56. Remuneration report
The remuneration policy and structure reflects the Company's strategic ambitions,
take into account internal and external circumstances and preserve the highest
standards of good corporate citizenship. The policy seeks to maintain a tight focus on
the Company's strategic short-term and long-term results. The policy was adopted in
the Annual General Meeting of Shareholders in 2005 and has remained unchanged.
Remuneration structure
The remuneration package of the Executive Board
includes a base salary, a short-term incentive and
a long-term incentive. With the remuneration policy
fully implemented, the fixed salary will account
for 45 percent of the total remuneration package
when targets are achieved. The variable
remuneration is divided equally between short-
term and long-term. This ensures a balanced focus,
on both short-term and long-term performance.
The Company aims at consistency in the structure
of the remuneration packages of both Executive
Board members and senior Heineken executives.
The performance-related elements in Executive
Board members' remuneration is emphasised more
strongly than those of senior executives, reflecting
the principle of increasing performance sensitivity
in line with the ability to impact on Group results.
In order to be able to determine the remuneration
package for the members of the Executive Board,
internal pay relativities and relevant market data
have been used. For internal pay relativities,
it was assessed what differential would fairly reflect
the different levels of responsibility between
the Executive Board and senior executives.
For the market reference, a specific labour market
was defined. The remuneration package of
the Chairman will be based on a premium of
30 percent above the remuneration level of the
other members of the Executive Board.
Heineken operates in a highly international labour
market peer group and is headquartered in the
Netherlands. Consequently, the main reference
for market competitive salary levels are primarily
other Dutch multinational companies (75 percent).
To reflect the specific business of Heineken a
minority of Continental European companies
that operate in the market of branded consumer
products are included (25 percent). The peer group
consists of the following companies: Akzo Nobel,
DSM, Reed Elsevier, Royal Ahold, Royal KPN, Royal
Numico, TPG, Unilever, VNU, Wolters Kluwer, InBev,
Henkei, L'Oréal and Nestlé.
Base salary
For the members of the Executive Board, the
remuneration policy includes a base salary at the
median level of the labour market peer group.
The base salary for the Chairman is set at 30
percent above the base salary for the members
of the Executive Board.
In 2005, the base salary levels have been adjusted
by 16.7 percent in line with the Consumer Price
Index (CBS) since 1999 to €418,000 for the
Executive Board members and to €634,000 for
the Chairman.
Heineken N.V. - Annual Report 2005
