2023 actual remuneration

The following section provides insight into how our remuneration policy was implemented in 2023 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 2023, we have overseen that all decisions made regarding the remuneration of the Board of Management are in line with the remuneration policy, as approved by the AGM in 2022, and decision-making process (no deviations took place).

Regarding the Supervisory Board’s remuneration and in order to safeguard the long-term interest and sustainability of the company as a whole, derogation has been applied by rewarding the members of the newly introduced ESG Committee (as per 1 July 2023), in line with the committee fee level for the Remuneration and Nomination Committee. The ESG Committee fee is part of the proposed 2024 remuneration policy of the Supervisory Board which will be put forward to the AGM for voting. Notwithstanding the foregoing, the decision-making process regarding the remuneration of the Supervisory Board was in line with the remuneration policy as approved by the AGM in 2020.

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/or 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 2023. 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 these analyses, the Supervisory Board deems the remuneration levels to be appropriate in view of the performance. 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.

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.

Please note that, as part of the evaluation of the remuneration policy, we updated the peer group as from 2024.

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 2023, we continued to monitor the development of our internal pay ratios which show a relatively consistent development over the years. The ratio between the annual total remuneration for the CEO and the average annual total remuneration of an employee was 21.6 for 2023. The ratio between the annual total remuneration of the CFO and the average annual total remuneration of an employee was 16.3 for 2023. 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 2023 in line with the 2022 CLA increase of the wider workforce as further laid-down in the remuneration policy. The total remuneration of the Board of Management in 2023 (and 2022) is outlined in the table above.

PostNL Remuneration Board of Management in €
2022, 2023

1. Base salaries 2023 were indexed with 2.5%.
2. Other benefits include company costs such as tax and social security, pension allowances, company car and other compensation.
3. Pension costs represent the cash out for the collective defined contribution plan (net of employee contributions), and risk premium for a net pension plan.
4. The 2023 amounts give the value of the shares that vested in May 2023 which relate to the LTI 2020-2022. The 2022 amounts give the value of the shares that vested in May 2022 which relate to the LTI 2019-2021.

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Short-term Incentive (STI) 2023

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 2023 STI realisation amounts to 15% out of a maximum of 37.50%, which equals a pay-out ratio of 40%.

Full year profitability (normalised EBIT) came in at €92 million, which is mainly explained for by lower parcel volumes than expected (largely reflecting lower market growth), a shift in the volume mix negatively impacting returns and higher illness-related costs. The €92 million is positively influenced by lower than expected profit sharing for employees. Correcting for this one-off financial benefit, the target would not have been achieved (€85 million) and therefore a realisation of 0% is considered.

Cash generation (free cash flow) for 2023 came in at €52 million, which is well above target level, fueled by the focus on capex and strict working capital management.

In 2023, the Net Promotor Score was introduced throughout PostNL to measure client satisfaction. Regularly tracking NPS allows PostNL to focus on enhancing customer experience, leading to actionable insights and improvements in services such as further development of our PostNL app. PostNL measured customer experience by cNPS twice in 2023, resulting in an 5 average number one position, hereby achieving our target level.

The employee engagement score unfortunately strongly declined in 2023 with 68% engaged employees, compared to 78% in 2022 (on a like-for-like basis, taking into account the updated scoring method). While this is below the target level, 2023 was a year of challenges and changes for many people across PostNL. The tight labour market that led to employee shortages in certain functions increased pressure on people, while the reorganisations that are undertaken to adapt to a changing postal market have contributed to how engaged people feel. We are pleased to see that within Parcel operations employees reported an increase in the enjoyment and energy they get from their work.

PostNL failed to reach the Quality target levels for both Mail and Parcels. The quality levels at Parcels remained very high but ended up at a score of 97.4%, just below target level. Quality levels at Mail in the Netherlands further declined, which was mainly affected by a very tight labour market and relatively high levels of absenteeism. Through (locally targeted) campaigns, improving the recruitment and onboarding process and reducing mail delivers’ turnover (e.g. by introducing dedicated people coaches), PostNL continuous to combat the tight labour market. To reduce absenteeism and building further on the 2023 measures taken, 2024 will be dominated by the implementation of people coaches to work on reducing physical complaints, a dedicated absenteeism department within the HR organization and extra support for people on sick leave during the first six weeks of their absence.

Long-term Incentive (LTI) 2021-2023

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 2023, the LTI 2021-2023 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 2021-2023 was granted in 2021 and as such, originates from the previous remuneration policy as adopted by the AGM in 2020. Hereby, LTI free cash flow performance measures were set at segment level. Whereby, outperformance on free cash flow in one segment does not compensate for performance in the other segment, whilst the overall performance is deemed to be leading as the Board of Management is responsible at PostNL level. Aforementioned, resulted in an adjusted remuneration policy as from 2022 onwards, measuring free cash flow on PostNL level.

Earnings attributable to shareholders (cumulative normalised comprehensive income) of €434 million subceeding threshold level, resulting in a pay-out ratio (% of annual base salary) of 0%. Furthermore, cash generation Parcels subceeded theshold level while cash generation Mail in NL exceeded target level. For cash generation Parcels this lead to a pay-out ratio of 0%, for cash generation Mail this lead to a pay-out ratio of 9.375%.

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. 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 2021-2023 was defined as ‘absolute CO₂ 2023 is lower than 2020’. With lower absolute CO₂ emissions in 2023 than in 2020 and a 39.0% CO₂ reduction compared to 2017 (= base year), both qualifier and target level were strongly exceeded. This performance is the consequence of three developments 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 refueled 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. Lastly, we kept investing in these initiatives despite challenging market conditions over the past two years. This contributed in further improvement of the relative carbon emissions, because less diesel kilometres than anticipated were needed, while growing the amount of renewable fuels and electric vehicles. Aforementioned resulted in a pay-out of 9.375%.

The applicable number of performance shares will vest in 2024 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 2024 at €1.4451 (2023: €1.7183). 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.

Shares held by the Board of Management

PostNL Shares held by Board of Management in shares
2022, 2023

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Share ownership

PostNL Share ownership as percentage of the minimum shareholding in %
2022-2023

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

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The table provides an overview of the shares held as a percentage of the minimal shareholding (75% of annual base salary) at year-end 2023 (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 still expects to do so within the requisite period.

Information on the change of remuneration and company performance

PostNL Performance/remuneration/internal pay ratio
2019-2023 (IFRS based)

1. Profitability is equal to normalised EBIT (see chapter 9 Financial value).
2. Earnings attributable to shareholders is equal to normalised comprehesive income (see chapter 9 Financial value).
3. IFRS based remuneration, for more information see note 5.1 of the performance statements.
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 chapter 'Financial Statements' of the relevant years.
5. Herna Verhagen was CEO and Pim Berendsen was CFO over the presented years.

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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 21.6 for the CEO in 2023 (2022: 21.5) and 16.3 for the CFO in 2023 (2022: 16.1), hereby in line with 2022.

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 have 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 2023 excluding external temporary staff would have been 22.1 (2022: 22.0) for the CEO and 16.7 (2022: 16.4) for the CFO.

Total remuneration of the Supervisory Board

PostNL Total remuneration Supervisory Board in €, 2022, 2023

1. Martin Plavec was appointed as member of the Supervisory Board as per 18 April 2023
2. Excluding mandatory social security and health insurance contributions.

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The total remuneration of the Supervisory Board in 2023 (per individual member) and 2022 (as a total) is presented in the table on the right. In view of the appointment of Martin Plavec as Supervisory Board Member and committee fees paid to the chairman and members of the newly installed ESG committee as of 1 July 2023, the total 2023 Supervisory Board fees exceed previous year’s fees.

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.

With the exception of Martin Plavec (6,000 PostNL shares), none of the Supervisory Board members hold shares in PostNL N.V.

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 €, 2019-2023

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