58. Remu
The performance condition is total shareholder
return, measured over a three-year period.
The total shareholder return is measured relative
to a performance peer group. The performance
peer group is different from the labour market
peer group and includes companies with which
Heineken competes for shareholder preference.
It is composed of other brewers, but also includes
European companies that operate in the branded
consumer products market. The performance
peer group consists of the following companies:
Anheuser-Busch, Carlsberg, InBev, SABMiller,
Scottish Newcastle, Henkei, L'Oréal, LVMH,
Nestlé, Numico and Unilever.
If, over a three year period, Heineken performs
better than the median of the peer group the
Executive Board will be rewarded with shares.
These shares are subject to a holding restriction
of two years. Below median, no shares will be
awarded. At sixth position, 25 percent of the
target amount will vest. A linear vesting schedule
applies, with 50 percent of the target amount
vesting at fifth position and 75 percent at fourth
position. At third position, the target amount will
vest. If Heineken is ranked first, the maximum
number of shares will vest. This is 1.5 times the
target amount of shares. Heineken is currently
ranked eleventh.
Heineken will repurchase the shares that will be
required for vesting.
New contracts of employment have been agreed
with the Executive Board, reflecting the new
remuneration structure. Similar to the previous
contracts, the new contracts have been entered
into for an indefinite period of time. The general
notice period is 6 months for the Company
and 3 months for the members of the Executive
Board.There is no specific scheme in the event
of dismissal. As stated in our Comply or Explain
Report (February 2005), on the basis of the Dutch
Corporate Governance Code, provision 11.2.7
cannot be complied as it violates the law.
Pensions
The pension policy for the current members
of the Executive Board remained in place until
the end of December 2005, however, in anticipation
of changes proposed to the plan design for 2006,
an extra pension payment was made for each of
the current Executive Board members. This extra
payment augmented benefits over past service to a
level that is consistent with a 60 percent pension at
age 60, pro-rated-years of service actually worked.
As from 2006 a new pension policy will be
introduced for current and future members of the
Executive Board, reflecting the Dutch market and
Heineken N.V. - Annual Report 2005
