Amendment regarding the Board of Management Remuneration Policy, following stakeholder feedback
At the Annual General Meeting (AGM) held on April 22, 2022, an amendment to the STI metrics in the Remuneration Policy was approved with a majority of 91.94% of the votes. The amended Policy became effective (retroactively) from January 1, 2022, and will remain effective until a new Policy is approved, which will be proposed to shareholders no later than at the 2025 AGM.
In 2021, in favor of transparency and strategy alignment, the AGM approved the adjusted OPI and operating cash flow (OCF) metrics as the two financial STI metrics that are applicable throughout the effective period of the Policy. Taking into account external (e.g. shareholder) feedback, OCF has been replaced by free cash flow (FCF) in the amended Policy that was approved at the 2022 AGM. The reason being that OCF is an internal metric which is not externally published, and focuses only on adjusted EBITDA, CapEx and working capital. Therefore, OCF is viewed as what the Board of Management can “operationally control directly”. Feedback was also received from shareholders who favor FCF over OCF, because FCF is an externally published metric, and is therefore well recognized by investors. Ultimately, the Board of Management is expected to steer on FCF as it also includes elements such as interest, tax and cash out from provisions.
The annual report on remuneration
This report includes a summary of the Remuneration Policy (the Policy) for our Board of Management and Supervisory Board, as well as our annual report on remuneration, which sets out how our Policy was applied in 2022 – and how it will be applied in 2023.
On April 22, 2021, the Board of Management Policy and the Supervisory Board Policy were approved by the AGM, with a majority of 86.3% and 99.0% of the votes respectively.
The 2021 Remuneration report received 42.7% of favorable votes at the AGM (advisory vote). In communication between AkzoNobel, investors and other stakeholders, the main concern expressed was related to the disclosure of the financial and non-financial STI targets, as well as a discretionary decision to evaluate performance against the ROI target of 20%, as communicated in early 2020 in context of the Grow & Deliver strategy.
This Report 2022 includes improvements in transparency on the relevant STI metrics, as requested, and no discretionary power has been used to adjust performance. This document is subject to an advisory vote at the AGM in 2023.
Visit our website for a full description of the Remuneration Policy for the Board of Management and Supervisory Board.
Annual General Meeting of shareholders; Extraordinary General Meeting of shareholders.
Operating income is defined in accordance with IFRS and includes the relevant identified items. Adjusted operating income excludes identified items.
We use operational cash flow to monitor cash generation. It is defined as operating income excluding depreciation and amortization, adjusted for the change in operating working capital and capital expenditures.
Adjusted EBITDA is operating income excluding depreciation, amortization and identified items.
Annual General Meeting of shareholders; Extraordinary General Meeting of shareholders.
ROI is adjusted operating income of the last 12 months as a percentage of average invested capital.