In conversation with our chairman
Remuneration Committee Chairman Ad Melkert reflects on 2024.
How do you look back on 2024 as chairman of the Remuneration Committee?
The year 2024 turned out to be an unsatisfactory year from a financial perspective. The company had to deal with higher than expected client concentration in e-commerce and severe cost pressures in a tight labour market with rising wages and considerable absenteeism, resulting in declining margins at e-commerce and mail. Normalised EBIT therefore ended up lower than expected, but thanks to well-executed cash and balance sheet management, the outlook for free cash flow and normalised comprehensive income was achieved. From a non-financial perspective, the year 2024 also gives diverse results. PostNL’s digital transformation accelerated in 2024 and further progression was made on the ESG domain. On customer satisfaction, PostNL maintained its strong position versus competition. In addition, the employee engagement score ended up at target level while quality at Parcels ended up just below target level, but equaled the 2023 score. Unfortunately, the quality levels at Mail in the Netherlands have further declined, despite all efforts made, a.o. by increasing the inflow of mail deliverers. This confirms the necessity to adjust service levels, to ensure a sustainable mail business for the future. In 2024, discussions with the government on the future of mail in the Netherlands were initiated to transition towards a service level for standard mail to be delivered within two days, moving towards within three days over time.
From a remuneration perspective, the year 2024 was marked by the renewed remuneration policies for the Board of Management and the Supervisory Board, that were approved at the AGM in April with almost all of the votes casted. Moreover, three collective labour agreements were concluded between PostNL and the trade unions, as well as a transition plan for the PostNL pension scheme, to ensure compliance with the upcoming new pension legislation.
In April 2024 the AGM voted for the renewed remuneration policies. Can you reflect on the evaluation process and its outcomes for the Board of Management?
Review of the remuneration policy of the Board of Management normally takes place every four years and was necessary as the evaluation made clear that the policy (which had not substantially been changed for more than 10 years) was no longer in line with best practice and even rewarded below variable remuneration ambition and market levels. The new policy includes a variable remuneration increase up to the ambition level (which is moderate compared to the market, taking into account PostNL’s public mail delivery task), the introduction of a threshold, stretch opportunity and variable remuneration design adjustments to improve the pay for performance mechanism. This responsible and balanced new policy is better equipped to attract, reward and retain qualified Board members. At the start of the new policy, it was however jointly concluded by the Supervisory Board and the Board of Management to not implement variable remuneration increases in 2024, acknowledging the societal context PostNL operates in and considering performance and all stakeholders’ interests. A recent assessment of the situation, taking into account our stakeholder landscape, has led to the same conclusion for 2025. As of 2026, the Supervisory Board will start implementing variable remuneration increases towards the new policy levels.
Which other topics have been discussed in the Remuneration Committee in 2024?
In addition to putting renewed remuneration policies up for voting at the 2024 AGM and deciding to keep the variable remuneration levels of the Board of Management as is for 2024, the regular base salary adjustment and the variable remuneration outcomes of the Board of Management were discussed.
Following the change in the remuneration policy of annually selecting STI performance measures and LTI non-financial performance measures via the bucket approach, the Supervisory Board has reviewed, discussed and selected the most appropriate performance measures for 2025, which are disclosed in this remuneration report. Moreover, the Remuneration Committee discussed the remuneration proposals for the new CEO and CFO, who will be appointed mid-April 2025 after the AGM. An overview of the elements of their remuneration package, which have been determined in line with the remuneration policies, will be attached to the AGM agenda which will be published early March.
Furthermore, taking into account the 99.85% votes for the 2023 remuneration report and the feedback received from stakeholders, no material adjustments were implemented in the remuneration report 2024 (apart from the adjustments resulting from the renewed remuneration policies).
On a final note, looking at the year 2025, is there anything you would like to add?
At the 2025 AGM, CEO Herna Verhagen will step down after many years of service and will formally hand over her responsibilities and duties to Pim Berendsen, the current CFO. At the same time, Linde Jansen will be appointed as PostNL’s new CFO. We are very grateful for the CEO’s strong leadership and dedication and look forward to write with the new Board of Management a new chapter in PostNL’s exceptional history.