Report of the Supervisory Board
Remuneration report
Remuneration Supervisory Board
The amounts paid to the members of the
Supervisory Board are stated on page 112 of
the financial statements. These amounts came
into force as per 2006.
Shares held by the Supervisory Board
As at 31 December 2006, one of the Supervisory
Board members holds 8 shares in Heineken N.V.
The other Supervisory Board members do not
hold any of the Company's shares, convertible
bonds or option rights. Three Supervisory Board
members together held 9,508 shares of Heineken
Holding N.V. as at 31 December 2006.
Remuneration policy as from 2007
A proposal will be submitted to the Annual
General Meeting of Shareholders to revise the
remuneration policy, such revision to have effect
as from 2007. The amended remuneration policy
reflects the organisational structure and the
strategic ambitions.
The proposed changes in the policy are:
Base salary
The CEO will be paid at market median of the
labour market peer group. In 2005 and 2006 the
CEO was paid 30 per cent above the level of the
other Executive Board members. There is no
change to the median pay policy for the other
members of the Executive Board. This represents
€750,000 for the CEO and €550,000 for the CFO.
Annual bonus and long-term incentive
In practice the median of the labour market peer
group has moved towards greater variable pay.
For 2007 this will be reflected in the increase of
target annual bonus and target long-term incentive
for the CEO from 62 per cent to 100 per cent and
for the CFO from 62 per cent to 75 per cent.
The maximum annual bonus will change from
1.4 times target annual bonus to 1.5 times target
annual bonus, in line with the figures for the long-
term incentive plan. The effect of the variable
compensation changes is to make the package
more performance sensitive. In 2005, at target
level, base salary accounted for 45 per cent of the
CEO's remuneration package. In the revised policy
(as from 2007) it will account for only 33 per cent.
For the CFO the figures are 45 per cent and 40
per cent respectively.
The value of performance shares at target level is
equivalent to 100 per cent of base salary for the
CEO, and 75 per cent for the CFO. Based on the
share price as per 31 December 2006 of €36.03
this corresponds at target level to 20,816
performance shares for the CEO and 11,449
performance shares for the CFO. These will vest,
subject to the fulfilment of the performance
conditions in 2010.
Peer group
The labour market peer group will be adjusted.
Philips N.V. replaces VNU as the change in
ownership of VNU renders the inclusion in
Heineken's labour market peer group no longer
appropriate. Philips is the most suitable company
to replace VNU.
Pensions
As from 2006 a new pension policy has been
introduced for current and future members of
the Executive Board, reflecting the Netherlands
market and Netherlands legislative changes.
The arrangements are based on the principle of
defined contribution. The policy aims to provide
for a secure income after retirement. Executive
Board members can choose to participate in the
Defined Contribution Plan or to allocate, within
the fiscal rules, the amounts into a Capital
Creation option. In the Defined Contribution
Plan, apart from the survivor's pension, a
separate lump sum of two times base salary will
be paid in the event of death whilst in service.
In the Capital Creation option the Executive Board
member may elect to receive as income the
Defined Contribution premium amounts from the
pension scheme, less an amount equivalent to
the employee contribution. Instead of a survivor's
pension, a lump sum of, depending on age, ten,
C/\ Heineken N.V.
DM-Annual Report 2006
