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The remuneration policy is the framework used by the Supervisory Board to establish the remuneration of GrandVision’s CEO and CFO for 2016. This policy is transparent and promotes the interests of the Company in the medium and long term, and incentivizes performance. The Supervisory Board has analyzed the possible outcomes of variable remuneration components in different scenarios and how these may affect the remuneration of the Management Board.
The remuneration policy consists of the following fixed and variable components, which are discussed in more detail below:
- Fixed base salary
- Short-term variable remuneration
- Long-term incentive plan
- Pension and fringe benefits
- Severance arrangements
Fixed base salary
The base salary of the CEO and the CFO is a fixed cash compensation paid on a monthly basis and is set by the Supervisory Board at a competitive level, taking into account the performance, experience, capability and marketability of the CEO and the CFO.
Short-term variable remuneration
The CEO and the CFO are entitled to an annual performance-related variable remuneration payment settled in cash. The objective of the annual performance-related variable remuneration payment is to incentivize and reward strong short-term financial and personal performance and the implementation of strategic imperatives, and to facilitate rapid growth while continuing to focus on sustainable results, an approach which is in line with GrandVision’s long-term strategy.
Performance conditions are set by the Supervisory Board on an annual basis at or prior to the beginning of the relevant calendar year. These performance conditions include criteria reflecting GrandVision’s financial performance and may also include quantitative or qualitative criteria related to the Company’s non-financial performance and/or to individual performance.
Typically, 60% of the variable remuneration component is related to two or three financial objectives, usually GrandVision’s total net revenue and EBITA. Another 30% is based on three to four personal objectives with measurable targets, and 10% is related to one shared Group objective.
This objective is based on a specific Group-wide focus and shared by all senior managers throughout GrandVision. After the performance period has elapsed, an evaluation is carried out to determine whether, and if so, to what extent, the performance criteria have been met. The Supervisory Board will define, on an annual basis, the performance ranges, the “on target” value and the maximum at which the payout will be capped.
The Management Board has partially achieved the 2016 financial target for revenue and achieved the 2016 financial target for profit growth. The personal targets of the Management Board were partially achieved. The Group objective for 2016 was achieved.
Long-term incentive plan
The long-term incentive plan aligns the interest of the CEO and the CFO with those of the shareholders. The CEO and the CFO will be eligible to receive annual awards under the GrandVision Long-Term Incentive Program 2015 ('LTIP 2015'), which was approved by the General Meeting on 14 October 2014 and became effective in February 2015. The 2016 award is made under the 2015 plan. Annual awards can be received in shares or options for shares, as determined by the Remuneration Committee and approval of the Supervisory Board. The maximum number of awards in shares or options for shares to be granted to the CEO and the CFO has been set by the General Meeting at 240,000 shares per year.
The performance conditions for the LTIP 2015 are, among others, total net revenue growth and earnings per share growth after three years. Depending on the actual fulfillment of these performance conditions, the CEO and the CFO will receive the awards that have vested, up to a maximum of 150% of the original awards. After vesting, the shares, if any, must be held in deposit for two years, after which period they may be sold, provided that the CEO at all times holds shares in deposit with a value equal to at least two gross annual salaries, and the CFO at all times holds shares in deposit equal to at least one gross annual salary.
Pension and fringe benefits
The CEO and the CFO are eligible to receive post-employment benefits by participating in a pension plan and/or to elect to receive a cash payment in lieu of pension. The CEO receives a monthly cash sum instead of contributions to the pension plan. The CFO receives an additional cash allowance in accordance with the terms of the regular pension plan pursuant to recent changes in Dutch pension law. The CEO and the CFO are entitled to customary fringe benefits, such as a company car, expense allowances and reimbursement of any costs incurred.
Contractual severance arrangements for the CEO and the CFO are compliant with the Code.
A 'clawback' clause is included in the service agreements of the CEO and the CFO, applicable in a situation in which the financial or other information on which the payout of variable remuneration was based is determined to be incorrect.