Remuneration Report continued
Labour market peer group
A new global labour market peer group was adopted by the Annual General Meeting of Shareholders in 2011The median target remuneration of
this peer group is a reference point for the target remuneration of the CEO and CFO. Each year, the Remuneration Committee validates the peer
group to ensure relevance, and recommends adjustments to the Supervisory Board when needed. For 2011 and 2012, the peer group consisted
of the following companies:
Anheuser-Busch InBev (BE)
Kraft Foods (US)
Sara Lee (US)
In 2012, two companies from the labour market peer group, Kraft Foods and Sara Lee, have each split into two independent publicly traded companies.
Based on our selection criteria established in 2011 (sector, revenue and geographic spread), the Supervisory Board has decided to replace Kraft Foods
with its spin-off Mondelez International (US) and Sara Lee with Pernod Ricard (FR) as from 2013.
Base salaries are determined by reference to the median base salary level of the aforementioned labour market peer group. Every year, peer group and
base salary levels are reviewed, and the Remuneration Committee may propose adjustments to the Supervisory Board taking into account external peer
group data and internal pay relativities.
The base salaries for 2012 were EUR1,050,000 for the CEO and EUR650.000 for the CFO. To realign with the peer group median, the Supervisory Board
has decided to increase the CEO's base salary to EUR1,150,000 as from 2013. The base salary for the CFO does not require realignment and will thus
Short-term variable pay
The short-term variable pay (STV) is designed to drive and reward the achievements of HEINEKEN's annual performance targets. Through its pay-out
in both cash and investment shares it also drives and rewards sound business decisions for HEINEKEN's long-term health whilst aligning Executive Board
and shareholder interests at the same time.
The target STV opportunities for both 2012 and 2013 are 140 per cent of base salary for the CEO and 100 per cent of base salary for the CFO. These
opportunities are well aligned with the global labour market peer group medians. The STV opportunities are for a weighted 75 per cent based on financial
and operational measures, and fora weighted 25 percent on individual leadership measures.
At the beginning of each year, the Supervisory Board establishes the performance measures, their relative weights and corresponding targets based
on HEINEKEN's business priorities for that year. The measures and their relative weights are reported in the Remuneration Report up front; the targets
themselves are not reported as they are considered to be commercially sensitive.
The STV awards for 2013 will be subject to four performance measures, viz Organic Net Profit beia Growth (25 per cent), Free Operating Cash Flow
(25 per cent), Organic Gross Profit beia Growth (25 per cent) and Individual Leadership Targets (25 per cent). The financial performance measures
for 2013 have thus remained the same as for 2012, although their relative weights have levelled out (cf. Part II).
Heineken N.V. Annual Report 2012