Remuneration Report (continued)
Pay Ratio
Part III - Adjustments to the Executive Board remuneration policy and
implementation for 2019
Policy changes
Implementation changes
O Q,
Introduction Report of the Executive Board
In the Netherlands a revised corporate governance code has come into effect as of financial year 2017.
This revised code requires Dutch stock-listed companies to consider pay ratios between Executive Board
members and other employees within the Company when formulating the remuneration policy for the
Executive Board, and to disclose these ratios in the Remuneration Report every year.
As is commonly understood, such ratios are specific to the company's industry, geographical footprint
and organisational model. HEINEKEN has a truly wide geographical footprint, with the majority of its
business and employees in emerging markets with widely different pay levels and structures compared
to the Netherlands and Europe. In addition, HEINEKEN has a large number of breweries and sales forces
in-house worldwide, which adds to the variety of pay within the Company. For other companies in other
industries this will be different. Finally, pay ratios can also be quite volatile over time, as they can vary with
exchange rate movements and can be very dependent on the Company's annual performance since that
performance impacts the remuneration of the Executive Board much more than of all other employees.
The 2018 pay ratios for HEINEKEN are 198 for the CEO and 91 for the CFO, versus 215 and 100 in 2017
respectively. These ratios are obtained by dividing the 2018 total remuneration for the CEO and CFO
by the 2018 average total remuneration of all other employees worldwide. The common denominator
of these ratios is derived from note 6.4 on page 75 by dividing the 2018 total personnel expense (after
subtracting the expense for contractors and for the Executive Board), by the reported FTE (minus two;
excluding contractors), leading to an amount of €41,689 versus €42,074 in 2017. The total remuneration
for the CEO and CFO is retrieved from note 13.3 on page 109. The reason why the Executive Board's
remuneration is obtained from note 13.3 rather than from this Remuneration Report is explained by the
fact that the personnel expense in note 6.4 is based on IFRS valuation standards, which implies that the
Executive Board's remuneration also needs to be based on these standards for reasons of comparability.
The pay ratio decrease of ca. 8.5% over 2018 results from a decrease in the remuneration of the CEO
and CFO over 2018 by ca. 9.5% and a decrease of the average total remuneration of all other employees
worldwide by ca. 1%.
The decrease in the CEO and CFO remuneration is predominantly caused by a decrease in the Long-term
incentive plans, which clearly exceeds the increase in salaries (cf. note 13.3).
The decrease in the average total remuneration of all other employees worldwide follows from exchange
rate effects and changes in the distribution of employees over geographies, which exceed the regular
pay increases in 2018 in local currencies worldwide.
Financial Statements
Heineken N.V. Annual Report 2018160
Sustainabil ity Review Other Information
The Supervisory Board reviewed the remuneration policy and decided not to submit any changes for
approval to the 2019 AGM.
The Supervisory Board also reviewed the remuneration policy versus its implementation and decided to
increase the base salary of the CFO, from €735,000 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 for a second term of four years.
As part of this nomination and related new service agreement the severance amount in case of dismissal
will be reduced from two years of base salary to one year of base salary, which was already indicated in
the service agreement for the first term (from April 2015 until April 2019).
Supervisory Board Heineken N.V.
Amsterdam, 12 February 2019
