Remuneration Report (continued)
Pay Ratio
Comparative overview of remuneration and company performance
Part III - Adjustments to the remuneration policy and
implementation for 2020
Policy changes
Implementation changes
O O Qs
Introduction Report of the Executive Board
In the Netherlands a revised corporate governance code came 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 2019 pay ratios for HEINEKEN are 166 for the CEO and 87 for the CFO, versus 198 and 91 in 2018
respectively. These ratios are obtained by dividing the 2019 total remuneration for the CEO and CFO by the
2019 average total remuneration of all other employees worldwide. The common denominator of these
ratios is derived from note 6.4 on page 76 by dividing the 2019 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 42,937 versus 41,689 in 2018. The total remuneration for the CEO
and CFO is retrieved from note 13.3 on page 111. 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 standards, which implies that the Executive Board's
remuneration also needs to be based on these standards for reasons of comparability.
The Executive Board's average pay ratio decrease of ca. 10% compared to 2018 results from a decrease
in the remuneration of the CEO and CFO over 2018 by ca. 10% and an increase in the average total
remuneration of all other employees world-wide by ca. 3%.
- The decrease in the CEO and CFO remuneration is predominantly caused by a decrease in the incentives
value (cf. note 13.3).
- The increase in the average total remuneration of all other employees worldwide follows from regular pay
increases, changes in the distribution of employees over geographies, and exchange rate effects in 2019.
The Dutch Act to implement the Shareholder Rights Directive was adopted by the Dutch Senate in
November 2019 and entered into force in December 2019. The Shareholder Rights Directive will be followed
by Guidelines to drive greater consistency of reporting regarding executive remuneration disclosure in
company Remuneration Reports. It is expected that these Guidelines will be issued in the course of 2020.
In anticipation of those Guidelines and in accordance with the Shareholder Rights Directive, the following
table provides a comparative overview since 2015 of annual Executive Board remuneration; average
employee remuneration; Executive Board pay ratio; and company performance:
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2019 l!
Other Information
Total remuneration
in thousands of €1
Average
employee total
remuneration
in thousands
of €3
Pay ratio4
Organic net
revenue
growth %5
Year
CEO
CFO2
CEO
CFO
2015
9,119
2,137
n.a.
n.a.
n.a.
3.5
2016
9,480
3,514
n.a.
n.a.
n.a.
4.8
2017
9,060
4,203
42.1
215
100
5.0
2018
8,244
3,805
41.7
198
91
6.1
2019
7112
3,726
42.9
166
87
5.6
1 Total remuneration for the CEO and CFO as per note 13.3 Related Parties (i.e. fixed salary, short and long term incentives, pension contributions and other
emoluments). Supervisory Board management fees are disclosed in note 13.3 (as approved by the AGM in 2011 and adjusted most recently in 2019 AGM).
2 Appointed on 23 April 2015.
3 Total personnel expense in thousands of (after subtracting the expense for contractors and for the Executive Board) divided by the reported FTE (minus
two; excluding contractors). Reporting available since 2017.
4 Total remuneration for the CEO and CFO divided by the average total remuneration of all other employees worldwide. Reporting available since 2017.
5 Organic net revenue growth percentage for the financial year (performance measure for short- and long-term incentives).
The Supervisory Board and its Remuneration Committee carefully studied the Dutch Act aimed to
implement the Shareholder Rights Directive, as adopted by the Dutch Senate in November 2019, to identify
any potential gap in our remuneration policy. In line with the requirements of the new legislation, we will
submit for approval to the 2020 AGM a revised Executive Board and Supervisory Board remuneration policy.
HEINEKEN has engaged with main shareholders to gather feedback on our current remuneration policy and
proposed changes. We also encourage all our shareholders to attend the 2020 AGM to provide their views.
The Supervisory Board is also mindful of the recommended changes to remuneration disclosure that form
part of the Draft Guidelines to the Shareholder Rights Directive. These changes are intended to drive greater
transparency and consistency of reporting regarding executive remuneration and may result in further
updates to our remuneration disclosure in the Remuneration Report once the Guidelines are finalised.
Supervisory Board Heineken N.V.
Amsterdam, 11 February 2020
