66
REMUNERATION REPORT CC JED
REPORT OF THE SUPERVISORY BOARD
HEINEKEN N.V. ANNUAL REPORT 20( 8
Base salary
The base salary policy for the Executive Board is the median
level of the labour market peer group. The median of the
new labour market peer group is substantially higher than the
2008 base salary levels. In view of the current exceptional
economic conditions, the Executive Board wishes to freeze
their 2008 base salary levels, being €750,000 for the CEO
and €550,000 for the CFO for 2009, which the Supervisory
Board respects.
Short-term incentive
The median level of short-term incentive in the new labour
market peer group, as a percentage of base salary, is similar
to that of the old labour market peer group, so there is no
change in level of incentive. At target level, the short-term
incentive for the CEO is 100 per cent of base salary and for
the CFO 75 per cent. The maximum payout is set at a multiple
of 1.5 times the target level.
The focus of the short-term incentive performance measures
remains on annual operational performance. In 2008 organic
net profit growth accounted for 75 per cent of the incentive
opportunity, and special annual targets accounted for the
remaining 25 per cent.
For 2009, to reflect the evolving priorities of the Company,
50 per cent of the incentive opportunity will be linked to
organic net profit growth, 25 per cent to free operating
cash flow, and 25 per cent to special annual targets.
Long-term incentive
The median level of long-term incentive in the new labour
market peer group, as a percentage of base salary, is above
that of the old labour market peer group. Consequently, the
target levels will increase. For the CEO the target level will
increase to 150 per cent of base salary and for the CFO to
100 per cent of base salary, relative to the current levels of
100 per cent and 75 per cent respectively.
TSR Performance Peer Group
Anheuser-Busch InBev (B) (formerly InBev),
Cadbury (UK) (replaced Anheuser-Busch as from the
2006 - 2008 performance period),
Carlsberg (DK),
Danone (F) (replaced S&N as from the 2006 - 2008
performance period),
Diageo (UK) (replaced Numico as from the 2005 - 2007
performance period),
Henkei (G),
LVMH (F),
Nestlé (CH),
L'Oréal (F),
SABMiller (UK),
Unilever (NL).
In each case when a company leaves the TSR performance
peer group it is replaced from the beginning of all current
performance periods.
The requirements of the new Dutch Corporate Governance
code, dated 10 December 2008,11.2.10 (upward/downward
clause) and 11.2.11 (claw-back clause) will be included In the
Long- and Short-Term Incentive Plans.
Supervisory Board Heineken N.V.
17 February 2009
Based on the share price as per 31 December 2008 of
€21.90, for 2009 this corresponds at target level to 51,370
performance shares for the CEO and 25,114 performance
shares for the CFO. These will vest, subject to the fulfilment
of the performance condition, in 2012. The TSR 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,
and also European- and UK-based multinational companies
that operate in the branded consumer products market.
Following acquisition activity in 2007 and 2008, the TSR
performance peer group is as follows:
