NON-EXECUTIVE DIRECTORS IN EUROPE Pay practices, structures and diversity of leading European companies

NON-EXECUTIVE DIRECTORS IN EUROPE 2015 Pay practices, structures and diversity of leading European companies 1

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CONTENTS Typical European Board Profile 4 Welcome 5 European overview 6 Remuneration 7 Board structure 10 Independence 12 Diversity 14 Country analyses Europe 18 Austria 20 Belgium 22 Finland 24 France 26 Germany 28 Italy 30 The Netherlands 32 Norway 34 Spain 36 Sweden 38 Switzerland 40 United Kingdom 42 Methodology 45 3

TYPICAL EUROPEAN BOARD PROFILE How the directors are paid Non-executive chair fee 250.000 Non-executive director fee 69.300 Non-executive chair actual pay 259.200 Non-executive director actual pay 86.000 Comparison chair fee vs. director s fee 2,62 How the directors are organised Average number of directors 8 Number of board committees 3 Prevalence of Audit Committee 100% Prevalence of Remuneration Committee 94% Prevalence of Nomination Committee 88% Prevalence of Risk Committee 26% Number of board meetings 8 Number of Audit Committee meetings 5 Number of Remuneration Committee meetings 5 Number of Nomination Committee meetings 4 Number of Risk Committee meetings 6 How the directors are organised Company-declared independent directors 80% Board where all non-executive directors are declared independent 25% Nationality same country 67% Nationality within the EU 17% Nationality non-eu 16% International experience same country 61% International experience within the EU 22% International experience non-eu 17% Male 76% Female 24% Gender pay gap 8% Audit committees without female members 37% Remuneration committees without female members 40% Median average board age 60 4

other countries like Italy. And across the continent it is still relatively rare to see requirements for non-executive directors to build a significant shareholding in the company they oversee. Our study highlights a number of interesting developments in the composition of boards. Over the past years we have seen a clear change of scope around both risk and remuneration. Many companies are separating risk out from audit committee and general board work to deal with increases in both complexity and regulation. Overall across our sample we saw the prevalence of risk committees go from 22 per cent last year to 26 per cent this year. With regard to remuneration, the scope of remuneration committees is changing as the committee work takes on more and more aspects of managing executive human resources, including succession and performance management. WELCOME Welcome to Hay Group s study of non-executive directors in Europe 2015. In a year of relative quiet on the executive compensation front, boards have ensured that their own fees increases also keep a low profile as have the developments in the structures and compositions of boards and in the evolving roles of committees. The market median level of actual fees paid to nonexecutive chairs of boards moved to 259,200 (down from 265,000 last year) and the median fee for other non-executive directors was 86,800 (an upward movement from 81,800 last year). Pay structures have been changing but not in a uniform way. Some countries, like Germany, continue to see a share of companies use variable compensation for non-executive directors, which stands in sharp contrast to practices in countries like the United Kingdom (although a number of German companies have recently moved more towards fixed fee practices). Fees delivered in shares are popular in countries like Switzerland and Finland but almost unheard of in The march towards more diverse boards is somewhat stagnating - the proportion of female directors increased slightly across the sample from 23 per cent to 24 per cent over the year. At the same time the gender pay gap we have been reporting on in previous years fell marginally from 9 per cent to 8 percent as more women have been brought onto boards committees. The percentage of committees without women members increased slightly during the year and increased from 34 per cent to 37 per cent for audit committees and sits at 40 per cent for remuneration committees. This year we saw the average percentage of local directors sit at 67 per cent (66 per cent last year) and the average percentage of directors with the majority of their career in the country where the company is headquartered rise from 55 per cent to 61 per cent. We hope that you will find this report useful and enlightening and please do not hesitate to get in touch with your local Hay Group contact or either of the consultants listed in the individual country sections. William Eggers Head of Executive Reward Germany Frankfurt, April 2016 5

EUROPEAN OVERVIEW Non-executive directors are appointed by shareholders as their supervisory, non-executive representatives on the ultimate board of a company. What makes for a more effective constellation of non-executive directors (we will call them directors for the purposes of this report) is a matter of strong opinion and, as this report will show, practices across Europe have a lot of commonality but also some significant differences. Where we see clear similarities are in the recognised benefits of a diverse board and in having dedicated audit, remuneration and nomination committees. European boards have a median of eight directors and the vast majority of companies in our sample have separate audit and remuneration committees, with many also having a nominations committee, and increasingly also having a committee dedicated to risk. Each committee has director members selected from the population of the broader board. OUR APPROACH This study is designed to provide a comparison of board composition and remuneration for major companies across Europe. We looked at the constituent companies of the major indices for 12 European countries (a full list of these companies is provided at the back of the report). The data we collected is from the most recently filed public documentation, primarily annual reports. The data covers non-executive directors elected by general meeting, thus excluding all executive management and employee representatives. We have reported on both the policy pay and the actual pay information for each organisation. Policy pay data represents the typical pay that each director expects to receive for service on the main board and committees, including meeting fees (per meeting) if applicable. Actual pay data is the amount paid to each individual director as reported in the audited annual reports. This figure will be affected by factors such as the specific number of committees an individual sits on, how many meetings they attended and, if any form of variable pay is involved, and the performance of the company. We have chosen to report most figures as median (rather than average) as this minimises the impact of extreme or unusual results and is more representative of the true picture. Throughout the report we also refer to the concept of median average, which refers to how we calculated the actual awards we calculated an incumbent average for each company and then took the median of those averages. All European values have been converted to Euros taking the average exchange rate for last two years 1 January 2013 to 31 December 2014. 6

REMUNERATION Director remuneration and fee policy varies widely across Europe. Board fees are typically fixed fees though some boards have variable pay components, usually in the form of meeting fees. The median basic policy fee paid to directors across Europe is 69,300, with fees for Austrian directors being the lowest at 15,000 and for Swiss directors the highest at 197,000. Most companies across Europe pay their fees wholly in the form of cash but equity awards are made in some cases. Similar to last year s report, eight percent of companies in our sample pay their directors partly in equity and this is particularly prevalent in countries such as Finland and Switzerland. German director pay differs in the sense that many German companies partly pay their directors in the form of variable cash (though this is becoming slightly less prevalent due to restrictions imposed by the German government). Nearly all companies in the survey have an audit committee, where the basic median committee fee is an additional 15,000 for director members and an additional 25,000 for the committee chair. Some 94 percent of companies have a committee which handles the remuneration of the board, with the median additional basic committee fee across Europe is 12,100 for members and 20,100 for the chair. Policy fees Policy fee figures represent the company stated rates of pay to directors for service on the main board and committees. In addition to these fees may be attendance fees and, in some countries, variable pay linked to company performance. Median policy fees by country Country Median Basic Board Fees Non-Exec Chair Median Additional Committee Retainers Audit RemCo Risk Average Other Director Chair Member Chair Member Chair Member Chair Member Norway 62.600 36.900 16.500 10.500 12.830 7.500 - - - - Spain - 100.000 39.000 27.900 35.000 28.500 - - - 55.900 Sweden 197.200 62.000 22.500 14.100 13.500 11.000 - - - - Austria 30.000 15.000 7.500 5.000 - - - - - - Belgium 100.000 35.000 16.300 6.300 15.000 8.000 - - - - Finland 89.000 43.900 15.000 - - - - - - - France 250.000 20.000 20.000 10.000 15.000 8.400 - - 12.500 7.000 Germany 188.800 90.000 70.000 37.500 40.000 20.000 40.000 30.000 40.000 20.500 Italy 238.000 50.000-24.000 20.000 16.500 30.000 20.000 30.000 15.100 Netherlands 85.000 60.000 15.000 10.000 10.000 6.300 10.000 6.000 9.000 5.000 Switzerland 956.800 197.000 49.100 24.500 28.600 24.500 - - 32.700 24.500 UK 459.500 78.600 25.000 15.100 24.200 14.800 36.300 14.500 18.700 9.700 Median 250.000 69.300 25.000 15.000 20.100 12.100 36.300 20.000 19.100 12.100 7

Median actual pay by country Actual pay Actual pay is the amount paid to each individual director, as reported in the audited annual report. This figure will be affected by the number of committees an individual sits on, how many meetings they attended and, where variable pay is involved, the performance of the company. Our figures for actual pay show the total fees paid to directors and non-executive chairs for services throughout the year (including fees for meetings attended). The number of board and committee meetings held over a year varies significantly across companies and countries. The median fee earned by non-executive chairs across Europe was 259,210 during the year, up from 265,000 last year, with Swiss non-executive chairs continuing to earn the most at 914,700 and Austrian non-executive chairs earning the least at 65,000. The median fees received by other non-executive directors across Europe was 86,000 up from 81,800 last year, with Swiss directors continuing to earn the most at 246,200 and Austrian directors earning the least at 33,400. If we look at fees paid from an industry perspective the picture changes again. Industries that are known for paying their executives well also tend to come out with higher chairman fees, but other than that the pay pattern is complex for both chairs and other directors. There are some countries and industries where there are strong correlations between size of company and pay, but for others the correlations are very weak. Some sectors with a higher focus on risk, such as the banking and pharmaceutical sectors, tend to pay higher director fees. Switzerland Germany Spain UK European median Netherlands Sweden Belgium France Italy Finland Norway Austria 0 200.000 400.000 600.000 800.000 Non-executive chair total Median average director's total Median market cap (x100,000) Median actual pay by industry Banks Health and Life Sciences Insurance Technology Utilities Other financials Consumer Goods Consumer Services European median Automotive Industrials Natural Materials Transport Communications Oil & Gas 0 100.000 200.000 300.000 400.000 500.000 Non-executive chair total Median average director's total Median market cap (x100,000) For information on how the sectors have been categorised please see appendix. 8

Comparing director pay to chair pay One factor that varies widely across Europe is the differential between average director pay and the pay of the chair of the board. Board chairs of British and Swiss companies are the most highly paid compared to other board directors, earning around four times the amount. By contrast, pay is much more evenly distributed across Dutch boards, where the median pay differential between fees earned by the chair and the average fees earned by other directors is a multiple of just 1.38. Comparing non-executive chair vs. average directors pay by country UK Switzerland Italy France Sweden European median Germany Belgium Austria Finland Spain Norway Netherlands 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 Comparing non-executive chair vs. average directors pay by industry Other financials Banks Consumer Services European median Automotive Insurance Natural Materials Consumer Goods Technology Health and Life Sciences Industrials Communications Transport Oil & Gas Utilities 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 9

BOARD STRUCTURE As part of our study, we examine board structure and the committees responsible for the most typical functional areas: audit, remuneration, risk and nomination. Many boards will also cover additional functional areas which can be more specific to their industry or line of operation and are, as a result, difficult to aggregate. We have included these functional areas as other. Since it is not unusual for one committee to cover more than one area, we have concentrated on the functional area of each, rather than on the specific name. That said, we note that approximately a third of our sample has extended the scope of the remuneration committee to include a wider human resources agenda and/or succession. Most European countries have mandated the formation of an audit committee and as a result all the companies we reviewed across Europe have a committee in place to oversee audit. While this report is specifically aimed at the supervisory board (or non-executive members of the unitary board) elected at the Annual General Meeting., it is worth mentioning that all Italian companies with a unitary board have to have an external statutory audit board. 1 Unlike the audit committee, most countries have not specifically mandated the creation of a remuneration committee. However, 94 percent of companies in our sample have a remuneration committee in place, a slight decrease on last year. All companies in the sample from Belgium, Finland, Switzerland and the United Kingdom have a remuneration committee in place. In contrast, only 70 percent of German companies have a remuneration committee, which is down from last year when 77 percent of the German sample had one. Our data suggests that companies are placing greater emphasis on nomination, with many having newly formed committees to cover nomination and succession planning. This trend is not surprising in the light of the hype around boardroom diversity. Nomination committees are responsible for determining the characteristics sought in new executives and directors to serve in the best interests of the company and, by extension, consider the composition of the board. This year a total of 88 percent of companies across our European sample have put in place a committee whose responsibilities include nomination. This is an increase on last year where 73 percent of the European sample had a nomination committee in place. Nearly all companies from the UK and Germany have a committee for nominations, while only 68 percent of the Austrian sample run a nomination committee. For Norwegian and Swedish companies the common practice is to have external nomination committees, which are not included in our statistics. The prevalence of a committee covering risk is also becoming increasingly common across Europe at 26 percent overall, up from 22 percent last year. Separate risk committees tend to be more prevalent in industries which have inherent risk built into the business model, such as financial services and pharmaceuticals. As a result, there is a high incidence of risk committees in the UK and Switzerland - countries with heavy representation from these sectors. 1 The statutory audit committee (Collegio Sindacale) is required in Italy by law for companies with a unitary board structure. For companies adopting a dual board structure the statutory audit committee functions are taken over by the supervisory board. The statutory audit committee is composed by external certified professional experts in accounting and business law. The statutory audit committee monitors compliance with the law and corporate governance codes, the observance of the principles of correct administration, the adequacy of the company s organisational structure and internal control systems. 10

Prevalence of board committees Country Median number of board committees Prevalence of board committees that cover functional areas Audit Remuneration Risk Nomination Austria 3 100% 84% 11% 68% Belgium 3 100% 100% 10% 76% Finland 2 100% 100% 14% 81% France 4 100% 97% 25% 89% Germany 5 100% 70% 17% 97% Italy 3 100%* 97% 83% 71% Netherlands 4 100% 95% 26% 89% Norway 2 100% 83% 4% - Spain 3 100% 95% 16% 89% Sweden 2 100% 96% 20% - Switzerland 4 100% 100% 30% 80% UK 4 100% 100% 29% 98% European 3 100% 94% * prevalence Both statutory audit boards and audit committees have been included for Italy. 26% 88% * Both statutory audit boards and audit committees have been included for Italy. The table below shows the median number of board and committee meetings for each country. Over the last year, Spanish directors met most frequently in most categories, whereas Austrian directors consistently met fewer times than the European median. Board and committee meetings Country Board Meetings Audit committee Remuneration committee Nomination committee Risk committee Austria 3 3 2 2 - Belgium 9 5 4 4 - Finland 11 5 4 4 - France 8 6 5 4 5 Germany 6 5 4 2 4 Italy 9 9,5 6 5 9,5 Netherlands 9 5 4 4 5 Norway 11 6 6 - - Spain 11 7 6 5,5 26,5 Sweden 10 5 4-6 Switzerland 8 5 4 4 6,5 UK 8 5 5 4 6 European median 8 5 5 4 6 11

INDEPENDENCE While director independence is a well-established governance principle across much of Europe, each country has established its own definition of independence. For the purpose of this study, independent directors are those declared as such by their companies. Overall, a median of 80 percent of directors in the Europe-wide sample are declared as independent, up from 78 percent last year. Finland, Netherlands and Switzerland are the only countries in the sample where boards are declared fully independent at the median. Board structure and the concept of independence varies significantly from country to country across Europe. In Germany, board structure is strictly regulated and, unless they operate as a Societas Europaea (SE), German companies must operate a two-tier board with a supervisory board of legally independent members. Conversely, directors in Sweden may be declared to be independent but the Swedish definition of independence is much more relaxed than, say, in the UK. Independence levels in boards and committees (median percent) Country Board Audit Remuneration Risk Austria 80% 67% 67% - Belgium 54% 62% 76% 60% Finland 100% 100% 100% - France 64% 75% 100% - Italy 67% 100% 100% 100% Netherlands 100% 100% 100% 100% Norway 73% 100% 100% - Spain 50% 67% 67% 67% Sweden 64% 67% 67% 67% Switzerland 100% 100% 100% 100% UK 86% 100% 100% 100% European median 80% 100% 100% 100% * No data on the independence of German board directors was available. However, unless German companies operate as a Societas Europaea, German companies must operate a two-tier board with a supervisory board of legally independent members. European median UK Switzerland Sweden Spain Norway Netherlands Italy France Finland Belgium Austria 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Audit Remuneration Risk 12

Company-declared independent directors (median percent of board) Switzerland Netherlands Finland UK European median Austria Norway Italy Sweden France Belgium Spain 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% * No data on the independence of German board directors was available. However, unless German companies operate as a Societas Europaea, German companies must operate a two-tier board with a supervisory board of legally independent members. While it is useful to see the median number of directors on each board who have been declared independent, it is equally interesting to see how many companies have declared all of their directors as independent. Results very widely across Europe. Spain and Belgium sit at one end of the scale where not a single company has declared 100 percent of its directors to be independent. Conversely in the Netherlands where 67 percent of the sample have stated that each and every one of their non-executive directors is independent. The European median for our sample has increased to 25 percent this year (from 17per cent last year). As one would expect, there are much higher levels of independence within the sub-committees of the board. In Europe the audit, remuneration and risk committees are declared to be fully independent at the median. Prevalence of boards where all non-executive directors are declared independent Netherlands Switzerland Finland Norway Austria European median UK Sweden Italy France Spain Belgium 0% 10% 20% 30% 40% 50% 60% 70% * No data on the independence of German board directors was available. However, unless German companies operate as a Societas Europaea, German companies must operate a two-tier board with a supervisory board of legally independent members. 13

DIVERSITY The trend towards increased boardroom diversity is gathering pace as boards continue to be under pressure from both regulators and the public, in particular with regard to gender diversity. Over the last few years our results have shown that boards recognise the value gained from greater breadth of perspective in the boardroom and are acting on this in the nomination of new directors. Nationality As part of our research we collected data around the diversity of directors in each company and found that the results vary significantly from country to country. This year we found an average of 67 percent of directors are from the country in which they serve (up from 64 percent last year), 17 percent are of other EU nationality (last year 24 percent) and 16 percent hold nationality from outside EU borders. The most internationally diverse countries are Switzerland, the Netherlands, Sweden and Belgium. Average nationality mix UK Germany Finland Norway France European average Belgium Sweden Netherlands Switzerland 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Same country Within Europe Outside Europe * Insufficient data points were available to produce an average statistic for Austria, Italy and Spain. International experience Across our European sample, an average of 61 percent of directors have spent the majority of their career experience in the same country in which they serve as a director (up from 55 percent last year). 22 percent of directors have experience from within other EU countries (last year 23 percent) and 17 percent, on average, have spent most of their career in a more international setting (last year 22 percent). Average main career geographic experience mix Austria Spain UK Germany Italy European average Sweden Norway Finland France Belgium Netherlands Switzerland 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Same country Within Europe Outside Europe 14

Gender In recent years gender equality has dominated the diversity agenda and much of the debate has centred on the subject at continental and national levels. Different countries have adopted different approaches to boost female presence in the boardroom. Some have set internal targets while others, unsatisfied with the slow progress, have resorted to binding obligations through the use of strict quotas as a means to prioritise female hiring. Across our European sample, 76 percent of directors are male (down from 77 percent last year). This year Spain joins Austria as being the country with the highest number of male directors with an 83 percent presence. At the other end of the scale, Nordic countries continue to lead the way in gender diversity with the highest proportion of female directors on boards. Our study shows that 36 percent of Norwegian directors are women, brought about through binding legislation. Sweden and Finland have also seen the proportion of female directors increase in recent years to 31 percent without the use of such quotas. Average gender mix Austria Spain Switzerland Belgium Germany Netherlands European average UK Italy France Sweden Finland Norway 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Male Female Gender pay gap European companies continue to harbour a gender pay gap at the board level, though our data suggests that gap is beginning to narrow. The gap varies from country to country but male non-executive directors in Europe receive, at the median, eight percent more in total fees than their female counterparts, excluding chairs (down from nine percent last year). Significant improvements have been seen in Austria where the gender pay gap has decreased to eight percent (from 18 percent last year). Spain ranks highest in terms of pay equity and has no pay gap at the median. In contrast the gap broadens to as much as 25 percent in Germany and 16 percent in France. The pay gap appears to result mainly from an underrepresentation of women on the strategically important board committees (see below), which has translated into women board members being paid significantly less than men. Median gender pay gap Germany France Italy UK Switzerland Norway European median Austria Finland Belgium Sweden Netherlands Spain 0% 5% 10% 15% 20% 25% 30% 15

This year only five percent of non-executive chairs are women (three percent last year). The number of women holding the position of chair of the audit and risk committees has increased to 15 percent (from 12 percent last year) and 16 percent (from 13 percent last year). women assuming the position of deputy chair/ senior independent director remains unchanged at 12 percent while the numbers for remuneration chair increase (18 percent of sample from 13 percent last year). Gender representation in board roles Role Male Female Non- Exec Chair 95% 5% Exec Chair 99% 1% Deputy Chair/ SID 88% 12% Audit Chair 85% 15% RemCo Chair 82% 18% More telling is the number of companies that do not have any female representation at all on their board committees. The number of audit and remuneration committees without female directors across our European sample was 37 percent for the audit committee (last year 34 percent) and 40 percent for the remuneration committee (unchanged from last year). Scandinavia and France have a consistently high number of committees of female representation and are joined by Italy and the UK this year. At the other end of the scale, Austria and Germany continue to display very low levels of female representation in both the audit and remuneration committees. Prevalence of committees without female members Prevalence of committees without female members Audit Committee Remuneration Committee Risk Committee Austria 74% 88% 67% Belgium 56% 44% 0% Finland 24% 48% - France 20% 34% 50% Germany 68% 75% 83% Italy 25% 27% 25% Netherlands 44% 39% 20% Norway 23% 33% - Spain 53% 49% 43% Sweden 16% 38% 40% Switzerland 50% 53% 33% UK 25% 26% 37% Europe 37% 40% 37% 16

Age Boardroom diversity also extends to director age. Notwithstanding, boardroom age carries a lower profile than some of the other areas of diversity and relatively few European companies choose to impose a compulsory retirement age. This year the youngest median average director age was 58 in Austria, Belgium, Italy, Norway and Sweden, while the oldest median average age was 62, in the Netherlands. The European median average board age is 60. These figures show little change on last year. However, some marked gender differences in age can be observed across the European sample. The largest age gaps are seen in the Netherlands, Norway and Germany, where the median average age for male directors is around eight years older than female directors. The smallest age gap is seen in Finland, where there is less than a three-year age gap between male and female directors. To calculate the median director age, we first calculated the median age of directors per company provided that a minimum of five data points were available. We then calculated the overall country median provided that a minimum of five company medians were available. There were insufficient data points to provide a median age for Spain. Median average board age Netherlands UK France Switzerland Germany European median Finland Sweden Norway Italy Belgium Austria 40 45 50 55 60 65 Board Male directors Female directors *Insufficient data points were available to produce a median average statistic for Spain. 17

COUNTRY ANALYSES EUROPE In this section, Hay Group consultants provide country-by-country analyses and comparisons of board composition and remuneration trends, as well as a typical director profile for each country. To discuss these findings further, please contact the relevant Hay Group consultant. 18

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William Eggers T: +49 69 50 50 55 220. E: william.eggers@kornferry.com Austria All companies in Austria operate a two-tier board. A typical Austrian board is comprised of eight directors and boards run three committees at the median. All companies in the Austrian sample have committees which cover audit, 84 percent cover remuneration, 68 percent cover nomination. Only two companies in the sample formally has a risk committee. Employee representation in Austria is regulated under the Labour Code which came into effect in 1974. It states that workers have the right to be represented by up to one third of members on the supervisory board. Employee representatives do not receive fees for their participation on the supervisory board (whose fees are not included in this survey). Employee representation also extends to large private companies. Independence is treated seriously in Austria, with boards declaring themselves 80 percent independent at the median. Under the Second Stability Act (2012), management board members of listed companies must normally wait for a minimum of two years before putting themselves forward for candidature onto the supervisory board. Director pay in Austria continues to be the lowest in Europe, with board chairs now earning 65,000 at the median in actual fees (up from 57,100 last year) and other directors earning 33,430 at the median average (up from 29,900 last year). Director pay is generally built on basic fees and meeting fees, with some companies also choosing to pay committee fees. In all but one case, basic pay is delivered in fixed cash, with one company in the sample splitting basic fees into fixed and variable cash. There continues to be discussion around whether director fees should be broken down into fixed and variable components with a view to aligning director fees to company results, so we may see an increase in variable pay in the future. The levels of international experience brought in by board members have decreased compared to last year. On average 83 percent (73 percent last year) of directors have gained the greater part of their work experience from Austria, 15 percent (24 percent last year) have earned it from other European countries and just 2 percent (3 percent last year) have obtained it outside of Europe. However we expect to see changes going forward with changes brought in under the Second Stability Act (2012) requiring boards to pay closer attention to the internationality and competence of their directors. Gender diversity levels have made headway since last year as now on average only 83 percent (88 percent last year) of directors are male. We believe this change to be a consequence of the revision of the Austrian Corporate Governance Code (UGB) in July 2012 as well as the Second Stability Act (2012), which places greater importance on bringing more women onto boards. Although there is no quota for women, the Austrian Corporate Governance Code stipulates that listed companies are required to compile a corporate governance report that should include measures to promote the entry of women onto the supervisory board as well as the management board. The median director age has increased one year in comparison to last year and now stands at 58. 20

Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 30.000 15 Non-executive director basic fee 15.000 15 Board meeting attendance fee 750 10 Additional* fee for deputy chairman 8.750 14 Additional* fee for audit committee chairman 7.500 5 Additional* fee for audit committee members 5.000 5 Audit committee meeting attendance fee 500 9 Remuneration committee meeting attendance fee 500 7 Actual fee received: Non-executive chairman total fee 65.000 15 Average non-executive director total fee 33.430 19 * in addition to non-executive director basic fee Typical non-executive director profile in Austria Age: 58 Gender: Male in 83 percent of instances Most significant work experience: Gained within Austria in 83 percent of instances 21

Walter Janssens T: +32 2 333 74 56. E: walter.janssens@kornferry.com Belgium The majority of Belgian companies operate a unitary board. A typical Belgian company consists of 9 directors with no employee representatives. At the median there are three committees per company. All companies in our sample have committees for audit and remuneration, while 76 percent operate a nomination committee and 10 percent a risk committee. Remuneration and nomination committees are often combined together. Typically, Belgian boards will meet nine times over the year and committees will meet five times a year to discuss audit and four times a year to discuss remuneration matters. This year boards in our sample were declared as being 54 percent independent at the median. By law, only the remuneration committee chair is required to be independent. Director pay levels in Belgium are becoming more competitive by European standards. This is mainly a result of boards paying closer attention to board effectiveness which has resulted in significant changes to the board composition (including board chairs). The median actual fees for board chairs have increased to 172,720 (from 170,000 last year). Actual fees for other directors sit at 72,800. The pay ratio between the actual fees earned by the board chair and those earned by other directors has widened to 2.18 at the median (from 2.08 last year). Policy pay in Belgium is generally made up of basic fees, committee fees and meeting attendance fees. Basic fees are paid entirely in cash in all but two companies in the sample. Directors are paid only in cash as equity payments are forbidden by Belgian corporate law. The basic fee for board chairs has remained the same at 100,000 at the median. The median basic fee for all other directors has also remained at 35,000. Committee fees for participat- ing in the remuneration committee have overtaken those for the audit committee, with remuneration members now earning a median average of 8,000 against 6,250 for audit members. Whereas committee fees for chairing the audit committee are higher at 16,250 against 15,000 for chairing the remuneration committee. Directors are typically not bound to any shareholding requirements, nor are there any shareholding requirements for them to follow. Belgium has imposed a gender quota which legally binds companies to ensure that at least one third of board seats are filled by women by 2016. Our data shows that companies in Belgium are moving towards target levels though there is still some distance to go. On average 18 percent of board roles in Belgium are filled by women. The gender pay gap remains at 10 percent at the median. Belgium has long shown healthy levels of diversity in terms of international experience. On average 46 percent of directors have gained their main work experience in Belgium, 37 percent have worked the majority of their career in other countries within Europe, and 17 percent bring in the bulk of their work experience from outside of Europe. In terms of nationalities, the split between directors of Belgian nationality and those who are from other countries has shifted from last year: On average 63 percent are from Belgium (46 percent last year), 33 percent are from elsewhere in Europe (44 percent last year) and four percent are from outside Europe (nine percent last year). It should be noticed that more and more Belgian executives have gained experience in international companies. As such, despite their Belgian nationality, they bring in a lot of significant international experience as a board member The median director age has decreased by one year this year to 58. 22

Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 100.000 19 Non-executive director basic fee 35.000 19 Board meeting attendance fee 3.000 12 Additional* fee for audit committee chairman 16.300 8 Additional* fee for audit committee members 6.300 7 Audit committee meeting attendance fee 2.750 14 Additional* fee for remuneration committee chairman 15.000 5 Additional* fee for remuneration committee members 8.000 6 Remuneration committee meeting attendance fee 2.500 14 Actual fee received: Non-executive chairman total fee 172.700 16 Average non-executive director total fee 72.800 21 * in addition to non-executive director basic fee Typical non-executive director profile in Belgium Age: 58 Gender: Male in 82 percent of instances Nationality: Belgian in 63 percent of instances Most significant work experience: Gained within Belgium in 46 percent of instances 23

Juhani Ruuskanen T: +358 9 4133 6600. E: juhani.ruuskanen@kornferry.com Finland Finnish companies have just two committees at the median. All companies in the Finnish sample have an audit and remuneration committee and 81 percent have a nomination committee. However, we are seeing the role of the remuneration committee broaden in some companies to include succession planning, an area normally covered by nomination committees. Human capital issues are also increasingly being tackled at board level. Typically Finnish boards will meet 11 times during the year and committees will meet five times during the year to discuss audit and four times to discuss remuneration. Finnish boards are typically made up of seven directors at the median with no employee representatives on the board. Finnish companies maintain a high level of independence. This year Finnish boards declare their directors to be 100 percent independent at the median. Around 70 percent of the sample have disclosed formal shareholding guidelines. It is worth noting that fee payment in the form of equity with no performance conditions attached is permitted by the 2010 Finnish Corporate Governance Code and as a result is very prevalent. Director fees in Finland are fairly moderate and have not changed in the last five years as boards have been unwilling to increase fees in the face of recession. This year Finland ranks as the third lowest paying country in the European sample. In terms of actual fees, this year board chairs have earned 98,000 at the median ( 98,270 last year) and other directors have earned 58,500 at the median average ( 63,530 last year). The median pay differential between actual fees earned by board chairs compared to other directors remains comparatively low at just 1.73. In the majority of cases director fees consist of basic fees and meeting attendance fees. Few companies also pay for committee chairmanship or membership. The exception to this rule applies to audit chair retainer fee, where 43 percent of the sample pay such a fee. In 70 percent of cases, basic fees in Finland are delivered in both cash and shares which are non-performance related, with the cash portion normally being larger than the equity portion. Only one fourth of the sample delivers basic fees solely in cash. The total actual amount earned in basic fees stands at 89,000 at the median for board chairs and 43,900 at the median for other directors. Meeting fees for board, audit and remuneration committee attendance is 600 at the median. Finland ranks very highly in terms of gender diversity, where on average 31 percent of board positions are filled by women. This figure increases to 34 percent when considering positions in the audit committees and decreases to just 21 percent when looking at the composition of remuneration committees. Progress has been made without the introduction of any strict quotas, which are regarded as rather negative in Finland. Finland is not particularly diverse in terms of the level of international expertise brought in by its board of directors compared to some of the other countries included in this study. On average 54 percent of director have gained the majority of their work experience from within Finland, 39 percent from other European countries and only 7 percent from outside of Europe. Regarding the nationalities of its directors, on average 74 percent are Finns, 18 percent are of other European nationalities and 8 percent are from outside Europe. Finland has a relatively young median director age at 59, which rises by two years compared to last year. 24

Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 89.000 20 Non-executive director basic fee 43.900 20 Board meeting attendance fee 600 13 Additional* fee for deputy chairman 15.000 19 Additional* fee for audit committee chairman 15.000 9 Audit committee meeting attendance fee 600 14 Remuneration committee meeting attendance fee 600 14 Actual fee received: Non-executive chairman total fee 98.000 21 Average non-executive director total fee 58.500 21 * in addition to non-executive director basic fee Typical non-executive director profile in Finland Age: 59 Gender: Male in 69 percent of instances Nationality: Finnish in 74 percent of instances Most significant work experience: Gained within Finland in 54 percent of instances 25

Jerome Rambaldi T: +33 173 443 550. E: jerome.rambaldi@kornferry.com France Most French companies operate a unitary board, with only 11 percent of our sample running a double-tiered board. The vast majority of board chairs in French companies are executive chairmen: only one third of companies in the sample have a non-executive director who serves as board chair. The median number of directors sitting on the board stands at 12 directors. French companies typically run four committees; all companies have an audit committee and 97 percent of the companies in the sample have a remuneration committee. Some 89 percent of the sample also have a separate nomination committee and 25 percent also have a separate risk committee. This year French boards met eight times over the year at the median and committees met at the median six times to discuss audit and five times to discuss remuneration matters. Independence has come under the spotlight in France. The AFEP-MEDEF governance code recommends that the proportion of independent directors should be above 50 percent (or 33 percent if there is a controlling shareholder) in order to improve board effectiveness. This year, boards are declaring themselves to be 64 percent independent at the median, but we observe higher levels of independence in both the audit and remuneration committee where median figures stand at 75 percent and 100 percent respectively. As of 2015, French companies are required to appoint one or two employee representatives onto their boards. The AFEP-MEDEF code also recommends that an employee representative participates on the remuneration committee. In terms of actual pay, we have observed a raise in fees for board chairs which now stands at 287,500 at the median (against 202,120 last year). However, as aforementioned, the sample is small since the vast majority of board chairs are executives and median figures for actual pay for executive chairmen is 2,128,000. Actual fees received by other directors is up on last year, and the median average now stands at 66,800 (from 63,890 last year). Policy pay is generally comprised of a basic fee and a committee fee. Fees for meeting attendance is also provided in about half the sample. Basic fee levels tell a similar story to actual pay levels: The basic fees received by non-executive chairs has increased this year to 250,000 (from 225,210 last year) while those earned by other directors has dropped to 20,000 (from 31,500 last year). Audit chairs earn 20,000, and remuneration chairs earn 15,000 at the median. Audit committee members also earn higher fees than their counterparts in the remuneration committee, with the former earning 10,000 and the latter earning 8,400 at the median. With regards to meeting attendance fees, parity has been reached amongst committee chairs and members, with chairs earning 5,000 and members earning 3,000 at the median. Paying for board meeting attendance is not as common as paying for committee meeting attendance, with only one fifth of companies doing so, where board meeting fees are 3,750 per meeting at the median. French law no longer requires directors to be shareholders. Companies are increasingly seeking to enhance the diversity of their boards, particularly through competency training. In France there are formal training structures for directors. In particular, IFA ( Institut Français des Administrateurs ) which founded the first certification program in France, proposes there be a training period for directors which includes international training. The situation surrounding gender diversity continues to improve in France. Companies are on track 26

to reach the legal quotas set in 2012 which states that by 2017 companies should have at least 40 percent female directors on boards. This year our figures show that on average companies have 28 percent female directors at board level, and the distribution within the audit and remuneration committees is also strong where there is an average of 33 percent and 25 percent of positions filled by women respectively. Boards continue to diversify in terms of the nationality and levels of international experience brought in by its directors. International experience is clearly a valued attribute, and there is now only an average of 53 percent of board members who have obtained the majority of their work experience within France, while 27 percent bring in the bulk of their work experience from other European countries and 20 percent have obtained most of their work experience from outside of Europe. Diversity through nationality is not quite as varied: on average 70 percent are of French descent, 19 percent are of other European descent and 11 percent come from outside of Europe. Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 250.000 11 Non-executive director basic fee 20.000 26 Board meeting attendance fee 3.750 8 Additional* fee for deputy chairman 35.000 10 Additional* fee for audit committee chairman 20.000 9 Additional* fee for audit committee members 10.000 15 Audit committee meeting attendance fee 3.000 18 Additional* fee for remuneration committee chairman 15.000 7 Additional* fee for remuneration committee members 8.400 15 Remuneration committee meeting attendance fee 3.000 17 Actual fee received: Non-executive chairman total fee 287.500 12 Average non-executive director total fee 66.800 36 * in addition to non-executive director basic fee Typical non-executive director profile in France Age: 61 Gender: Male in 72 percent of instances Nationality: French in 70 percent of instances Most significant work experience: Gained within France in 53 percent of instances 27

William Eggers T: +49 69 50 50 55 220. E: william.eggers@kornferry.com Germany German companies are built on two-tier board structure as prescribed by German law, and consist of 9 board members at the median. German companies typically run five committees at the median, which is the largest median figure in Europe. All companies in the German sample have committees which cover the areas of audit, 97 percent have committees which cover nomination, 70 percent have a remuneration committee and 17per cent have a risk committee. Board Effectiveness is an area which is becoming increasingly regulated. Higher skill requirements are being placed on directors of the supervisory board. Finding the right talent for the supervisory board is becoming increasingly challenging given the increasing time commitment involved to perform the role. The German Corporate Governance Code states that all members of the supervisory board are required to arrange the necessary training for their directors, supported by the company as appropriate. This has created a market for external providers offering their services to improve and audit the qualifications of members of the supervisory board. There are fairly strict guidelines surrounding the independence of directors. The German Corporate Governance Code recommends that the supervisory board shall include what it considers an adequate number of independent members. Independence, by German standards, is defined as not having any personal or business relations with the company, its executive bodies, a controlling shareholder or any other enterprise associated with the latter. It is recommended that no more than two former members of the management board sit on the supervisory board. Former management members who wish to be appointed to the supervisory board are generally required to wait at least two years before assignment. Further, directors should not exercise directorships or similar positions or advisory tasks at competing companies. This year board chairs received 300,000 at the median (down from 331,700 last year) while other directors received a median average of 140,300 (up from 125,340 last year). The pay differential between the two remains at 2.22, exactly as last year. Policy pay is generally built on three components: a basic fee, a committee retainer fee as well as meeting attendance fees. In about half the sample, the basic fee component is split between a fixed and variable portion. However, it should be noted that the German government has called for a restriction in the variable portion. In response to these calls, some companies have eliminated the variable component altogether but have inevitably off-set the overall fee decrease by increasing the fixed component. Where variable pay is included, it is most often based on profits or dividends as opposed to a defined target cash amount, thus differentiating non-executive director pay from the pay of executive directors. In the future, it is expected that companies who do not drop the variable pay component base performance on the sustainable growth of the enterprise. As far as committee fees are concerned, fees are usually based on a proportion the total basic fees. Since a substantial number of German companies in the sample use a form of variable basic fees, we have only been able to calculate the committee fees off the guaranteed fixed portion of the basic fee because the variable component can be very variable. This accounts for the seemingly low policy figures when compared against actual fees. It is unusual for German companies to grant stock to directors. At policy level, basic fee levels are down this year with board chairs earning a basic fee total of 188,750 (down from 198,750) while other directors earn a basic fee of 90,000 (down from 94,380 last year). There remains a discrepancy in the amounts paid in committee fees to audit and remuneration committee participants, with the committee chairs of each committee earning 70,000 (down from 75,000 last year) and 40,000 (no change on last year) respectively at the median, and with other members earning 28

37,500 (down from 40,000 last year) and 20,000 (no change on last year) respectively at the median. It is not uncommon for chairs and members of the nomination and other non-mainstream committees not to earn any committee fees for work undertaken in these committees. Board and committee meeting fees are typically 1,000 per meeting. Board diversity remains a much debated topic in Germany, and public pressure over the issue has spurred on the introduction of a statutory quota for women on boards. Under the proposed law, from 2016 at least 30 percent of board positions in companies listed on the German Stock Exchange are to be held by women. Companies unable to appoint women to at least 30 percent of open board seats from 2016 are likely to be required to leave those seats vacant until a suitable female candidate fills the position. In 2015, large German companies must also set their own binding goals for increasing the amount of female directorships on both their supervisory and management boards. Figures this year show that most companies are far from reaching this target: this year, on average 19 percent of positions are filled by females on the supervisory board (no change on last year). Gender numbers in both the audit and remuneration committees are lower still, with an average of around 11 percent in both. The gender pay gap is significant and has increased to 25 percent (up from 22 percent last year) at the median. With regards to the composition of boards, the German Corporate Governance Code recommends that companies take into account their international activities. However directors with extensive international experience are few and far between. There is currently no additional reward for having international experience. But as companies begin to comply with the code, having international experience will make a director more attractive candidate. There has been a marginal improvement in terms of the diversity of international experience brought into the supervisory board by its directors. This year an average of 70 percent of directors have gained the majority of their experience in Germany, 22 percent having gained it within Europe and 8 percent having gained it outside of Europe. Germany has actually become more diverse in terms of the nationalities of its directors, on average, 74 percent of its directors comes from Germany (down from 84 percent last year), 17 percent comes from other countries within Europe and 9 percent comes from outside of Europe. Typical non-executive director profile in Germany Age: 60 Gender: Male in 81 percent of instances Nationality: German in 74 percent of instances Most significant work experience: Gained within Germany in 70 percent of instances Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 188.800 28 Non-executive director basic fee 90.000 28 Board meeting attendance fee 1.000 20 Additional* fee for deputy chairman 40.000 28 Additional* fee for audit committee chairman 70.000 24 Additional* fee for audit committee members 37.500 24 Audit committee meeting attendance fee 1.000 20 Additional* fee for remuneration committee chairman 40.000 18 Additional* fee for remuneration committee members 20.000 18 Remuneration committee meeting attendance fee 1.000 15 Additional* fee for risk committee chairman 40.000 5 Additional* fee for risk committee members 30.000 5 * in addition to non-executive director basic fee Actual fee received: Non-executive chairman total fee 300.000 27 Average non-executive director total fee 140.300 30 29

Lucia Bartolini T: +39 02 7716 315. E: lucia.bartolini@kornferry.com Italy The majority of Italian companies operate a unitary board, with only 9 percent of the sample operating a two-tier board. The number of board directors remains at 10 at the median. No employee representatives sit on the board, and it is not thought to change in the short term. Italian companies tend to run three committees. All companies in the sample have an audit committee, 97 percent of the companies have a remuneration committee, 83 percent have a risk committee and 71 percent have a nomination committee. There are typically nine board meetings in a year. At the median directors meet six times per year to discuss remuneration and ten times to discuss risk. Independence is taken seriously in Italy. Boards have to go through a formal process of certifying the independence of their non-executive directors every year. This year companies declare that 67 percent (at the median) of their non-executive directors are independent. This increases to 100 percent within the audit, remuneration and risk committees. It is expected that independent directors will become more involved with investor engagement, especially independent directors in the remuneration committee when communicating executive reward matters. Executive board chairs are common in Italy, with 43 percent of the sample having one. This year board chairs have earned a median total remuneration of 218,000 in actual pay, a significant decrease from 451,100 last year, which is caused by a number of changes in the sample constellation. Fees for other directors have also fallen to a median average of 66,400 (from 90,330 last year). The gap between the fees earned by board chairs and other directors has decreased, with a pay differential of 2.86 at the median (2.95 last year). While policy fees have decreased to 238,000 at the median for board chairs (from 400,000 last year), there has been no change in policy pay for other directors and their fees remain at 50,000 at the median. Director pay is typically based on an annual fee and a committee fee. Fewer companies pay on a meeting attendance basis. Director pay in Italy is becoming an issue: as the time commitment increases directors are not allowed to serve on as many boards as in previous years. Nor do fees increase for good reputation. Remuneration chairs earned 20,000 (no change on last year) and remuneration members earned 16,500 (up from 15,032 last year). Risk committees are now in place in 83 percent of the sample companies. This year risk chairs earned 30,000 in committee fees and members of the risk committee earned 20,000 at the median. Directors in Italy are paid solely in cash. Equity arrangements are generally frowned upon. Boards in Italy are certainly diversifying. Regulators (such as the Bank of Italy in the financial services sector) are focusing on board composition and effectiveness and formal induction programs are becoming the norm for listed Italian companies. The number of female directors is increasing as a result of legislation: Gender balance on the boards of listed companies came into effect in July 2011 and requires at least one third of director positions to be held by women by 2015. This law has proven to be effective at bringing women into the boardroom. There are, on average, 75 percent male and 25 percent female directors (last year: 16 percent female directors), though there is still some distance to go before meeting the quota. 30

Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 238.000 12 Non-executive director basic fee 50.000 23 Additional* fee for deputy chairman 50.800 6 Additional* fee for audit committee members 24.000 5 Additional* fee for remuneration committee chairman 20.000 12 Additional* fee for remuneration committee members 16.500 20 Remuneration committee meeting attendance fee 1.000 7 Additional* fee for risk committee chairman 30.000 10 Additional* fee for risk committee members 20.000 15 Risk committee meeting attendance fee 800 6 Actual fee received: Non-executive chairman total fee 218.000 15 Average non-executive director total fee 66.400 32 * in addition to non-executive director basic fee Typical non-executive director profile in Italy Age: 58 Gender: Male in 75 percent of instances Most significant work experience: Gained within Italy in 69 percent of instances 31

Eric Engesaeth T: +31 (0) 888 929 611. E: eric.engesaeth@kornferry.com The Netherlands As a matter of law and practice Dutch companies typically have a double tier governance structure, as is the case for 79 percent of our Dutch sample. There are seven directors sitting on Dutch boards at the median and, until recently, employee representation was rare but it is now becoming more prevalent. A typical Dutch company will run four subcommittees of the board, with the majority (at least 90 percent) of companies in the sample covering audit, remuneration and nomination. Risk is covered by 26 percent of the sample. The audit and risk committees met five times at median over the course of the year, while the remuneration and nomination committee met four times at median. Dutch boards met nine times over the year at the median. Board effectiveness continues to make the headlines. The disclosure of board self-evaluations are becoming the norm in listed companies. Since 2013, Dutch law dictates the maximum number of positions a director may hold. The limit to the number of positions is devised using a point system, where board/committee chairmanship constitutes two points and membership constitutes one point. Directors are not allowed to exceed a total of five points. This new law will potentially have a significant impact on director remuneration, particularly on chairman fees. Consequently several companies have significantly increased their fees. Levels of board independence are very high in the Netherlands. Dutch boards are declared to be 100 percent independent at the median, with both the audit and remuneration committees reaching 100 percent independence at the median. Notwithstanding director fees in the Netherlands do not stack up so well against the rest of Europe, with directors still earning relatively low fees by European standards. However the heightened scrutiny placed on boards together with the limit on board positions is expected to push up director fees. This year board chairs earned 117,900 in actual fees at the median and other directors earned 79,350 in actual fees at the median. The board chair typically earns 1.38 times the amount of other directors (1.34 last year). In terms of pay policy, director fees are generally built on two components: basic fees and committee retainer fees. Basic fees this year have increased compared to last year, with board chairs earning 85,000 ( 80,000 last year) and other directors earning 60,000 ( 50,000) at the median in basic fees. There has been a slight change in median committee retainer fees from last year, with audit chairs now earning 15,000 against the 10,000 earned by their remuneration counterparts, and audit members now earning 10,000 against the 6,330 earned by their remuneration counterparts. Paying on a meeting attendance basis does happen but is becoming relatively rare. In all but one case fees are delivered entirely in cash (i.e. non-performance based) in accordance with Dutch corporate governance requirements. In 2012 the Netherlands enforced a bill on management and supervision which includes provisions on gender parity at board and management levels. This bill came into effect as of 1 st January 2013. Specifically, it states that companies should endeavour to fill at least 30 percent of board positions with women. This provision is non-binding and there are no formal penalties for non-compliance, though companies are required to explain why they fall short of this target in their annual reports. On average 21 percent of board positions are filled by women directors. The gender pay gap of the past (two percent last year) no longer exists in the Dutch market. Dutch directors are on the whole the oldest in Europe, aged at 62 at the median (no change on last year). 32

Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 85.000 18 Non-executive director basic fee 60.000 19 Additional* fee for deputy chairman 10.000 11 Additional* fee for audit committee chairman 15.000 16 Additional* fee for audit committee members 10.000 16 Additional* fee for remuneration committee chairman 10.000 16 Additional* fee for remuneration committee members 6.300 14 Additional* fee for risk committee chairman 10.000 5 Additional* fee for risk committee members 6.000 5 Actual fee received: Non-executive chairman total fee 117.900 16 Average non-executive director total fee 79.300 18 * in addition to non-executive director basic fee Typical non-executive director profile in Netherlands Age: 62 Gender: Male in 79 percent of instances Nationality: Dutch in 51 percent of instances Most significant work experience: Gained within The Netherlands in 41 percent of instances 33

Juhani Ruuskanen T: +358 9 4133 6600. E: juhani.ruuskanen@kornferry.com Norway Norwegian boards are comparatively small and typically consist of seven directors who meet 10 times throughout the year. The majority of Norwegian companies tend only to operate two committees (71 percent of the sample), while some companies only have one sub-committee of the board. Norwegian law requires all companies employing over 200 employees to have employee representation on the board. Employee representatives have the same powers and rights as other directors and often also sit on the audit and remuneration committees. All companies in the sample have committees which cover audit, and 83 percent have committees for remuneration. Only one company in the sample runs a separate risk committee and nomination is a duty carried out by an external committee separate from the board. Boards are declared to be 73 percent independent at the median, with also the audit and remuneration committee being fully independent at the median. Norwegian directors earn modestly when compared to the greater European sample, ranking second lowest in Europe after Austria. The pay differential between board chair and other directors is down on last year and now stands at 1.57 at the median (from 1.69 last year). In terms of actual pay board chairs took home 84,400 at the median, while other directors earned just 57,000 at the median. Director pay in Norway tends to be based on a basic annual fee plus a committee retainer fee, and these fees tend to be delivered in cash. Only one company in the sample part pays in equity. Few Norwegian companies pay for meeting attendance. At the median the policy is to pay board chairs a fee of 62,600 and other directors 36,900 in basic pay. Committee retainer fees are noticeably higher for participating in the audit committee than the remuneration committee: Audit chairs earn 16,480 while their remuneration counterparts earn 12,830 at the median; and members of the audit committee earn 10,500 with their remuneration committee counterparts earning 7,490 at the median. Gender diversity in Norway has long been strong. Norway was the first country to introduce a quota for female directors in 2003, setting target levels of 40 percent and imposing strong penalties for non-compliance. This year s figures show that, on average, Norwegian companies are comprised of 64 percent male directors and 36 percent female directors. Gender figures for the audit committee are a bit higher, where an average of 46 percent of seats are filled by women. Younger women are being appointed to the board as a result of the gender quota. As such, there is an evident age gap between genders in the boardroom, with women aged at 54 and men at 61 at the median. Diversity in terms of background experience and nationality is also strong but not as striking as gender diversity. This year an average of 56 percent of directors have gained their principal work experience in Norway, 27 percent from within other European countries and 17 percent from outside European boarders; similarly 72 percent of directors are from Norway. There is a requirement for the board chair plus 50 percent of other directors to be living in Norway. 34

Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 62.600 8 Non-executive director basic fee 36.900 10 Additional* fee for deputy chairman 10.200 7 Additional* fee for audit committee chairman 16.500 7 Additional* fee for audit committee members 10.500 9 Additional* fee for remuneration committee chairman 12.800 5 Additional* fee for remuneration committee members 7.500 6 Actual fee received: Non-executive chairman total fee 84.400 16 Average non-executive director total fee 57.000 22 * in addition to non-executive director basic fee Typical non-executive director profile in Norway Age: 58 Gender: Male in 64 percent of instances Nationality: Norwegian in 72 percent of instances Most significant work experience: Gained within Norway in 56 percent of instances 35

Sergio Perez T: +34 93 209 27 44. E: sergio.perez@kornferry.com Spain Most Spanish companies operate a unitary board, as is the case with all companies in our sample. The vast majority of board chairs in Spanish companies are executive chairmen: only one fifth of companies in the sample have a non-executive director who serves as board chair. At the median there are 11 directors serving on the board who meet a total of 11 times per year. Spanish boards typically run three committees. In our sample 100 percent of the companies have committees for audit, 95 percent for remuneration, 89 percent have a nomination committee and 16 percent (all of them in the banking sector) have a risk committee. Spanish boards have declared themselves 50 percent independent, with audit and remuneration committee being 67 percent independent at the median. Spain is highly competitive in terms of director fees, following Switzerland and Germany in terms of the highest earning directors. This year Spanish board chairs earned 225,400 while other directors earned 132,900 at the median average (up from 121,230 last year). However, as aforementioned, the sample is small since the vast majority of board chairs are executives and the median actual pay for executive chairmen is 1,822,000. Directors pay is usually built on a mix of basic and committee fees, on top of which some companies also pay meeting fees. Fees are almost always entirely paid in cash. The Spanish Securities Commission (CNMV) has asked IBEX 35 companies to apply a discount to policy fees to reflect both company financial performance and the conditions of the Spanish economy. Directors fees in banks that receive financial state support are not allowed to exceed 100,000 per year, which is further restricted to 50,000 where the state has become the major shareholder as a result of significant financial aid. Also in the banking sector, audit, remuneration, nominations and risk committees are compulsory, apart from any other stated in own by-laws. No improvement has been seen around gender diversity in Spanish companies. On average 83 percent of board positions continue to be filled by male directors. However, more positively, there is no gender pay gap in Spain at the median (last year there was a 1 percent gap). In terms of pay policy levels, directors in Spain have earned a median basic fee of 100,000. The median fees earned for chairing and participating in the audit committee have decreased, and now stand at 38,950 for audit chairs (from 58,950 last year) and 27,900 for audit members (down from 38,950 last year). Remuneration committee chairs have also experienced decreases, in their median committee fees: 35,000 (from 43,520 last year) for remuneration chairs and 28,500 ( 28,950 last year) for remuneration members. 36

Element Median fee Companies Policy fee and structure prevalence: Non-executive director basic fee 100.000 18 Additional* fee for deputy chairman 49.000 6 Additional* fee for audit committee chairman 39.000 20 Additional* fee for audit committee members 27.900 20 Audit committee meeting attendance fee 1.000 5 Additional* fee for remuneration committee chairman 35.000 20 Additional* fee for remuneration committee members 28.500 20 Remuneration committee meeting attendance fee 1.000 5 Actual fee received: Non-executive chairman total fee 225.400 8 Average non-executive director total fee 132.900 27 * in addition to non-executive director basic fee Typical non-executive director profile in Spain Gender: Most significant work experience: Male in 83 percent of instances Gained within Spain in 75 percent of instances 37

Juhani Ruuskanen T: +358 9 4133 6600. E: juhani.ruuskanen@kornferry.com Sweden At the median there are seven directors serving on Swedish boards, who meet a total of 14 times during the year (board and committee meetings included). There are typically 10 board meetings in a year. It is typical for Swedish companies to only operate two committees. All companies in the sample have committees for audit, all but two also have a committee for remuneration and 20 percent have a risk committee. Nomination is not an area which is undertaken by directors in Swedish companies, as practice is to have an external nominations committee, as is also the case in Norway. The audit committee meets typically five times a year and the remuneration committee meets four times during the year. Employee representatives have long served on Swedish boards. They are elected by established Swedish Trade Unions, who also set their term of office. They have the same right to vote and essentially have the same standing as other board members in their remit. However they are not remunerated as other board members (rather they are paid as trade union representatives). Occasionally companies go further than informing employee representatives of the decisions made by the various committees by allowing employee representatives on the audit and remuneration committees, though this is rare. Director pay in Sweden is structured around a basic fee and a committee retainer fee. At the median, board chairs earn a basic fee of 197,230 and other directors earn a median average of 61,990 (compared to last year s figures of 182,650 and 60,690 respectively). Equity-based pay is uncommon, though it should be noted that a few companies pay participants in synthetic stock, otherwise all fees are in cash. Sweden continues to maintain good levels of gender diversity. On average 31 percent of board positions are filled by female directors (up from 30 percent last year). The gender pay gap has, accordingly, lessened to 2.87 percent at the median average (down from 3.3 percent last year). The level of international work experience brought into Swedish companies by their directors has decreased slightly from last year. On average 57 percent of directors have gained their main work experience within Sweden, 28 percent from within Europe and 15 percent have gained it from outside Europe. Diversity in terms of director nationality is however up on last year. This year on average 57 percent of directors are from Sweden (down from 66 percent last year), 31 percent are from other European countries and 12 percent are non-europeans. Sweden is one of the countries where there has been movement in actual fees this year, with board chairs earning fees of 209,200 at the median (up from 199,010 last year) and other directors earning fees of 76,750 at the median average (up from 72,250 last year). The pay differential between the two has been calculated at 2.62 at the median (down from 2.7 last year). 38

Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 197.200 23 Non-executive director basic fee 62.000 23 Additional* fee for deputy chairman 34.100 8 Additional* fee for audit committee chairman 22.500 21 Additional* fee for audit committee members 14.100 21 Additional* fee for remuneration committee chairman 13.500 20 Additional* fee for remuneration committee members 11.000 20 Actual fee received: Non-executive chairman total fee 209.200 22 Average non-executive director total fee 76.750 24 * in addition to non-executive director basic fee Typical non-executive director profile in Sweden Age: 58 Gender: Male in 69 percent of instances Nationality: Swedish in 57 percent of instances Most significant work experience: Gained within Sweden in 57 percent of instances 39

William Eggers T: +49 69 50 50 55 220. E: william.eggers@kornferry.com Switzerland The majority of Swiss companies (70 percent up from 65 percent last year) operate a two-tier board structure. Swiss boards typically comprise of nine directors who attend a total of 11 meetings per year (board and committee meetings included). There is typically no employee representation at board level. Swiss companies typically operate four committees. All companies in the Swiss sample have committees which cover audit and remuneration, 80 percent have a nomination committees and almost a third of companies have a separate risk committee. Over the course of the last year, Swiss boards met eight times at the median, audit committees met five times, remuneration and nomination committees met four times. In 2014 new amendments to the Swiss Code of Best Practice for Corporate Governance were published. In addition to the existing recommendations, the new Swiss Code recommends an appropriate diversity (see below) as well as assurance that independent decision-making processes are in place through the exchange of ideas with executive management. Until now, the Swiss Code only lay down recommendations on the independence of committee members rather than the board in general. The median actual fees this year are 914,700 ( 760,070 last year) which is a notable increase after decreasing continuously for the last years. Similarly actual fees for other directors have increased from last year, with directors now earning a median average of 246,200 ( 230,630 last year). Policy pay has also increased on last year s reported figures. Board chairs earn 956,800 ( 886,980 last year) at the median. However, the basic pay for other directors has almost remained equal to last year s figures at 197,000. In terms of fee structure, director pay in Switzerland typically consists of a basic fee plus a committee retainer. Meeting fees have become fairly uncommon and are only provided by two companies in the sample. The committee retainer fee for participating in the remuneration committee has now caught up with that of the audit committee, both standing at 24,500 at the median. However the audit chair continues to out-earn the remuneration committee chair in terms of committee fees, earning 49,100 against 28,600 at the median respectively. The pay differential between board chairs and other directors, which compares the actual fees obtained by board chairs with the average amount earned by all other directors at each company, is up on last year. Board chairs now earn 3.88 times the amount earned by other directors at the median (3.55 last year). It is not uncommon for directors to receive their fees both in cash and share grants, and this occurs in 50 percent of the sample. The equity granted is typically, but not always, smaller than the cash component. None of the companies reward stock options as this would be seen to compromise director independence. Critics fear that variable payments of any form would reduce the independence and might influence directors to make decisions conflict the long-term sustainable growth of the company. Directors in Switzerland continue to bring large amount of international work experience with them to the board room. This has been a natural development rather than brought about by any regulatory requirements. The Swiss Code recommends that the Board of Directors should include members with long-serving international experience if a significant part of the company s operations is abroad. Our figures show that geographical span of work experience to be very strong. Switzerland continues to recruit the lowest proportion of directors whose 40

main work experience has been obtained locally: on average 30 percent of directors have gained the majority of their work experience in Switzerland, 41 percent have gained it from the rest of Europe and 29 percent from outside of Europe. Similarly Switzerland has the lowest percentage of directors of local nationality: on average 39 percent of directors are Swiss, 29 percent are Europeans of other nationalities and 32 percent are from outside Europe. Switzerland does not, however, boast such strong diversity figures in terms of gender. There continues to be a shortfall of women directors. At present, Switzerland has no fixed or statutory regulated quota on gender diversity. However, a recent decision has been made by the Swiss Cabinet in 2013 which will introduce a target rate for women occupying 30 percent of board positions in companies with close links to the Swiss government (such as the Post Office, Swisscom and Swiss Broadcasting Corporation), to be implemented by 2020. Currently, on average, 82 percent of directors are male and 18 percent are female (which compares to 83.5 percent male and 16.5 percent female last year). Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 956.800 15 Non-executive director basic fee 197.000 16 Additional* fee for deputy chairman 110.400 9 Additional* fee for audit committee chairman 49.100 13 Additional* fee for audit committee members 24.500 12 Additional* fee for remuneration committee chairman 28.600 12 Additional* fee for remuneration committee members 24.500 11 Actual fee received: Non-executive chairman total fee 914.700 18 Average non-executive director total fee 246.200 20 * in addition to non-executive director basic fee Typical non-executive director profile in Switzerland Age: 60 Gender: Male in 82 percent of instances Nationality: Swiss in 39 percent of instances Most significant work experience: Gained within Switzerland in 30 percent of instances 41

Simon Garrett T: +44 20 7856 7113. E: simon.garrett@kornferry.com United Kingdom British companies typically operate a unitary board where both non-executive and executive directors sit alongside each other. The UK Code of Corporate Governance states that at least half the board of a listed company should be independent, including all members of the audit and remuneration committees. Employee representatives are not typically seen on boards. Despite this, under the new Director s Reporting Regulations which became effective this year, companies are asked to disclose whether employees have been consulted during the review of executive remuneration. However, many companies choose not to include this and the consultation process itself is not a requirement. The median number of directors per company in the FTSE 100 (surveyed here) is seven this year. Directors in the UK typically attended eight board meetings in the year. The UK Corporate Governance Code requires the board to have three committees: audit, remuneration and nomination. In addition 29 percent of companies in the sample also have a separate risk committee. The audit and remuneration committees typically met five times, nomination four times and risk committees typically met six times over the year. Policy pay for non-executive directors tends to be made up of a basic fee and a committee retainer fee where applicable. Seldom do UK companies pay on a meeting attendance basis. The fee for the board chair is typically an all-encompassing one with no added premia for any additional responsibilities taken on. The median policy fee for board chairs is 495,460 and for other directors is 78,590. The median committee retainer fee for the remuneration chair almost matches that for audit chair, with 24,180 for the former and 25,000 for the latter. Median committee fees for membership of the remuneration committee also lag just behind that of the audit committee, with the former earning 14,800 while the latter earns 15,110. The UK Code includes a specific provision discouraging companies from including share options or other forms of performance-related elements as part of directors fee arrangements. In exceptional cases where equity is granted, companies need to gain shareholder approval prior to exercise and the acquired shares should be held at least a year following the director s departure from the board. Our figures show that the vast majority of directors receive all fees in cash, with only three percent of the companies in the sample part paying fees in shares. In terms of aggregate fees, directors in the FTSE 100 now earn median fees of 98,540 with board chairs earning 425,300 at the median. The median pay differential between the actual fees for board chairs versus those earned by other directors is the highest in Europe with board chairs earning 4.43 times the amount earned by other directors at the median. Director diversity in the UK boardroom continues to grow as companies strive for board diversity. Women on boards continue to attract most attention. As yet there are no legal quotas in place, and the Davis report on board gender diversity, published in 2015, concluded they would be unwarranted. It is common for companies to introduce their own internal targets with regards to gender diversity. Some have chosen to state such targets in their annual reports and disclose whether these targets have been met. This year there are 75 percent male directors at the median average (up from 74 percent last year) in UK companies within the sample. This year s figures show that an average of 70 percent of non-executive directors have gained the bulk of their work experience within the UK, 20 percent from outside the Europe and 10 percent from within Europe. When looking at directors nationality an average of 77 percent are British, 9 percent are from other European countries and 14 percent are non-europeans. 42

Element Median fee Companies Policy fee and structure prevalence: Non-executive chairman basic fee 459.500 87 Non-executive director basic fee 78.600 91 Additional* fee for deputy chairman 24.200 84 Additional* fee for audit committee chairman 25.000 85 Additional* fee for audit committee members 15.100 45 Additional* fee for remuneration committee chairman 24.200 83 Additional* fee for remuneration committee members 14.800 44 Additional* fee for risk committee chairman 36.300 17 Additional* fee for risk committee members 14.500 15 Actual fee received: Non-executive chairman total fee 425.300 79 Average non-executive director total fee 98.500 96 * in addition to non-executive director basic fee Typical non-executive director profile in UK Age: 61 Gender: Male in 75 percent of instances Nationality: British in 77 percent of instances Most significant work experience: Gained within UK in 70 percent of instances 43

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