Remuneration report
In this Remuneration Report, the Supervisory Board accounts for the implementation of the remuneration policy for the Management Board of Alliander in 2017. The report was prepared by the Selection, Appointment and Remuneration Committee. It also sets out the remuneration policy for the members of the Supervisory Board. An overview of the remuneration awarded to the Management Board and Supervisory Board members for 2017 can be found in the notes to the consolidated financial statements.
Remuneration policy for the Management Board
General
The remuneration policy for the Management Board is based on the principle that the remuneration must be in line with market practices and must enable Alliander to recruit and retain qualified and expert Management Board members. The remuneration policy was adopted by the General Meeting of Shareholders in May 2004 and was last amended in April 2006.
The Supervisory Board is responsible for the implementation of the remuneration policy for the Management Board. The Public and Semi-Public Sector Executives Pay (Standards) Act (WNT), which sets limits for the remuneration of senior executives within the public and semi-public sector, is not applicable to Alliander. The Supervisory Board is acutely aware of the evolving perceptions within society regarding remuneration in the public and semi-public sector. Against this background, the Supervisory Board finds it acceptable to cap the remuneration at 130% of a minister's remuneration. It is expected that this level of remuneration will be sufficient to maintain the quality of the company's management, which is of vital importance in the light of the radical changes facing the company as a consequence of the energy transition.
In concrete terms, this has the following implications for the members of the Management Board. Mr P.C. Molengraaf (in office until September 2017) and Mr M.R. van Lieshout, both members of the Management Board of Alliander, also committed on a voluntary basis to a reduction of their previously agreed salaries to the capped remuneration level as introduced for Alliander, on the understanding that existing arrangements will be respected insofar as possible. This means that the remuneration of Mr Van Lieshout will be reduced to a level of 130% of a minister's remuneration in 2020. Ms I.D. Thijssen is also a member of the Management Board of Alliander. In addition, she is responsible for the business and operational management of the network operator Liander. In connection with the latter activities for Liander, Ms Thijssen qualifies as a senior executive within the meaning of the WNT. Her remuneration package for these activities is in conformity with the WNT. The total remuneration of Ms Thijssen does not exceed the remuneration cap that has been introduced for Alliander.
Finally, the Supervisory Board advocates the introduction of a sector-wide, multi-category remuneration code. The aim is to create a level playing field and ensure that all companies can compete with their peers on equal terms in the relevant labour market in terms of technological developments, complexity and required knowledge.
Procedure
The Supervisory Board draws up the remuneration policy for the members of the Management Board, based on advice from the Selection, Appointment and Remuneration Committee. The General Meeting of Shareholders of Alliander adopts the remuneration policy. Within the set remuneration policy, the Supervisory Board, again acting on the advice of the Selection, Appointment and Remuneration Committee, sets the actual remuneration package for each individual Management Board member.
Variable remuneration
Effective from 1 January 2017, the short-term variable remuneration was partly incorporated into the salary[1]. As a result, there is no longer any form of variable remuneration.
The Supervisory Board has the discretionary power to reclaim from the member of the Management Board all or part of any variable remuneration paid to him or her since 1 January 2014 on the basis of incorrect information about the achievement of the objectives underlying the variable remuneration or about the conditions governing the variable remuneration (‘claw back’).
Remuneration components
The total remuneration package for the Management Board members for 2017 consists of the following components:
annual gross base salary;
pension benefits;
social security charges and other benefits.
1. Annual gross base salary
Management Board members receive an annual gross base salary, including holiday allowance. The annual gross base salary is adjusted each year, insofar as this fits in with the agreed remuneration arrangements, in line with the periodic salary increases for employees, as laid down in the collective labour agreement for network companies.
2. Pension benefits
Management Board members participate in the pension scheme of Stichting Pensioenfonds ABP as referred to in the collective labour agreement for network companies and applicable to all employees of Alliander. Since 1 January 2004, this has consisted entirely of an average pay scheme. Management Board members pay an individual contribution to participate in the pension scheme.
Effective from 1 January 2015, the maximum pensionable salary is equal to the permitted maximum under tax rules (€ 103,317 for 2017). This entails that no further pension is accrued over the part of the salary that exceeds € 103,317.
3. Social security charges and other benefits
In addition to the social security charges and contributions that are normally paid by the company, Management Board members are entitled to an employer's contribution to the premium for the group health insurance plan, contributions to the personal employee benefits budget, an expense allowance [2] and the use of a company car. In addition, the company has arranged accident and liability insurance for the benefit of the Management Board members. The company does not provide loans, advances or guarantees to members of the Management Board.
A restrictive policy is in place for positions outside the company: the Supervisory Board must approve any supervisory board membership or other paid position, including positions of an advisory or supervisory nature, while other positions outside the company must be reported in advance to the Supervisory Board. Any remuneration received for other positions held pursuant to membership of Alliander's Management Board accrues wholly to the company. Any remuneration for other positions not held pursuant to membership of Alliander's Management Board accrues to the Management Board member concerned, who is also liable for any resulting tax consequences.
Other principles
Terms of appointment
All members of the Management Board are employed by Alliander N.V. on the basis of an indefinite contract of employment.
Notice and severance policy
Notice periods of three months for the Management Board members and six months for the company have been agreed with the Management Board members. If the company terminates a Management Board member's employment contract, it is company policy to award a severance payment equal to one year's salary, based on the relevant provisions in the individual employment contracts.[3]. Under certain conditions, this one-off payment is also made if a member of the Management Board resigns and cannot be reasonably required to continue the employment contract. Relevant examples include a change of control of the company or an irreconcilable difference of opinion on the policy.
Implementation of remuneration policy for the Management Board in 2017
General
In drawing up its proposal for the remuneration of the individual Management Board members, the Selection, Appointment and Remuneration Committee also took note of the views of the individual members of the Management Board regarding the level and structure of their own remuneration.
1. Annual gross base salary
Until 1 September 2017, the base salary of Mr Molengraaf amounted to € 171,587, including 8% holiday allowance. In the 2017 calendar year, the base salary of Mr Van Lieshout amounted to € 290,158, including 8% holiday allowance. In the 2017 calendar year, the base salary of Ms Thijssen amounted to € 209,771, including 8% holiday allowance.
2. Pension benefits
Pension costs relate to standard pension contributions, which are based on the annual gross base pensionable salary, up to the permitted maximum of € 103,317 under tax rules. The total pension contributions paid in the year under review for Mr Molengraaf (until 1 September 2017), Mr Van Lieshout and Ms Thijssen were € 12,449, € 21,875 and € 19,449, respectively.
3. Social security charges and other benefits
In 2017, the total amount of social security charges and contributions, the employer's contribution towards the premium for the health insurance plan, contributions to the personal employee benefits budget and the expense allowance [4] amounted to € 17,562 for Mr Molengraaf (until 1 September 2017), € 26,469 for Mr Van Lieshout and € 11,806 for Ms Thijssen.
Notice and severance policy
The Supervisory Board arranged Mr Molengraaf's departure effective from 1 September 2017 as contractually agreed with Mr Molengraaf. His departure was initiated by the Supervisory Board and arranged accordingly.
Claw back
In 2017, the Supervisory Board did not claw back any variable remunerations paid in previous years to members of the Management Board.
Remuneration ratio
The median of the remuneration of all employees of Alliander set against the remuneration of the Management Board members results in the following remuneration ratios:
Management Board members | I.D. Thijssen | M.R. van Lieshout | P.M. Molengraaf | |||
Ratio | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
3,6 | 3,7 | 5 | 4,8 | 3 | 5,1 | |
Principles:
the calculation for both employees and Management Board members was based on the following elements: base remuneration, employer's contribution towards pension, social security charges and other applicable remuneration elements;
both full-time and part-time employees were included in the calculation.
Remuneration policy for the Supervisory Board
The remuneration of the Supervisory Board members is fixed and not dependent on the company's results. The remuneration was adopted by the General Meeting of Shareholders in 2011 and consists of a fixed annual gross amount for the chair and a fixed annual gross amount for the other members. Furthermore, additional fixed annual gross amounts are paid to the members of the various Supervisory Board committees. The remuneration levels are adjusted yearly in line with wage developments under the collective labour agreement for network companies. The members of the Supervisory Board are also entitled to an allowance for travel and accommodation expenses. Alliander does not provide any personal loans, guarantees and so forth to the members of its Supervisory Board. Liability insurance has been taken out for the members of the Supervisory Board. The WNT restricts the remuneration of the members of the Supervisory Board in their capacity as supervisors of the Liander network operator. Effective from 1 January 2015, the WNT limits the maximum remuneration of the Supervisory Board chair and Supervisory Board members to, respectively, 15% and 10% of the maximum WNT limit applicable to Liander.
An overview of the total remuneration awarded to the members of the Supervisory Board for 2017 can be found in the notes to the consolidated financial statements
WNT
The WNT, as applicable to the network operator Liander N.V., requires companies to report on the remuneration of current and former senior executives. In addition, the WNT requests transparency on any remuneration paid to non-senior executive employees that exceed the set limit in the reporting year. The annual report of the network operator, which is to be published in the second quarter of 2018, will contain disclosures on the WNT requirements.
- 1 The variable remuneration system was not applicable to Ms Thijssen.
- 2 An expense allowance is not applicable to Ms Thijssen.
- 3 The maximum severance payment upon dismissal by the company for Ms Thijssen is € 75,000.
- 4 An expense allowance is not applicable to Ms Thijssen.