CAPITULO 4. DISCUSIÓN DE RESULTADOS
4.2 CARACTERIZACIÓN DE LOS CATALIZADORES
4.2.4 Caracterización por reducción a temperatura programada
Base Salary
Base salaries for the Management Board are determined by the Supervisory Board upon the recommendation of the A&RC and after consideration of various factors as explained in detail in the Annual Report 2011. During the course of 2013, the A&RC reviewed the implementation of RP2011aa and engaged a specialist remuneration consultant to carry out a remuneration benchmarking study. This study showed that the base salary of the CEO was not compliant with the RP2011aa principle of remunerating at the median of the Peer Group and required an increase.The A&RC recommended raising the CEO’s base salary from €677,200 p.a. to €800,000 p.a. effective 1 July 2013 and the Supervisory Board endorsed this recommendation.
Average base salary of the CEO for the year 2013 amounted to €738,600. Base salary amounts for all Members of the Management Board were increased effective 1 January 2013 in line with the market in general with 2.6%. During the year under review, base salaries p.a. of the Management Board were as set out below. The exact amount paid, expressed in USD which is the Company’s reporting currency, is mentioned in the note 4 to the Annual Accounts.
Base Salary
€ 2013 2012
B.Y.R. Chabas, CEO 738,600 660,000
P.M. van Rossum, CFO 492,500 480,000
S. Hepkema, CGCO 590,000 575,000
Peer Group
Each year, the A&RC evaluates the Peer Group based on market circumstances (mergers, acquisitions, de-listings, etc.) and recommends adjustments to the Supervisory Board for approval.In 2013, the Peer Group remained the same as in 2012 and consisted of the following 18 companies:
Peer Group
Aker Solutions ASA Fugro N.V. Oil States International
Amec PLC Helix Energy Solutions Petrofac LTD
for their individual performance against pre-set performance targets. A minimum 1/3 of the STI opportunity is based on Company performance, and a maximum 2/3 of the STI opportunity is based on individual performance. The appropriate split between the percentage attributable to Company and individual performance is set by the Supervisory Board upon recommendation of the A&RC at the beginning of each financial year for each director based on his specific responsibilities, and in particular during these turnaround years taking into account the extent to which each is responsible for Legacy Projects and compliance enhancement.
The table below shows the percentages of base salary that can be earned depending on the score achieved by each individual director compared to targets.
STI description
Management Board Threshold STI Target STI Maximum STI
CEO 40% 100% 200%
Other Directors 40% 100% 150%
80% of the STI pay-out is paid in cash and 20% is mandatorily paid in Company shares. These STI shares are restricted for a period of three years. At the end of the restriction period and subject to continued employment, the Company awards an additional unrestricted matching share for every STI share held (1:1 match).
STI pay-out in 2013 on account of performance in 2012
In the Annual Report 2012, disclosure was made of the Company performance element which given the negative results shown in the Annual Accounts 2012 were not met and therefore it was determined by the Supervisory Board upon recommendation of the A&RC that no STI payment would be made related to Company performance in 2012. The individual performance of each member of the Management Board was scored against the pre-set personal objectives. These objectives were based on the following pillars: (i) Work as One, (ii) Perform and (iii) Shape the Future and can be summarized as specific goals related to the following critical activities:
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Effectively implementing the new organisation structure and change programme•
Strengthening the Company’s balance sheet•
Managing the legacy projects•
Embedding compliance throughout the Company•
Improving the Company’s safety performanceThe A&RC evaluated each Management Board member’s individual performance and recommended a score which was endorsed by the Supervisory Board. This resulted in a pay-out of the STI as indicated in the table below.
Base Salary and STI 2012 € Base salary 2012 Short-Term Incentive (1) B.Y.R. Chabas 660,000 770,000 P.M. van Rossum (2) 240,000 208,000 S. Hepkema (2) 431,250 362,117
(1) This is the total amount of the Short Term Incentive, i.e. the part payable in shares (20%) and the part payable in cash (80%) earned in respect of performance year 2012, which was paid in 2013, as modified by the CSR Multiplier as referred to below
STI payable in 2014 on account of performance in 2013
The STI relating to the performance year 2013 is based on the Economic Profit (EP) of the year 2013, i.e. Return On Average Capital Employed (ROACE) exceeding an assumed Weighted Average Cost of Capital (WACC), adjusted as appropriate for exceptional items and extraordinary circumstances. The Company performance criteria which have a weight of 1/3 of the 2013 STI opportunity, have been scored at 160% for the CEO and 130% for the CFO and CGCO, resulting in a Company Performance share in the STI of 52.8% for the CEO and 42.9% for the CFO and the CGCO. The individual objectives for Management Board members in 2013 were similar to those set for 2012, recognizing that 2013 is the second of what is expected to be a three year turnaround period for the Company. Individual performance had a weight of 2/3 of the 2013 STI opportunity and the Supervisory Board, acting on the advice of the A&RC, resolved to score the individual performance for each one of the Management Board members at maximum, thus rewarding the teamwork approach taken by the Management Board in delivering on each Member’s individual objectives which resulted in tangible results for the Company and its shareholders. Pay-out of the STI in 2014 on account of performance in the year 2013 is therefore as follows:
Base Salary and STI 2013
€ Base salary on 31 December 2013 Short-Term Incentive (1) B.Y.R. Chabas 800,000 1,494,400 P.M. van Rossum 492,500 706,245 S. Hepkema 590,000 846,060
(1) This is the total amount of the Short Term Incentive, i.e. the part payable in shares (20%) and the part payable in cash (80%) earned in respect of performance year 2013, which will be paid in 2014, as modified by the CSR Multiplier as referred to below
CSR Multiplier
In its business plan and performance objectives, the Management Board has specific operational Health, Safety, Security and Environment (“HSSE”) objectives. As mentioned at the EGM of 27 June 2012, however, due to the urgency and priority of achieving the operational and financial business objectives of the Company, no other specific CSR objectives were set for the purpose of the CSR multiplier in 2012. Since the CSR multiplier is calculated as a multiple of the Company performance element that, in 2012, was nil, the CSR multiplier outcome was equally nil, despite a marked improvement in HSSE performance.
HSSE Performance in the year 2013 was assessed and the Supervisory Board, on advice of the A&RC, scored the CSR multiplier at 100%. Consequently, this score does not modify the STI payable in 2014 on account of performance in 2013.
Long Term Incentive (LTI)
The LTI is designed to reward superior long-term corporate financial performance and shareholder returns and to enhance management retention and commitment.
Threshold, target and maximum LTI opportunities expressed as a percentage of base salary are as follows:
LTI description
Management Board Threshold LTI Target LTI as %
of base salary
Maximum LTI as % of base salary
CEO 50% 125% 250%
Other Statutory Directors 50% 125% 187.5%
At the start of each year performance shares are conditionally awarded at the target level of base salary. The target number of performance shares conditionally awarded is determined by dividing the LTI target opportunity outlined in the table above by the average closing price of the Company shares over the five trading days following the date of publication of the final results for the previous financial year. At the end of the three-year performance period performance against agreed targets is assessed and scored by the Supervisory Board acting upon the recommendation of the A&RC, and the target number of performance shares is adjusted upwards or downwards based on that assessment to arrive at the final number of shares awarded.
In 2013, following the successful rights issue in April, in accordance with the LTI Performance Share regulations which are posted on the Company website, the A&RC recommended and the Supervisory Board endorsed increasing the number of conditionally awarded shares by 1.9187%, being the Theoretical Ex Rights Price correction factor as applied by Euronext Amsterdam for the adjustment of derivatives pursuant to the NYSE Euronext Corporate Actions Policy for the Euronext Derivatives Markets.
LTI shares Target number of performance shares conditionally awarded in 2013 (1) Threshold- Minimum vesting opportunity (number of performance shares) Maximum vesting opportunity (number of performance shares) B.Y.R. Chabas 88,913 35,565 177,825 P.M. van Rossum 59,287 23,715 88,931 S. Hepkema 71,024 28,410 106,537
(1)The number of LTI shares that vest for the performance period 2013-2014-2015 will be determined in March 2016, upon finalisation of the financial accounts for the year 2015. Following the vesting of performance shares, a lock-up of two years applies to the performance shares
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Special Incentive (SI): the Supervisory Board was given the power to award SI’s to individual directors based on the achievement of predefined goals set by the Supervisory Board. The SI, introduced in 2012, only allows for vesting of LTI shares up to but not exceeding the maximum LTI opportunity as set out in the table above. The SI performance metrics which were predefined before the beginning of the performance period 2012 – 2014, and 2013 – 2015 will be disclosed in 2015 in the 2014 Annual Report for the conditional awards made in 2012 and in 2016 in the 2015 Annual Report for the conditional awards made in 2013When assessing, early in 2016, the vesting conditions of the LTI shares conditionally awarded in 2013, the Supervisory Board intends to fully take into account the achievements so far of the Management Board, both collectively and individually, having:
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taken control of the Legacy Projects generally and having, in particular, reached a full and final settlement with the client of the Yme project•
strengthened the Company’s balance sheet with record levels of project financing, the introduction of a well-respected corner stone investor (HAL Investments B.V.) and a successful rights offering of 10% new shares; and•
refocused the business on FPSOs and achieved a very strong order intake with three new vessels so far, leading to a record order bookConditional award of LTI Performance shares
The average closing price of the Company share over the five trading days following the date of publication of the final results for the financial year 2013 was € 11.874. The number of conditional shares awarded to the
Management Board for the performance period 2014-2015-2016 is as set out in the table below:
LTI performance shares
Target number of performance shares conditionally awarded in 2014 (1) Threshold- Minimum vesting opportunity (number of performance shares) Maximum vesting opportunity (number of performance shares) B.Y.R. Chabas 84,218 33,687 168,435 P.M. van Rossum 51,846 20,739 77,770 S. Hepkema 62,110 24,844 93,166
(1)The number of LTI shares that vest for the performance period 2014-2015-2016 will be determined in March 2017, upon finalisation of the financial accounts for the year 2016. Following the vesting of performance shares, a lock-up of two years applies to the performance shares
Pensions
Of the current Management Board, none has a defined benefits pension plan. Two of the three members of the Management Board participate in a defined contributions pension scheme the parameters of which may be amended in the context of the base salary for each member of the Management Board taking into account the relevant country competitive practice, tax and legal environment.