2014 Remuneration report

Transcription

1 2014 Remuneration report Remuneration policy The remuneration policy that applies to the USG People Executive Board is set by the General Meeting of Shareholders for a period of several years. The shareholders approved the remuneration policy for the period from 2011 to 2014 during General Meeting of Shareholders in The Supervisory Board determines the remuneration of the individual members of the Executive Board based on the policy set by the General Meeting of Shareholders. The remuneration policy is aimed at attracting and retaining qualified directors for the Executive Board who have the drive and sustained commitment to add value to USG People. Market-compatible policy The policy is designed to be in line with market-compatible practice as much as possible, taking into account the remuneration practice within the performance peer group. This group consists of USG People s direct competitors. Another reference point is a labour market reference group consisting of a balanced selection of shares included on the Amsterdam Midkap Index (AMX) and the Amsterdam Exchange Index (AEX). This labour market reference group provides a framework for determining the amount, structure and composition of the remuneration of the members of the Executive Board. Structure of the Executive Board remuneration The remuneration of the Executive Board consists of five components: a fixed gross annual salary, a variable short-term cash remuneration, a variable long-term share remuneration, a pension contribution, and a car and other emoluments. 1. Fixed gross annual salary The Supervisory Board applies a market compatible remuneration level within the median and third quartile range based on the aforementioned labour market reference group for the fixed annual gross salary for the members of the Executive Board. The fixed gross annual salaries for the period from 2011 to 2014 have been set as follows: Position Fixed gross annual salary CEO CFO The Supervisory Board retains the right to deviate from the aforementioned levels of remuneration in certain cases. 2. Variable short-term cash remuneration The strategic growth of USG People is measured using two financial performance indicators, namely Earnings Before Interest, Tax and Amortisation (EBITA) as a percentage of revenue and EBITA as a percentage of the gross result. The variable short-term cash remuneration is also linked to a third financial performance indicator: average Days Sales Outstanding (DSO). Part of the variable shortterm cash remuneration now depends on the results of qualitative objectives. These qualitative objectives relate to leadership and culture, socially responsible business practices 1/17 Remuneration report 2014

2 and innovation. The results targeted within these areas are set annually in light of the strategic development of USG People. The variable short-term cash remuneration target is linked for up to 70% of the fixed gross annual salary to the results of financial parameters, namely EBITA as a percentage of revenue and EBITA as a percentage of the gross result. The variable short-term cash remuneration linked to qualitative targets is up to 30% of the fixed gross annual salary. The spread of the threshold (D) (excluding a maximum 10% DSO discount), target (T) and maximum (M) variable short-term cash remuneration as a percentage of the fixed gross annual salary of the members of the Executive Board is 28% (D) 70% (T) 100% (M). 3. Variable long-term share remuneration The variable long-term share remuneration (performance shares) is conditionally granted each year based on the results of pre-set financial parameters. These are EBITA as a percentage of revenue and EBITA as a percentage of the gross result. Furthermore part of the variable long-term share remuneration is conditionally granted each year based on qualitative targets, as well as leadership and culture, socially responsible business practice and innovation considerations. The variable long-term share remuneration target is 70% linked to financial targets. These are EBITA as a percentage of revenue and EBITA as a percentage of the gross result. The remaining 30% is linked to qualitative targets. The spread of the threshold (D), target (T) and maximum (M) number of conditionally granted shares linked to the financial targets is 28% (D), 70% (T) and 140% (M) of the total target number of shares. A total of 30% of the total target number of shares is made available if the qualitative performance targets are met. If the results of the financial parameters fail to meet the defined threshold targets and no qualitative targets are met whatsoever, the number of conditionally allocated shares is nil. If the results meet the defined maximum targets (both financial and qualitative targets), the number of shares unconditionally allocated is 140% (relating to the financial targets) + 30% (relating to the qualitative targets) = 170% of the target number of shares. 2/17 Remuneration report 2014

3 Under the Unique Share Plan the number of shares to be allocated conditionally in the four-year ( ) performance period is as follows: Minimum (if the threshold performance is not achieved) Target (100%) number of shares in performance period (4 years in total) Maximum (170%) number of shares in performance period (4 years in total) CEO 0 90, ,000 CFO 1) 0 60, ,000 1) The target and maximum number of shares for the CFO for the entire performance period equals 57,500 and 98,000, respectively, with effect from The target and maximum number of shares of the CFO was 12,500 and 21,250 per year, respectively, up to and including The Supervisory Board reserves the right to deviate from the above target number of shares per year in certain cases. 4. Pension contribution The members of the Executive Board receive a gross pension contribution of 23% of their fixed gross annual salary. 5. Car and other emoluments The members of the Executive Board have a lease car at their disposal suitable to their position. The members of the Executive Board do not receive a fixed allowance for representation expenses. Any business-related representation expenses are claimed and reimbursed. Scenario analysis The Supervisory Board has calculated the possible outcome of the main elements of the remuneration policy, in particular the short-term variable cash remuneration and long-term variable share-based remuneration, based on various scenarios. Appointment policy The members of the Executive Board are appointed by the Supervisory Board. All members of the Executive Board were reappointed for a period of four years during the General Meeting of Shareholders in Date of reappointment Appointed until CEO Rob Zandbergen 8 May 2014 AGM 2018 CFO Leen Geirnaerdt 8 May 2014 AGM /17 Remuneration report 2014

4 Notice and dismissal policy A notice period of three months has been agreed with the members of the Executive Board for the members of the Executive Board and six months for the company. The payment upon termination of the contract of employment for reasons not attributable to the person will not exceed the amount of one year s fixed gross annual salary (subject to the agreed term of notice) including pension contribution. If the maximum of one year s fixed gross annual salary for a member of the Executive Board dismissed during the first term of their employment is manifestly unreasonable, the person becomes eligible for a termination payment of not more than twice their fixed gross annual salary, including pension contribution. If the company terminates the appointment and the employment contract for reasons attributable to the person, the company will not be obliged to make any payment whatsoever. In the event the contract of employment is terminated as a result of an acquisition of the company, resulting in a change of control, the payment upon termination will amount to two times the fixed gross annual salary, including pension contribution, plus one-twelfth of this fixed gross annual salary, including pension contribution, for every year of employment with USG People. This payment upon termination will, however, not exceed three times the fixed gross annual salary, including pension contribution. USG People applies a termination payment policy in the event of a change of control of the company to reward multi-year employment of members of the Executive Board as well as to protect the position of members of the Executive Board of the company in view of USG People s shareholder structure. 4/17 Remuneration report 2014

5 Remuneration of the Executive Board in 2014 In 2014 the remuneration of the individual members of the Executive Board was as follows: Rob Zandbergen, CEO Leen Geirnaerdt, CFO Fixed gross annual salary 625, , , ,000 4) Variable short-term cash remuneration 2) 528, , , ,203 Total cash remuneration 1,153,572 1,145, , ,203 Pension contribution 143, ,750 92, ,800 Value of variable share-based remuneration 3) 389, , ,903 32,000 Total 1,686,432 1,506,406 1,053, ,003 Car and other emoluments 22,000 21,800 17,600 17,200 2) Based on the realisation of 77% of the financial parameters, 54% of the fixed gross annual salary was achieved for the variable short-term cash remuneration. Based on the realisation of 98% of the qualitative targets, 29% of the fixed gross annual salary was achieved for the variable short-term cash remuneration. 3) Includes shares granted under the Unique Share Plan and the Unique Share Plan , in accordance with IFRS 2. The income tax and social security premiums linked to the distribution of shares are paid by USG People. 4) The Supervisory Board decided to increase the fixed gross annual salary of the CFO tot 460,000 as from 1 January The decision takes into consideration the fixed remuneration within the labour market reference group and the relationship between the fixed gross annual salary and that of the CEO. A situation in which the fixed gross annual salary of the CFO is around 75% of that of the CEO is deemed suitable in this respect. 5/17 Remuneration report 2014

6 The following tables provide a detailed account of the number of shares (conditionally) allocated to the members of the Executive Board in 2014: Shares allocated Performance period ) Rob Zandbergen Leen Geirnaerdt CEO CFO Number of shares unconditionally allocated 5) 30,500 1,867 Date of unconditional allocation Number of shares sold 0 0 Closing share price at unconditional allocation Number of 25% retention award ) 7, Date of allocation of retention award Closing share price at unconditional allocation ) The number of shares stated refers to the number of shares allocated to the individual members of the Executive Board for the period within the performance period in which they were a member of the Executive Board. No holding period applies to this unconditional allocation. 6) If the shares unconditionally allocated in 2011 for the performance period were held up to and including the General Meeting of Shareholders in 2014 and if the director was still employed by the company at that time, said director was entitled to a retention award of 25% of the shares unconditionally allocated in 2011 at the time of the General Meeting of Shareholders in Shares allocated 8) performance period Performance year 2014 Rob Zandbergen Leen Geirnaerdt CEO CFO Number of shares (minimum) 7) 0 0 Number of shares (target) 22,500 15,000 Number of shares (maximum) 38,250 25,500 Number of shares allocated (result) 19,181 12,787 Date of allocation Average closing share price in performance year Number of shares allocated (previous performance years) 37,913 24,615 Total number of shares allocated unconditionally 57,094 37,402 Date of unconditional allocation Restricted until AVA 2016 AVA ) Number of shares if the threshold performance is not achieved. 8) The conditional allocation of shares is accounted for in the remuneration report at the conclusion of each financial year. Shares are granted unconditionally only if the member of the Executive Board is still employed by the company at the time the shares are unconditionally granted. Summary and account of the methods used to determine whether the performance criteria for the variable short-term and long-term remuneration were met: 6/17 Remuneration report 2014

7 Before the start of the financial year the Supervisory Board sets annual targets with regard to the applicable performance criteria. The following performance criteria applied for 2014: EBITA as a percentage of revenue, EBITA as a percentage of the gross result and average Days Sales Outstanding (DSO). In this context minimum results are defined to set a threshold below which no variable remuneration (short-term or long-term) is awarded. A ceiling is also set for targeted results. After extensive internal control at the conclusion of each financial year the financial results are submitted to the external auditor for inspection. In anticipation of the results being approved a provisional estimate is made with regard to the allocation of the variable short-term and long-term remuneration; The decision on any allocation is taken and recorded by the Supervisory Board following approval of the annual results. Option rights Not taking into account the existing share plan, no share options are held by the members of the Executive Board. Loans No loans, advances or related guarantees have been granted to members of the Executive Board. 7/17 Remuneration report 2014

8 Remuneration of the Supervisory Board in 2014 The fixed remuneration of the chairman and members of the Supervisory Board is set at 57,500 and 42,500 per year, respectively. All members of the internal committees receive an amount of 7,500 per year for their involvement in these committees. All members of the Supervisory Board also receive an annual expense allowance of 2,000. In 2014 the individual remuneration of the members of the Supervisory Board was as follows: Periodical remuneration (including expense allowance) Cees Veerman 67,000 67,000 Joost van Heyningen Nanninga 18,440 Rinse de Jong 52,000 52,000 Alex Mulder 52,000 52,000 Willemijn Maas 9) 33,700 Johnny Thijs 9) 33,700 Marike van Lier Lels 10) 52,000 18,450 9) Ms Maas and Mr Thijs were appointed as members of the Supervisory Board by the General Meeting of Shareholders on ) The term of Ms Van Lier Lels expired on Having reached the maximum term of twelve years Ms Van Lier Lels was not reappointed. No share options are held by members of the Supervisory Board. No loans, advances or related guarantees have been granted to members of the Supervisory Board. 8/17 Remuneration report 2014

9 Remuneration of the Executive Board in 2015 The current remuneration policy for the Executive Board was set for the period up to and including In 2014 the remuneration and appointments committee therefore revised the remuneration policy and proposed changes to the Supervisory Board for the period. The proposed remuneration policy is subject to the approval of the General Meeting of Shareholders on 7 May If approved, then the remuneration policy will come into force with retroactive effect as from 1 January The proposed remuneration policy can be found on the USG People corporate website. Remuneration policy Executive Board This remuneration policy is drafted, subject to shareholders approval at the Annual General Meeting ( AGM ) of Shareholders to be held on the 7 th of May If the AGM adopts the remuneration policy, it will take effect retroactively as per the 1 st of January 2015 up to and including the 31 st of December The Supervisory Board determines the remuneration levels of the individual members of the Executive Board within the remuneration policy adopted by the AGM. The Remuneration- and Nomination Committee reviewed the remuneration policy of the Executive Board in 2014 and proposed amendments to the Supervisory Board. The reason for the review is that the current remuneration policy, which was last updated in 2010, applies until the end of The current policy was tested for market competitiveness and alignment with senior management remuneration of USG People. The variable remuneration plans were reviewed on the basis of their effectiveness in relation to the realization of the strategic objectives of the company. Based on these analyses, the Remuneration- and Nomination Committee proposed a number of changes to the current remuneration policy. An external remuneration specialist provided advice to the Remuneration- and Nomination Committee. The remuneration policy allows for attracting, committing and motivating qualified members for the Executive Board. Approximately 60% of the total remuneration of the Executive Board members is dependent on the performance of USG People. USG People strives to achieve an adequate balance between the short-term operational performance and long-term sustainable value creation. Competitiveness of the remuneration policy To test the competitiveness of the remuneration levels of the Executive Board of USG People, a peer group is composed that consists of comparable companies in terms of complexity and size. The level of complexity is measured on the basis of a number of quantitative and qualitative criteria, including revenue, margin, number of employees and enterprise value, but also the extent to which the activities are cyclical in nature as well labor- and/or capital intensive and the geographical regions in which the company employs its activities. A specific industry related peer group was not composed as this would lead to a comparison with larger, non-dutch industry peers that have different standards and structures of the remuneration of Executive Board members. However, in defining the peer group, specific industry related labor market qualifications for members of the Executive Board are included. 9/17 Remuneration report 2014

10 The criteria result in a group of fourteen, mostly Dutch companies compared to which USG People qualifies around the median level in terms of complexity. Therefore, a comparison with the median remuneration level of the peer group applies. The peer group consists of the following companies (in alphabetical order): Arcadis Hays (UK) Post NL BAM groep Heijmans Randstad Boskalis Imtech Robert Walters (UK) Brunel Michael Page (UK) SBM Offshore Fugro Ordina The Remuneration and Nomination Committee regularly assesses whether the companies in this peer group still qualify to be included. In addition to an external comparison, the Remuneration- and Nomination Committee assessed the balance in the ratio between level, structure and composition of the remuneration of the Executive Board members with those of senior management of USG People while drafting the remuneration policy Remuneration levels Executive Board The market comparison justifies an increase in the total remuneration levels of the Executive Board members in order to reach the median market level. In increasing the remuneration levels to the median markt level, the ratio between the remuneration of the Executive Board and senior management is comparable to that of the companies in the peer group. This observation leads to the conclusion that the total remuneration levels of the Executive Board can be adjusted towards the median level of the peer group. This change in remuneration levels is used to adjust the annual base salaries, and to redistribute the balance from the short-term variable remuneration towards a stronger focus on the long-term variable remuneration. Remuneration structure Executive Board The remuneration of the Executive Board consists of five components: the annual base salary, a shortterm variable remuneration, a long-term variable remuneration, a pension allowance and other emoluments. Annual base salary The Remuneration- and Nomination Committee assesses the competitiveness of the annual base salary levels of the Executive Board members in comparison to the positioning of USG People in the peer group. As the remuneration level of the CEO has not been adjusted since 2010, the Remuneration- and Nomination Committee decided to increase the annual base salary by 8% in For the CFO, the annual base salary level is determined as a ratio of the CEO s annual base salary level. The Remuneration- and Nomination Committee considers a ratio of 75% of the base salary level of the CEO to be adequate as a reference for the CFO s annual base salary level. This implies an increase of 8.7% as compared to the current annual base salary. 10/17 Remuneration report 2014

11 The annual base salary levels for the Executive Board members for 2015 and subject to adoption by the AGM are as follows: Position Annual base salary 2014 Annual base salary 2015 CEO 625, ,000 CFO 460, ,000 The Supervisory Board assesses each year if the level of the annual base salary is in line with the remuneration policy. Variable remuneration The objective of the variable remuneration is to find an appropriate link of variable remuneration with the business strategy of USG People with a healthy balance between its short- and long-term goals. Therefore, the new remuneration policy focuses on short-term operational excellence and long-term sustainable value creation. The targets are, in light of the strategic developments of USG People, set each year by the Supervisory Board in advance of every performance period. After each performance period, it is assessed to what extent the applicable targets for that period have been met. USG People is transparent with respect to the targets and performance criteria as long as this does not contain any competitive sensitive information, before or after the performance assessment. Short-term variable remuneration The short-term variable remuneration amounts to 60% of the annual base salary for the Executive Board members if all objectives are met (at target), 30% if the minimum requirements have been met (threshold), and a maximum of 90% of the annual base salary if the performance is outstanding. Below the minimum requirements, no short-term variable remuneration will be awarded. Between the minimum and maximum performance, a linear pay-out scheme applies. The pay-out is made in cash. The short-term variable remuneration is dependent of financial, quantitative performance criteria (⅔) and qualitative performance criteria (⅓). The financial performance indicators are the realized Earnings Before Interest Tax and Amortization ( EBITA ) as a percentage of revenues and EBITA as a percentage of gross margin. In addition, the short-term variable remuneration is linked to a third financial performance measure: the average Days Sales Outstanding ( DSO ). The qualitative measures relate to the quality and sustainability of the financial performances. The performance measures are leadership, culture and Corporate Social Responsibility (hereafter sustainability ). In case the predetermined target for DSO is not achieved, a linear reduction factor of up to 10% applies to the short-term variable remuneration that is linked to the financial, quantitative results. 11/17 Remuneration report 2014

12 Element Weighting Criteria Specific criteria Remuneration Short-term variable remuneration (in cash) ⅔ Financial EBITA as a percentage of revenues EBITA as a percentage of gross margin Minimum: 30% of the annual base salary Target: 60% of the annual base salary ⅓ Qualitative DSO Leadership Maximum: 90% of the annual base salary Culture Sustainability (Excluding the discount of DSO of maximum 10%) Long-term variable remuneration The award of the long-term variable remuneration depends on the achievement of the same objectives as the short-term variable remuneration. The realization of short-term operational performance is a crucial prerequisite for long-term value creation. USG People considers the overlap between the shortand long-term performance measures therefore appropriate in determining the remuneration levels of Executive Board members. The realization of these criteria determines the number of conditional shares that are granted each year. Similar to the short-term variable remuneration, the long-term variable remuneration is partly (⅔) dependent on the financial targets EBITA as a percentage of revenues and EBITA as a percentage of the gross margin. The remainder (⅓) of the long-term variable remuneration is linked to the qualitative targets leadership, culture and sustainability. The DSO performance measure may reduce the longterm variable remuneration that is linked to the quantitative, financial performance measures by a maximum of 10%. The long-term variable remuneration is conditionally granted in performance shares and amounts to 30,000 shares for the CEO and 20,000 for the CFO (at target). This grant in conditional shares can vary after one performance year between 50% if the minimum requirements are met and 150% for exceptional performances. If the realization of the short-term performance targets remains below the minimum requirements, no shares will be conditionally granted. Between the minimum and maximum levels a linear award schedule applies to the number of conditional shares. The shares are conditionally granted after the first performance year and the unconditional award is deferred for a period of three years. The final number of shares at the end of the fourth year can increase or decrease by 20% based on a second performance assessment, and is only awarded if the Executive Board member is still employed by USG People. The second performance assessment is based on sustainable long-term value creation for shareholders. This sustainable value creation is measured by innovation and growth in market share. Innovation is measured by the return on investments in, and integration of new applications in the business model of USG People. The assessment is executed annually on the basis of predetermined 12/17 Remuneration report 2014

13 targets. A three-year average determines the final level of the long-term variable remuneration. The growth in market share is measured each year on a country- and segment level and is consolidated on a group level to a three-year average. USG People chooses to award in a fixed number of shares. The target value of these shares is approximately 90% of the annual base salary at the on-target performance level on both the short- and long-term. The choice for a fixed number of shares makes the remuneration policy less ambiguous, and prevents Executive Board members to receive more conditional shares in a year where the stock price is relatively low compared to a situation where the stock price is relatively high. For illustration purposes, the number of shares that may be granted in a long-term variable remuneration cycle is as follows: Year Position Minimum* Target Maximum 1 CEO 15,000 30,000 45,000 CFO 10,000 20,000 30,000 4 CEO 12,000 30,000 54,000 CFO 8,000 20,000 36,000 (*) In case the minimum requirements have been met. N.B. Between these extremes a linear payment scheme applies. The Supervisory Board reserves the right to deviate from the above target number of shares if this is considered appropriate. Element Year Pay-out method Weighting criteria Specific criteria Long-term variable remuneration 1 Conditional shares 4 Unconditional shares ⅔ Financial ⅓ Qualitative 100% Sustainable value creation EBITA as a percentage of revenues EBITA as a percentage of gross margin DSO Leadership Culture Sustainability Innovation Market share If the Executive Board member is no longer a member of the Executive Board of USG People at the time of the unconditional grant as a result of dismissal, resignation or termination of the contract by the member of the Executive Board him- or herself, any entitlement to unconditional shares will be forfeited. USG People will cover the income taxes that are due on the value of the long-term variable remuneration that is awarded and the number of shares disclosed are net allocations. The long-term variable remuneration complies with all legislation and regulations in the event of a change of control, as mentioned in article 2:135 paragraph 7 of the Dutch Civil Code. Pension Members of the Executive Board receive a pension contribution that amounts to 23% of the gross annual base salary. There is no collective pension scheme for the members of the Executive Board. 13/17 Remuneration report 2014

14 Other emoluments The members of the Executive Board are entitled to the use of a lease car appropriate for the exercise of their duties. The members of the Executive Board receive no fixed expense allowance. Business expenses are reimbursed by USG People. Shareholding requirements To ensure that their interests are aligned with those of shareholders, an Executive Board member of USG People is required to hold at least two times his or her annual base salary in USG People shares. The shareholding requirement must be built up over a period of five years starting from 1 January The Executive Board member is required to retain these shares during the entire employment period. The value of the shares is determined on the basis of the share price at the time of vesting and/or purchase of these shares. The vesting date is usually the day after the AGM adopts the financial statements. The Executive Board member has the choice to use shares awarded from the long-term variable remuneration for the purpose of building up his or her shareholding requirement. This shareholding requirement applies instead of a restriction on the sale of unconditionally granted shares acquired as proposed in the Dutch Corporate Governance Code. The reason is that the internationally accepted shareholding requirements lead to a more sustainable build-up and alignment of the interests of the Executive Board member with those of the shareholders. Claw back The Supervisory Board is authorized to recover any awarded short- and long-term variable remuneration of the Executive Board member when it appears that the allocation is based on incorrect (financial) information (clawback). Ultimum remedium The Supervisory Board has the ultimate authority to adjust the value of any in previous years awarded variable remuneration component up- or downwards, if the award leads to manifestly unreasonable outcomes to either USG People or the Executive Board member as a result of extraordinary circumstances in the period in which the performance criteria were, or had to be realized (ultimum remedium). Loans USG People does not provide loans, advances or related guarantees to members of the Executive Board. 14/17 Remuneration report 2014

15 Scenario analysis In light of the new remuneration policy, the Remuneration- and Nomination Committee discussed all possible outcomes of the remuneration policy with the Supervisory Board. With the increase of the variable remuneration, this leads to a relatively large spread between the minimum remuneration level (no variable remuneration) and the maximum obtainable remuneration level. In determining this spread it has been taken into account that the long-term variable remuneration provides for the granting of a number of conditional shares instead of a certain value in Euro. The Supervisory Board considers the calculated spread acceptable, given that a stronger emphasis on variable remuneration increases the alignment between the remuneration of the Executive Board and the results of USG People. Termination arrangements It is agreed with the members of the Executive Board that the notice period is three months for the Executive Board members and a six months for USG People. The severance payment at resignation, which does not relate to personal culpable causes, is (subject to the agreed notice period) maximized at one year's gross annual base salary (including pension contribution). The variable remuneration not yet awarded will be paid out at target level and on a time pro-rated basis. If the maximum of one year's gross annual base salary for an Executive Board member who is dismissed during his first term is manifestly unreasonable, this person is eligible for a severance payment of up to two times the annual base salary (including pension contribution). The Executive Board members retain their entitlement to a special clause in case of dismissal after a change of control. This clause implies that the severance payment is two times the gross annual base salary, including pension, increased by one twelfth of the gross annual base salary, including pension, for each year of employment with USG People. This severance pay will not exceed three times the gross annual base salary level, including pension. USG People applies this policy on severance payment in the event of a change of control in order to do justice to the long-term employment of Executive Board members at USG People and in addition to, given the shareholders structure of USG People, protect the position as Executive Board member of USG People. If USG People terminates the appointment and employment for reasons that do relate to personal culpable causes, USG People is not obliged to provide any severance payment. The entitlements to conditional variable remuneration will lapse if the employment is terminated for reasons related to the personal culpable causes. 15/17 Remuneration report 2014

16 Compliance with the Dutch Corporate Governance Code The Remuneration- and Nomination Committee follows the principles and best practices of the Dutch Corporate Governance Code ( the Code ) of the Monitoring Committee closely, and has tested the new remuneration policy on the basis of the Code and all relevant legislation and regulations. As a result, USG People determined to be fully compliant with the Code, except for the level of the severance payment on termination of the employment of an Executive Board member because of a change of control (BPP II.2.8), and the best practice that unconditional shares must be locked up for at least five years (BPP II.2.5). For an explanation of this deviation, we refer to the sections Termination arrangements and Shareholding requirements. 16/17 Remuneration report 2014

17 Remuneration of the Supervisory Board in 2015 The Supervisory Board proposes to increase the consideration paid to members of the Supervisory Board for their involvement in committees from 7,500 to 12,500 per year with effect from This proposal will be submitted to the General Meeting of Shareholders on 7 May 2015 for approval. 17/17 Remuneration report 2014