Remuneration Report (continued) Labour market peer group Base salary Short-term incentive Maximum performance O Q, Report of the Executive Board Report of the Supervisory Board Remuneration element Description Strategic role Long-term Is based on achievements of three-year financial incentive targets for Heineken N.V. as specified on page 54 Aims, at target level, for the median of the labour market peer group Is awarded through the vesting of shares, net of taxes (i.e. after deduction of withholding tax due on the full before-tax Long-term incentive amount) Vested shares are blocked for another two years, to arrive at a five-year holding restriction after the date of the conditional performance grant Drives and rewards sound business decisions for the long term health of HEINEKEN Aligns Executive Board and shareholder interests Supports Executive Board retention Pensions Defined Contribution Pension Plan and/ or Capital Creation Plan Provides for employee welfare and retirement needs A global labour market peer group was adopted by the AGM in 2011, and subsequently adjusted in 2012 and 2017. The 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 if needed. For 2018 (and 2017), the peer group consisted of the following companies: Anheuser-Busch InBev (BE) Diageo (UK) Nestlé (CH) Carlsberg (DK) Henkel (DE) Pepsico (US) Coca-Cola (US) Kimberley-Clark (US) Pernod Ricard (FR) Colgate-Palmolive (US) Mondelez International (US) Unilever (NL) Danone (FR) L'Oréal (FR) Heineken N.V. Annual Report 2018 Financial Statements Sustainability Review Other Information Base salaries are determined by reference to the median base salary levels 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 the external labour market peer group data and internal pay relativities. The annual base salaries for 2018 were €1,250,000 for the CEO, and €735,000 for the CFO. For 2019 the base salary for the CFO will be increased to €850,000 to align it with the aspired policy level of the labour market peer group median, subject to the approval by the 2019 Annual General Meeting of Shareholders to re-appoint the CFO as member of the Executive Board. The Short-term incentive (STI) is designed to drive and reward the achievements of HEINEKEN's annual performance targets. Through its payout in both cash and investment shares it also drives and rewards sound business decisions for HEINEKEN's long-term health while aligning Executive Board and shareholder interests at the same time. The target STI opportunities for both 2018 and 2019 are 140% of base salary for the CEO and 100% of base salary for the CFO. These percentage opportunities are well aligned with the labour market peer group medians. The STI opportunities are for a weighted 75% based on financial and operational measures for Heineken N.V., and for a weighted 25% 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 financial and operational measures and their relative weights are reported in the Remuneration Report upfront; the numerical performance targets themselves are not disclosed as they are considered to be commercially sensitive. In the first weeks of the following year, the Supervisory Board reviews the Company and individual performance against the pre-set targets, and approves the STI payout levels based on the performance achieved. The performance on each of the measures is reported in qualitative terms in the Remuneration Report after the end of the performance period (cf. Part II). The STI payout for 2018 is subject to four performance measures: Organic Net Revenue Growth (weight: 35%), Organic Net Profit beia Growth (weight: 15%), Free Operating Cash Flow (weight: 25%) and Individual leadership measures (weight: 25%). For 2019 the same performance measures and weights will apply. For each performance measure, a threshold, target and maximum performance level is set with the following STI payout, as a percentage of target payout: Threshold performance 50% of target payout Target performance 100% of target payout 200% of target payout.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2018 | | pagina 54