5.1 Remuneration of Supervisory Board, Board of Management and other share based payments
Accounting policies
Equity-settled share-based compensation plans
PostNL operates a number of equity-settled share-based compensation plans, under which the employees receive (conditional) shares of the group for services rendered. The fair value of the employee services received, as measured at the grant date in exchange for the grant of the shares, is recognised as an expense, with a corresponding increase in equity.
Non-market performance and service conditions are included in assumptions about the number of (conditional) shares that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. In addition, for some share-based compensation plans, employees provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense between service commencement date and grant date. At the end of each reporting period, the group revises its estimates of the number of shares that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
Remuneration of members of the Supervisory Board
Total remuneration of the Supervisory Board in 2023 amounted to €410,500 (2022: €357,937). For details see the 'Remuneration report'.
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 mortgage loans, advance payments, guarantees and options or shares to any member of the Supervisory Board.
Remuneration of members of the Board of Management
In 2023, the total remuneration based on IFRS of the Board of Management amounted to €2,087,877 (2022: €2,057,994). The following table presents total remuneration of the Board of Management:
PostNL Remuneration of the Board of Management in €
2022, 2023
| Base salary1 | Other benefits2 | Pension costs3 | One year variable | Multi-year variable | Total remuneration | ||
|---|---|---|---|---|---|---|---|
| Herna Verhagen - CEO | 2023 | 696,630 | 193,394 | 45,447 | 104,495 | 149,698 | 1,189,664 |
| 2022 | 679,639 | 188,717 | 45,565 | - | 263,564 | 1,177,485 | |
| Pim Berendsen - CFO | 2023 | 529,439 | 133,665 | 41,920 | 79,416 | 113,774 | 898,214 |
| 2022 | 516,526 | 118,078 | 45,594 | - | 200,311 | 880,509 |
- Base salaries 2023 were indexed with 2.5%.
- Other benefits include company costs related to tax and social security, pension allowances, company car and other compensation.
- Pension costs represent the premium for the collective defined contribution plan (net of employee contributions) and risk premium for the net pension plan. In 2022 pension costs represent the service costs of the defined benefit scheme and risk premium for the net pension plan.
Base salary
The base salaries for both members of the Board of Management were increased by 2.5% in 2023 compared to 2022 in line with the remuneration policy.
Accrued for short-term incentive
PostNL accounts for the short-term incentive on the basis of the performance of the year reported. In 2023, an amount of €183,910 was accrued for. In accordance with the remuneration policy, this amount will be paid in cash in 2024. In 2023, no amount was paid out as targets were not achieved in 2022.
Accrued for long-term incentive
In 2023, the total share-based payment costs relating to the long-term incentive performance share plan for the members of the Board of Management amounted to €263,472 (2022: €463,875).
Performance share plan (PSP)
The members of the Board of Management are awarded a long-term incentive, which represents a maximum potential reward of 37.5% of the annual base salary in the form of a performance share plan. The characteristics of this performance share plan are:
- It is a conditional equity-settled share plan based on a three-year performance period
- Each year shares are conditionally allocated to members of the Board of Management
- Aconditional dividend equivalent is added to the conditional shares equal to the dividend rights of ordinary shares
- The conditional shares and their conditional dividend equivalents will vest after a performance period of three years
- Vesting is subject to the achievement of targets set on each of the long-term performance measures supportive to the attainment of PostNL’s strategy
- If a member of the Board of Management leaves the company during the performance period due to circumstances involving fraud or gross misbehaviour, any accrued rights on the long-term incentive plan will terminate and become void
- If a member of the Board of Management leaves the company due to other reasons, a pro rata performance and time-based vesting applies, unless decided otherwise by the Supervisory board.
In compliance with the Dutch Corporate Governance Code, following a three-year performance period, the holding period for vested shares expires two years thereafter or at termination of employment/service if this occurs earlier. For compliance reasons, a sale of shares may not occur within six months following the date of termination of the employment/service. Any sale of shares for the purpose of using the proceeds to pay for the tax due at vesting of these shares is exempted.
PostNL Performance share plan Board of Management number of shares
2023
| Name of Director - position | Specification of plan | Number of shares held at 1 Jan 2023 | Number of shares granted during 20231 | Number of dividend shares2 | Number of shares settled during 2023 | Number of shares forfeited during 2023 | Net number of shares under a holding period at 31 Dec 2023 | Number of shares subject to a performance condition at 31 Dec 2023 |
|---|---|---|---|---|---|---|---|---|
| Herna Verhagen - CEO | PSP 2023 | 163,711 | 4,739 | 168,450 | ||||
| PSP 2022 | 83,925 | 3,484 | 87,409 | |||||
| PSP 2021 | 65,051 | 2,700 | 67,751 | |||||
| PSP 2020 | 209,021 | 2,552 | (211,573) | 109,488 | ||||
| PSP 2019 | 44,246 | 44,246 | ||||||
| PSP 2018 | 30,687 | |||||||
| Total shares | 432,930 | 163,711 | 13,475 | (211,573) | 153,734 | 323,610 | ||
| Pim Berendsen - CFO | PSP 2023 | 124,421 | 3,602 | 128,023 | ||||
| PSP 2022 | 63,783 | 2,648 | 66,431 | |||||
| PSP 2021 | 49,440 | 2,053 | 51,493 | |||||
| PSP 2020 | 158,856 | 1,939 | (160,795) | 83,211 | ||||
| PSP 2019 | 33,628 | 33,628 | ||||||
| PSP 2018 | 23,322 | |||||||
| Total shares | 329,029 | 124,421 | 10,242 | (160,795) | 116,839 | 245,947 | ||
| Total shares | 761,959 | 288,132 | 23,717 | (372,368) | 270,573 | 569,557 |
- 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 2023 results (€1.557).
- Conditional dividend shares were granted following the final dividend 2022 and interim dividend 2023.
PostNL The main conditions of share award plans
| Specification of plan | Performance period | Grant date |
|---|---|---|
| PSP 2023 | 01/01/2023-31/12/2025 | 11/05/2023 |
| PSP 2022 | 01/01/2022-31/12/2024 | 12/05/2022 |
| PSP 2021 | 01/01/2021-31/12/2023 | 14/05/2021 |
| PSP 2020 | 01/01/2020-31/12/2022 | 06/05/2020 |
| PSP 2019 | 01/01/2019-31/12/2021 | 10/05/2019 |
The vesting date is generally equal to grand date plus three years. Subsequently, a holding period of two years applies.
Note that the number of outstanding conditional shares does not represent the total number of shares held by each member of the Board of Management, which includes vested shares under PostNL's performance share plan and variable remuneration. Reference is made to chapter 15 Remuneration, section actual remuneration, tabel 'Shares held by Board of Management'.
In 2023, an amount of €263,472 (2022: €463,875) was expensed for the cost of the performance shares of the Board of Management. The costs are determined by multiplying the number of granted performance shares by the fair value of such shares on the date of the grant (PSP 2023: €1.606 per share; PSP 2022: €2.817 per share; PSP 2021: €4.375 per share; PSP 2020: €1.341 per share) and by taking into account expected vesting percentages.
Other periodic compensation
Other periodic compensation included company costs related to tax and social security, pension allowances, company car and other compensation.
Pension costs
The pension costs consist of the pension contribution for the reported year (net of employee contributions) and risk premium for the net pension plan. The members of the Board of Management are participants in a collective defined contribution plan.
Loans, advance payments of guarantees
No loans, advance payments or guarantees were granted to members of the Board of Management in 2023 (2022: nil).
Other share based payments
Short-term incentive
The short-term incentive for senior management represents a potential reward of a percentage of the annual base salary (the percentage depending on the job level), which is based on annual performance measures. Of the realised achievements, 50% is paid in cash and 50% is paid in PostNL shares in the following year. Shares will be granted unconditionally and will be delivered without restrictions or a restricted period, other than those defined in the PostNL insider trading policy.
The 50% of the short-term incentive settled in shares is accounted for as an equity-settled share-based payment. The accrued share-based payment costs relating to this short-term incentive amounted to €1.2 million in 2023 (2022: €0.4 million). The realised amounts will be granted and paid in PostNL shares in 2024.
Performance share plan
A select group of senior management is awarded a long-term incentive, which represents a potential reward of 37.5% of the annual base salary in the form of a performance share plan that contains three-year performance measures. The long-term incentive is part of the remuneration package for this select group of senior management. It is aimed particularly at aligning their interests with the long-term interests of the company and its shareholders.
The performance share plan contains the same characteristics as the performance share plan of the Board of Management with the exception that there is no holding period applicable for senior management.
PostNL Performance share plan senior management
2023
| Specification of plan | Number of shares held at 1 Jan 2023 | Number of shares granted during 20231 | Number of dividend shares2 | Number of shares settled during 2023 | Number of shares forfeited during 2023 | Number of shares outstanding at 31 Dec 2023 |
|---|---|---|---|---|---|---|
| PSP 2023 | 482,855 | 13,978 | 496,833 | |||
| PSP 2022 | 235,838 | 185,654 | 15,166 | 436,658 | ||
| PSP 2021 | 179,943 | 141,698 | 11,576 | 333,217 | ||
| PSP 2020 | 499,937 | 30,664 | 6,105 | (496,653) | (40,053) | 0 |
| Total shares | 915,718 | 840,871 | 46,825 | (496,653) | (40,053) | 1,266,708 |
- The number of conditional shares 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 2023 results (€1,557).
- Conditional dividend shares were granted following the final dividend 2022 and interim dividend 2023.
In 2023, an amount of €644,212 (2022: €570,446) was expensed for the cost of the performance shares of senior management. The costs are determined by multiplying the number of granted performance shares by the fair value of such shares on the date of the grant (PSP 2023: €1.606 per share; PSP 2022: €2.817 per share; PSP 2021: €4.375 per share; PSP 2020: €1.341 per share) and by taking into account expected vesting percentages.
Bonus matching share plan
Since 2011, senior management have had the opportunity to participate, on a voluntary basis, in a bonus/matching plan. The company sees the bonus matching plan as part of the remuneration package for the members of senior management, particularly aimed at aligning their interests with the long-term interests of the company and shareholders. At the discretion of the Supervisory Board, grants are made on an annual basis in accordance with the bonus matching plan which has been approved by the Supervisory Board. The significant aspects of the plan are:
- Bonus shares are purchased by the participant using 25% of the gross (cash) variable remuneration and delivered upon the grant of the right on matching shares
- The number of bonus shares is calculated by dividing 25% of an individual’s gross annual cash bonus relating to the preceding financial year by the share price on Euronext Amsterdam on the date the grant is made
- The rights to matching shares are granted free of charge. The number of matching shares is equal to the number of bonus shares (equity settled scheme)
- The matching rights vest three years after the delivery of the bonus shares
- For each bonus share that is sold within three years, the associated right to one matching share lapses. If more than 50% of the bonus shares are sold within three years, the entire right to matching shares lapses with immediate effect
- If a participant leaves the company for certain reasons (retirement, certain reorganisations, disability or death), the right to matching shares will vest immediately and he/she can exercise his/her right pro rata
- A participant loses the right to exercise his/her right on matching shares when he/she leaves the company for reasons other than those mentioned
The exercise of the rights to matching shares is subject to the PostNL insiders trading policy.
PostNL Bonus matching plan senior management
2023
| Specification of plan | Vesting period | Number of shares outstanding at 1 Jan 2023 | Number of shares granted during 2023 | Number of shares settled during 2023 | Number of shares forfeited during 2023 | Number of shares outstanding at 31 Dec 2023 |
|---|---|---|---|---|---|---|
| Bonus matching 2023 | 11/05/2023-11/05/2026 | 16,838 | (141) | (1,892) | 14,805 | |
| Bonus matching 2022 | 12/05/2022-12/05/2025 | 45,561 | (2,591) | (6,045) | 36,925 | |
| Bonus matching 2021 | 14/05/2021-14/05/2024 | 34,606 | (2,864) | (2,425) | 29,317 | |
| Bonus matching 2020 | 06/05/2020-06/05/2023 | 44,463 | (44,463) | 0 | ||
| Total | 124,630 | 16,838 | (50,059) | (10,362) | 81,047 |
In 2023, an amount of €94,195 (2022: €94,917) was expensed for the cost of the equity-settled bonus matching shares. The costs are determined by multiplying the number of granted matching shares by the fair value of such shares on the date of the grant (2023: €1.606 per share; 2022: €2.817 per share; 2021: €4.375 per share; 2020: €1.341 per share) and by taking into account expected vesting percentages.
Financing of equity-settled plans
For all equity-settled , PostNL intends to perform the settlement by issuing new shares or assigning repurchased shares. Accordingly, the company does not need to actively hedge the risk in connection with its obligations. As a result, the company did not purchase any additional shares in 2023 to cover its obligations under the existing share plans. In 2022, PostNL assigned 1,051,073 repurchased shares to cover these obligations. As at 31 December 2023, the total number of shares held for this purpose was nil (2022: 0).