REMUNERATION REPORT
63
The remuneration policy and structure
reflects the strategic ambitions of the
Company and takes into account internal
and external circumstances. The policy
seeks to maintain a tight focus on both
short-term and long-term strategic results.
A review of the policy is conducted
every two years. The existing policy was
approved in the Annual General Meeting
of Shareholders in 2005 and adjusted
i 12007. Adjustments to the policy, as
f om 1 January 2009, will be submitted
to the Annual General Meeting of
Shareholders 2009.
HEINEKEN N.V. ANNUAL REPORT 2008
P muneration Executive Board as from 2007
1 ie remuneration package of the Executive Board includes
a oase salary, a short-term incentive and a long-term
i centive. Base salary accounts for 33 per cent of the total
r muneration package at target level for the CEO and 40 per
c nt for the CFO. Target percentage for both the short- and
I ng-term incentive is 100 per cent of base salary for the CEO
id 75 per cent for the CFO. The equal division of variable
I iy between short- and long-term incentive ensures a
t lanced focus, on both short- and long-term performance.
e Company aims to achieve consistency in the structure
the remuneration packages of both Executive Board
i embers and senior Heineken executives. The variable
ements in Executive Board members' remuneration are
are strongly emphasised than those of senior executives,
fleeting the principle of increasing performance sensitivity
i line with the impact on Group results.
)th internal pay relativities and relevant market data are
ed to define the remuneration package for the Executive
i >ard. For market data, a specific labour market is defined.
ie reference for market data according to the existing
ilicy is primarily other Dutch multinational companies,
reflect the specific business of Heineken a minority of
i ntinental European companies that operate in the branded
•nsumer products markets are included. The labour market
er group consists of the following companies:
Akzo Nobel (NL),
Anheuser-Busch InBev (B),
Henkei (G),
Koninklijke Ahold (NL),
Koninklijke DSM (NL),
Koninklijke KPN (NL),
Koninklijke Numico (NL)*,
Koninklijke Philips (NL),
Nestlé (CH),
L'Oréal (F),
Reed Elsevier (NL),
TNT (NL),
Unilever (NL).
Replacement of Koninklijke Numico N.V., following its take-over, is part of the
revised policy as per 2009.
Base salary
The members of the Executive Board are paid at the median
of the labour market peer group. This represents €750,000
for the CEO and €550,000 for the CFO.
Short-term incentive
The focus of the short-term incentive is on annual operational
performance. Organic net profit growth is the measure
used to assess the operational performance of Heineken
on a one-year basis and accounts for 75 per cent. Each year,
the Supervisory Board determines an ambitious, yet realistic
organic net profit growth target. The threshold level of
payout is set at 60 per cent of target. A linear payout curve
applies. Part of the payout is subject to meeting an acceptable
cash conversion rate. The remaining 25 per cent is linked to
yearly personal targets. The specific targets are commercially
sensitive and cannot be disclosed. At target level, the
short-term incentive level for the CEO is €750,000 and for the
CFO €412,500. The maximum payout will not exceed 1.5
times the target level.
As not all targets were met in 2008, the pay out for the 2008
bonus of the Executive Board is 81.5 per cent of target,
translating into a short-term bonus of €611,250 for the CEO
and €336,187 for the CFO.
Long-term incentive
The long-term incentive plan for the Executive Board, in
effect since 1 January 2005, is a performance share plan.
A similar plan was implemented for senior management
in 2006. Each year a number of performance shares are
conditionally awarded, the vesting of which is subject to
meeting a stretching performance target after three years.
The value of the performance shares at target level for 2008
for the CEO is €750,000 and for the CFO €412,500. The
performance condition according to the existing policy is
Total Shareholder Return (TSR), measured over a three-year
period, relative to a performance peer group. The