target level were significantly exceeded. The significantly improved performance is the consequence of two developments reinforcing each other and PostNL’s demonstrated commitment to embrace climate awareness throughout its operations. Firstly, accelerated by the strong improvement of our data insights on sustainability in our operational chain, we increasingly refuelled with bio and renewable fuels, such as HVO100. Secondly, where feasible, we replaced our means of transport that run on fossil fuels with a suitable electric alternative.

The interplay of these two developments lead to an acceleration of our transition. This resulted in a pay-out of 9.375%. Although all performance measures significantly exceeded target levels, this did not result in a higher pay-out (capped at 37.5% of annual base salary), since no stretch is in place. The applicable number of performance shares will vest in 2023 and are subject to a two-year holding period.

This holding period (together with the minimum shareholding requirement as described in section 'Share ownership’) aligns the long-term interest of the members of the Board of Management with our shareholders. Furthermore, the holding period ensures that the performance shares are held for a period of at least 5 years, in conformity with the Code.

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 2023 at €1.7183 (2022: €3.8307). See note '5.1 Remuneration of Supervisory Board, Board of Management and senior management' to the Consolidated financial statements for more information.

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

PostNL Shares (market value) in €

• 1 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 2022 results (€3.139). Vesting takes place at the end of the 3 year performance period, is subject to the long-term incentive plan's performance measures as described under 'Policy framework' and is determined by the Supervisory Board. Performance will be disclosed in the 2024 remuneration report.
• 2 Conditional dividend shares were granted following the final dividend 2021 and interim dividend 2022.

Shares held by the Board of Management

PostNL Shares held by Board of Management in shares
2021, 2022

Share ownership

PostNL Share ownership as percentage of the minimum shareholding in %
2021-2022

• 1 'Once achieved always achieved' principle applies for the CEO as from 2020 onwards.

The table provides an overview of the shares held as a percentage of the minimal shareholding (75% of annual base salary) at year-end 2022 (and 2022) by the CEO and CFO.

All members of the Board of Management are required to hold a specified value of PostNL shares. This minimum shareholding requirement fosters the identification of Board of Management members with PostNL’s strategy and its shareholders and aims to ensure a sustainable link to the performance of the company. The minimum shareholding requirement for the CEO and CFO is equivalent to 75% of annual base salary. These minimum shareholdings can be built up over 7 years (effective date share ownership as part of the 2020 remuneration policy), for the current Board of Management members.

The CEO has exceeded the minimum share ownership level since 2020, while the CFO has not yet reached the minimum level yet, although expects to do so within the requisite period. The decreased ownership level partially results from the decreased average share price compared to last year.

Information on the change of remuneration and company performance

PostNL Performance/remuneration/internal pay ratio
2018-2022 (IFRS based)

• 1 Profitability is equal to normalised EBIT (see the 'Financial value' chapter for more information).
• 2 Earnings attributable to shareholders is equal to normalised comprehesive income (see the 'Financial value' chapter for more information).
• 3 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.
• 4 Based on the total salaries, pensions and social security contributions (excluding the CEO and CFO) increased with the external temporary staff cost (from 2021 onwards) divided by the average number of FTE's (total of own personnel and external temporary staff) minus two as reported in the 'Financial Statements' of the relevant years. Specifically for 2022, the expense related to the change in pension accounting classification has been excluded.
• 5 Herna Verhagen was CEO over the presented years.

The table 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 table '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 21.5 for the CEO in 2022 and 16.1 for the CFO in 2022. The decrease in pay ratios compared to 2021 is mainly caused by lower variable remuneration costs for the Board of Management and higher average remuneration costs per FTE.

As from 2021 onwards, external temporary staff has been taken into account in the internal pay ratio calculation. This means that all FTEs of external staff hired has been taken into account when calculating the average number of FTEs. The related costs (see note '2.3.1 Work contracted out and other external expenses' to the Consolidated financial statements for more information ) are included in the calculation of the average remuneration per FTE. For administrative reasons, it is not feasible to make a distinction between external staff who have worked shorter/longer than 3 months for PostNL during the calendar year. As a result, no distinction is made in the duration of the activities performed by external staff for PostNL. The pay ratios 2022 excluding external temporary staff would have been 22.0 for the CEO and 16.4 for the CFO.

Total remuneration of the Supervisory Board

PostNL Total remuneration Supervisory Board in €, 2021, 2022

• 1 Hannie Vlug was appointed as member of the Supervisory Board as per 19 April 2022

The total remuneration of the Supervisory Board in 2022 (per individual member) and 2021 (as a total) is presented in the table on the right.

In line with the remuneration policy as adopted by the AGM in 2020, the Supervisory Board members are entitled to a Board fee and one or more fixed Committee fee(s). The members of the Supervisory Board receive no compensation related to performance and accrue no pension rights with the company.

As such, their 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 table on the right.

PostNL Five-year overview total remuneration Supervisory Board in €, 2018-2022