Labour market peer group
A new labour market peer group was selected using the
following approach. A shortlist was composed of companies that
are formally relevant for comparison with Heineken in terms
of sector, revenue and geographic spread. Philips was added
to the list to ensure relevance in the Dutch market.
The new labour market peer group consists of the following
Anheuser-Busch InBev (B)
Sara Lee (US)
(though Carlsberg does not yet disclose compensation data, it has been maintained
t the new peer group for future reference.
ne median of this global labour market peer group is proposed
the Supervisory Board as a reference point for the total
get compensation (base salary plus short-term and long-term
centive) of the CEO and CFO. Each year, the Remuneration
ommittee will evaluate the peer group to ensure it
mains relevant and may recommend adjustments to the
he Remuneration Committee conducted a detailed review
f the base salary levels of the Executive Board against the
ase salary levels in the new global peer group of companies,
he results showed that the current base salary level for the
EO is below the median base salary of his peers. Based on
iese findings, the Supervisory Board proposes to close the
alary gap. The table below sets out the proposed new base
alaries for 2011.
The Remuneration Committee conducted a detailed review of
the incentive levels of the Executive Board against those in the
new global peer group of companies. The results showed that
the incentive levels of the CEO and CFO are significantly below
the median incentive levels of their peers, especially where
related to long-term performance. Based on these findings,
the Supervisory Board proposes three adjustments:
The first adjustment is to increase the target STI levels from
100 per cent to 140 per cent of base salary for the CEO and
from 75 per cent to 100 per cent of base salary for the CFO.
This increase of target short-term incentive levels is, however,
intended to expand the portion of overall compensation linked
to Heineken's long-term success. This is achieved by a new
deferral requirement, which obliges the CEO and CFO to invest
at least 25 per cent of their STI payout in Heineken N.V. shares
(investment shares), to be delivered by the Company; the
maximum they can invest in Heineken N.V. shares is 50 per cent
of their STI payout (at their discretion). These investment shares
will then be blocked for five calendar years, regardless of
whether they stay in service of Heineken N.V., to link the value
of the investment shares to long-term Company performance.
After the five calendar years blocking period the Company will
match the investment shares 1:1, i.e. one matching share for
each investment share. Matching entitlements will be forfeited
in case of dismissal by the Company for an urgent reason
('dringende reden') within the meaning of the law, or in case of
dismissal for cause ('gegronde reden') whereby the cause for
dismissal concerns unsatisfactory functioning of the Executive
Board member. With this 'deferral-and-matching' proposition an
increased share ownership by the Executive Board is ensured,
creating an increased alignment of interest with shareholders.
In accordance with the existing clawback provision on the STI,
the Supervisory Board can recover from the Executive Board
any investment or matching share, which was awarded on the
basis of incorrect financial or other data.
To ensure an increased share ownership by the Executive Board
already in 2011, it is proposed to apply the 'deferral-and-matching'
proposition already to the payout of the STI for performance
year 2010. To this purpose, the CEO and CFO each have decided
to defer 50 per cent of their payout.
Base salary Base salary Effective date for
an Boxmeer 950,000 1,050,000 2011
eineken N.V. Annual Report 2010