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Remuneration Report 2023
Introduction
For each performance measure, a threshold, target and maximum performance level are set with the following
STI payout, as a percentage of target payout:
Sustainability
Review
Report
of the
Supervisory
Board
Other
Information
Financial
Statements
Report
of the
Executive
Board
Short-term incentive
The Short-term incentive (STI) is designed to drive and reward the achievement 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 2023 are 140% of base salary for the CEO and 100% of base
salary for the CFO.
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 Supervisory Board ensures that a balanced mix of financial, operational and
individual performance measures is selected, which incentivises executives to achieve our annual business
strategy and the growth of shareholder value.
The financial and operational measures and their relative weights are reported in the Remuneration Report
upfront (ex-ante); the numerical performance targets are disclosed after the close of the financial year (ex-post)
as they are considered commercially sensitive. In the first weeks of the following year, the Supervisory Board
reviews Company and individual performance against the pre-set targets and approves the STI payout levels
based on the performance achieved. The performance on the financial measures will be reported on actual
measure achievement results (cf. Part III).
The STI payout for 2023 is subject to four performance measures: Organic Net Revenue Growth (weight: 35%),
Organic Operating Profit beia Growth (weight: 15%), Free Operating Cash Flow (weight: 25%) and Individual
leadership measures (weight: 25%). The Individual leadership measures are a mix of quantitative and qualitative
measures tied to the achievement of our EverGreen strategy and are detailed in Part III of this report. The STI
payout for 2024 will be subject to the same four performance measures: Organic Net Revenue Growth (weight:
35%), Organic Operating Profit beia Growth (weight: 15%), Free Operating Cash Flow (weight: 25%) and
Individual leadership measures (weight: 25%). The individual leadership objectives are tied to the achievement
of our EverGreen strategy.
Base salary
Every year, the peer group and base salary levels are reviewed, and the Remuneration Committee may propose
adjustments to the Supervisory Board. HEINEKEN aims to compensate at median on-target remuneration of the
peer group. However, when changes in base salary are considered, broader factors are taken into account,
including but not limited to individual and business performance and internal pay relativities.
For each measure, payout in between these performance levels is on a straight-line basis; below threshold
performance the payout is zero, whereas beyond maximum performance it is capped at 200% of payout at
target.
In line with policy, 25% of the STI payout is paid out in shares, referred to as investment shares. At their
discretion, the Executive Board members have the opportunity to indicate before the end of the performance
year whether they wish to receive up to another 25% of their STI payout in additional investment shares. All
investment shares thus received are then blocked and cannot be sold under any circumstance, including
resignation, for five calendar years to link the value of the investment shares to long-term Company
performance. Withholding tax on the investment shares and on the cash part of the STI payout is settled with
the cash part at the time of payout. After the blocking period is completed after five calendar years, the
Company will match the investment shares 1:1 in the first weeks of the following year, i.e., one matching share is
granted for each investment share. As of then, there are no holding requirements on these investment shares
anymore, and there are no holding requirements on the resulting matching shares that remain after withholding
tax on these shares.
According to plan rules, matching entitlements will be forfeited in case of dismissal by the Company for an
urgent reason within the meaning of the law (‘dringende reden’), or in case of dismissal for cause (‘gegronde
reden’), whereby the cause for dismissal concerns unsatisfactory functioning of the Executive Board member.
With this ‘deferral-and-matching’ proposition, a significant share ownership by the Executive Board is ensured,
creating an increased alignment with the interests of shareholders. The Supervisory Board has the power to
revise the amount of the STI payout to an appropriate amount if the STI payout that would have been payable
in accordance with the agreed payment schedule would be unacceptable according to standards of
reasonableness and fairness. The Supervisory Board is entitled to claw back all or part of the STI payout (in cash,
investment shares or matching shares) insofar as it has been made on the basis of incorrect information about
achieving the performance conditions.
Maximum performance
200% of target payout.
Threshold performance
50% of target payout
Target performance
100% of target payout
Labour market peer group
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 2023, the peer group consisted of the
following companies:
Heineken
N.V.
Annual
Report
2023
Anheuser-Busch InBev (BE)
Carlsberg (DK)
Coca-Cola (US)
Colgate-Palmolive (US)
Danone (FR)
Nestlé (CH)
PepsiCo (US)
Pernod Ricard (FR)
Unilever (UK)
Diageo (UK)
Henkel (DE)
Kimberly-Clark (US)
Mondelez International (US)
L’Oréal (FR)
