Note 23: Remuneration of the Supervisory Board and the Board of Management

Total compensation to key management personnel amounted to €21.1 million (2016: €14.5 million). An amount of €10.1 million relates to short-term employee benefits (2016: €8.6 million); €1.2 million to post-contract benefits and other post-contract compensation (2016 €1.1 million); €7.9 million to share-based compensation (2016: €4.8 million); and €1.9 million related to payments upon termination of employment (2016 €nil million). The members of the Executive Committee that are not a member of the Board of Management are included in key management personnel.

Supervisory Board

Members of the Supervisory Board receive a fixed remuneration: €130,000 for the Chairman, €78,000 for the Deputy Chairman and €65,000 for the other members. Members of committees receive an extra compensation. Members living outside the Netherlands receive an attendance fee dependent on the country of residence. Members who are resident in the Netherlands do not receive an attendance fee except for meetings held outside of the Netherlands.

In accordance with the Articles of Association and good corporate governance practice, the remuneration of Supervisory Board members is not dependent on the results of the company.

We do not grant share-based compensation to our Supervisory Board members. Travel expenses and facilities for members of the Supervisory Board are borne by the company and reviewed by the Audit Committee.

Board of Management

The individual contracts of the members of the Board of Management are determined by the Supervisory Board within the framework of the remuneration policy adopted by the Annual General Meeting of shareholders. For more detailed information on the decisions of the Supervisory Board with respect to the individual contracts of the members of the Board of Management, see the Remuneration report. The service agreement with Mr. Büchner was terminated by mutual consent, while observing the contractual notice period of six months. Given the circumstances, the Supervisory Board found it appropriate and reasonable to provide a termination benefit in accordance with the remuneration policy and the Code, and to treat the unvested performance shares in line with our standard approach, which implies that the unvested shares granted during his active service will be retained, and the shares granted in the year of termination will be reduced time pro-rated. Mrs. Castella stepped down as CFO and went on leave of absence for health reasons. As such, no leaving arrangement is in place.

Short-term incentive

The short-term incentives for 2017 are linked to ROI (20 percent), EBIT (20 percent), OCF (20 percent), Revenue growth (10 percent) and the individual and qualitative targets of the members of the Board of Management (30 percent).

On the qualitative targets, the CEO performed above target.

Other short-term benefits

Other short-term benefits include employer’s charges (social contributions) and other compensations, such as representation allowances, insurances, car arrangements, housing and educational expenses.

Post-contract compensation

This refers to compensation intended for building up retirement benefits instead of pension contributions. The compensation is based on age and is calculated over the 2017 remuneration. These contributions are paid on base salary only. For Mr. Büchner, the contributions are paid over the base salary in the current year and the short-term incentive related to that year.

Termination benefits

Termination benefits include costs that have been incurred in 2017 relating to leaving arrangements.

Share-based compensation

The costs for share-based compensation are non-cash and relate to the performance-related share plan and the share-matching plan following IFRS 2. Further details on the fair value of the performance-related share plan and the share-matching plan are provided in Note 5.

Performance-related shares

With regard to the performance-related shares granted to the members of the Board of Management in 2015, the final vesting percentage of the series 2015-2017 equaled 81.8 percent (series 2014-2016: 66.49 percent), including dividend shares 92.65 percent (series 2014- 2016: 71.56 percent). The members of the Board of Management will retain the shares for a minimum period of two years after vesting or (if shorter) for the duration of their tenure as member of the Board of Management.

Share-matching plan

For Mr. Büchner, the shares purchased in 2014 under the applicable share matching plan were matched by the company following the Supervisory Board’s decision recognizing consistent and sustainable performance.