Remuneration Report continued
Reportofthe Reportofthe Financial Other
Contents Overview Executive Board Supervisory Board Statements Information
Long-term variable award
The long-term variable award (LTV) is designed to drive and reward sound business decisions for HEINEKEN's long-term health, and to align the Executive
Board with shareholder interests. The target LTV opportunities for both 2015 and 2016 are 150 per cent of base salary for the CEO and 125 per cent of
base salary for the CFO.
Each year, a target number of performance shares is conditionally granted based on the aforementioned target LTV opportunity percentage
of that year, the base salary of that year, and the closing share price of 31 December of the preceding year. The vesting of these performance
shares is contingent on HEINEKEN's performance over a period of three years on four fundamental financial performance measures:
Organic Revenue Growth (as ofthe 2014 plan) Organic Gross Profit beia Growth (for the 2013 plan)-to drive top-line growth
Organic EBIT beia Growth - to drive operational efficiency
Earnings Per Share (EPS) beia Growth - to drive overall long-term Company performance
Free Operating Cash Flow - to drive focus on cash.
These four performance measures have egual weights to minimise the risk that participants over-emphasise one performance measure to the
detriment of others. At the beginning of each performance period, the Supervisory Board establishes the corresponding numerical targets for these
performance measures based on HEINEKEN's business priorities. These targets are not disclosed upfront as they are considered to be commercially
sensitive. In the first weeks after the end of the performance period, the Supervisory Board reviews the Company's performance against the pre-set
targets, and approves the LTV vesting based on the performance achieved. The performance on each of the measures is reported in gualitative terms
in the Remuneration Report after the performance period has been completed (cf. Part II).
For each performance measure, a threshold, target and maximum performance level is set with the following performance share vesting schedule:
Threshold performance - 50 per cent of performance shares vests
Target performance -100 per cent of performance shares vests
Maximum performance - 200 per cent of performance shares vests.
For each measure, vesting in between these performance levels is on a straight-line basis; below threshold performance the vesting is zero,
whereas beyond maximum performance it is capped at 200 per cent of vesting at target.
The Supervisory Board has the power to revise the amount of performance shares that will vest to an appropriate number if the number of performance
shares that would have vested under the agreed vesting schedule would be unacceptable according to standards of reasonableness and fairness.
The Supervisory Board is entitled to claw back all or part of the shares transferred to the Executive Board members upon vesting (or the value thereof)
insofar as vesting occurred based on incorrect information about achieving the performance conditions. The vested performance shares that remain
after withholding tax are subject to an additional holding restriction of two years, to arrive at a five-year holding restriction after the date of the
conditional performance grant.
54 Heineken N.V. Annual Report 2015
