Remuneration report
1.6.5.1
The following remuneration report of the Supervisory Board contains an overview of the remuneration, a report on the manner in which the remuneration policy was put into practice over the past year, an overview of the remuneration policy to be followed by the Supervisory Board over the coming year and subsequent years, and a report on the remuneration of the members of the Supervisory Board. The remuneration policy was adopted by the General Meeting of Shareholders of 15 April 2016.
Remuneration policy
On the advice of the remuneration committee the Supervisory Board prepared the remuneration policy for the Executive Board (hereinafter the ‘Executive Board’). The term ‘Executive Board’ in this remuneration policy refers solely to the statutory directors and not to the persons referred to as directors (the ‘non-statutory' members of the Executive Committee) who are not a statutory director. The Executive Board’s remuneration policy and changes thereto are determined by the general meeting of ForFarmers N.V. (hereinafter ‘ForFarmers’ or ‘the Company’). The Supervisory Board sets the remuneration of the individual members of the Executive Board on the proposal of the Remuneration Committee, in line with the remuneration policy. The regulation of the Remuneration committee is published on the website of ForFarmers.
Principles
Prior to the preparation of this remuneration policy, the Supervisory Board of ForFarmers analysed the potential outcome of the variable remuneration components and the consequences thereof for the remuneration of the members of the Executive Board.
The remuneration policy is founded on attracting qualified people, retaining them, and motivating them to realise ForFarmers’ objectives. Experience in the (international) activities of ForFarmers and the necessary management qualities play a big part in this.
The policy is based on interesting and retaining highly-qualified people, even from other industries, in a position at ForFarmers. When setting the variable component of the remuneration, several aspects are taken into consideration, such as results and other developments relevant to the Company, including non-financial indicators that are relevant for the company’s long-term goals, always bearing in mind the risks that such a variable remuneration can entail for the Company. The level and structure of directors’ remuneration is also determined by way of scenario analyses conducted. The proportionality of remuneration within the Company is also considered.
When determining the aforementioned principles, the remuneration package is compared with that of a number of companies of a comparable scale, complexity, significance and results. This is what is called the ‘peer group’. When setting the total remuneration, the market median of the peer group will be taken as a basis. For this, research from an independent organisation is used. The Supervisory Board shall have the remuneration package assessed by an agency once every three years to ensure that the package complies with the principles of the remuneration policy. In the interim years the remuneration can be adjusted on the basis of the signalled remuneration margin compared to the peer group and inflation. The Executive Board receives a remuneration composed of a fixed and variable part. The variable part has both a short-term and long-term component. For the variable part of the remuneration, financial and non-financial targets are set every year by the Supervisory Board. The remuneration policy is regularly tested; changes to the policy are presented for adoption to the General Meeting of Shareholders.
Remuneration package
The total remuneration of the members of the ForFarmers Executive Board is composed of a fixed basic salary, a short-term performance bonus, a long-term performance bonus, a pension and other secondary conditions of employment. In addition, the CEO receives a fixed short-term bonus of €100,000 per year during the term of his current contract which must be used for the senior employee participation plan. Members of the Executive Board also have the option to take part in the participation plan for the senior management of ForFarmers. The Executive Board is not granted any options for the acquisition of shares or depositary receipts. The Company has no regulation relating to the change-of-control of the Company.
Prior to the preparation of the remuneration policy of individual members of the Executive Board, the Supervisory Board of ForFarmers analysed the potential outcome of the variable remuneration components and the consequences thereof for the remuneration of the members of the Executive Board.
Fixed basic salary
The adjustment of the basic salary by the Supervisory Board, on the recommendation of the Remuneration committee, basically takes place on 1 January. In this respect the personal performance, the results of the past years, the potential margin compared to the norm level and general adjustments in the remuneration market are taken into account.
Performance bonuses
Every member of the Executive Board is entitled to a short- or long-term performance bonus, the level of which depends on attaining targets discussed in advance by the Supervisory Board and the Executive Board, and supports the achievement of ForFarmers’ strategic agenda, with a responsible balance between a focus on the short-term and a focus on the long-term. The Supervisory Board sets the level of the variable remuneration realised, on advice from the Remuneration committee.
The Company’s external auditor executes specifically agreed upon tasks relating to the achievement of financial targets in the short- and long-term remuneration plan.
Short-term performance bonus
The short-term performance bonus as a percentage of the fixed basic salary, if all targets are achieved, amounts to:
- for the CEO 60% and maximum 72%; and
- for each of the other members of the Executive Board 40% and maximum 48%.
Any performance under 90% of the set target shall lead to non-payment of the bonus for that target. The maximum bonus for a target will be paid when the performance comes to at least 110% of the target set. In the case of performance between 90% and 110% of the set target, the bonus is paid out proportionally. If 90% of the target is not achieved for any of the set targets, 0% of the bonus is paid out. The targets for the short-term performance bonus are 70% related to financial targets and 30% to qualitative targets (as determined at the discretion of the Supervisory Board).
The short-term performance bonus is made up of an annual payment in cash paid out in the following year, directly after the annual accounts have been adopted at the Annual General Meeting that year.
Long-term performance bonus
The remuneration policy moreover offers room for a remuneration for members of the Executive Board that rewards long-term improvement.
The level of the long-term performance bonus depends on the extent to which the performance is achieved over a period of three years. The performance taken into account includes the development of profits after taxes and the realisation of the Company’s strategy and sustainability targets. Performance is established by the Supervisory Board on advice from the Remuneration Committee. If the performance remains under 90% of the set target, this shall lead to non-payment of the bonus for that target. The maximum bonus for a target will be paid when the realisation of that target comes to at least 110% of the target set. In the case of performance between 90% and 110% of the set target, the bonus is paid out proportionally. If 90% of the target is not achieved for any of the set targets, 0% of the bonus is paid out. The objectives for the long-term performance bonus are for 60% related to financial targets and for 40% to qualitative targets (as determined at the discretion of the Supervisory Board].
The long-term performance bonus as a percentage of the fixed basic salary, if all targets are achieved amounts to:
- for the CEO 60% and maximum 72%; and
- for each of the other members of the Executive Board 40% and maximum 48%.
For this, the fixed basic salary is used as applicable on 1 January of the first year of the specified period of three years.
The long-term performance bonus is composed of a compensation in cash and is paid out at the end of the specified period of three years, directly after the annual accounts have been determined in the Annual General Meeting of the year following the end of that period.
Share participation plan
Members of the Executive Board are in principle invited on an annual basis to take part in the employee participation plan for senior management. Participants in this plan may purchase (depositary receipts for) shares on an annual basis for an amount no higher than 70% of the gross amount of the short-term bonus they are set to receive in that year. For ordinary (depositary receipts for) shares received as part of this employee participation plan, a lock-up period of three years applies as well as a discount of 20% on the standard acquisition price which is granted in the form of an allowance of additional (depositary receipts for) shares. The Supervisory Board can determine whether members of the Executive Board can allocate other components of their salary to this.
Members of the Executive Board are not granted (depositary receipts for) shares and/or rights to (depositary receipts for) shares as part of their remuneration. Participation in an employee participation plan is at the discretion of each individual member of the Executive Board. The Supervisory Board annually determines whether the employee participation plan can be carried out.
Clawback
The Supervisory Board has the authority to adjust the level of the variable component of the remuneration of members of the Executive Board, the allocation of which was dependent, in whole or in part, on attaining certain targets or on special circumstances, to a suitable level if payment thereof would be unfair or unreasonable. Furthermore, the Company (represented for these purposes by the Supervisory Board or a person designated for that purpose by the General Meeting of Shareholders) is entitled to claw back, in whole or in part, any bonuses granted insofar as the payment has taken place on the basis of inaccurate information on the achievement of the targets that form the basis for earning the bonus or on the circumstances on which the bonus depended. These points are also included in the agreements with the members of the Executive Board and the non-statutory directors.
Pension
The CEO receives a fixed remuneration for accrual of his own pension scheme of 20% of the fixed salary. For other members of the Executive Board, up to a basic annual salary of €100,000, the collective pension scheme of ForFarmers, including the top-up scheme, applies based on defined contributions and participants’ own contributions. Above the aforementioned amount of €100,000, they receive an allowance for accrual of their own pension scheme. The premium is comparable with the amount of pension premium paid prior to introduction of the maximum threshold of €100,000.
Other secondary conditions of employment
ForFarmers has a package of secondary conditions for members of the Executive Board. These include, inter alia, a healthcare and sickness scheme, an accident scheme, a car scheme, directors’ liability insurance and an expenses scheme. ForFarmers does not issue loans, guarantees or similar benefits to members of the Executive Board.
Severance payment
The current agreement with the CEO was concluded for a term up to the annual General Meeting in 2018. If the agreement with the CEO is terminated by the Company then payment of his salary is continued up to the end of the contract term. Contracts with the other members of the Executive Board have been converted into temporary contracts in accordance with the maximum term of office as included in the Dutch Corporate Governance Code. Contracts with members of the Executive Board shall in the future in principle be entered into for a period of four years and shall include the provision that in the case of early dismissal by the Company, a maximum of one year’s fixed basic salary shall be paid out. The same applies in the event that a member of the Executive Board is not eligible for reappointment after four years. If that maximum of one year’s fixed salary for a member of the Executive Board who is dismissed during his/her first term of office is clearly unreasonable in the opinion of the Supervisory Board, this director shall be entitled to compensation for dismissal, of maximum of two years’ basic salary. The Supervisory Board is entitled not to grant such a compensation or to set it at a lower amount, if the Supervisory Board is of the opinion that the reasons for dismissal would make the granting of compensation of one year’s basic salary unacceptable based on criteria of fairness and reasonableness.
Non-statutory directors and other employees
For the record, it is noted that the remunerations of non-statutory directors are determined by the CEO after previous consultation with the Supervisory Board. The remuneration of non-statutory directors and other employees occurs within the limits of this remuneration policy.
Remuneration 2016
During the 2015 financial year, an independent organisation conducted market research among two peer groups to determine the level and composition of the remuneration of the members of the Executive Board. The composition of the peer groups was determined by the Remuneration Committee in consultation with an external advisor. The first peer group consisted of nine (9) companies in the Netherlands that are active in the agricultural sector in Europe, including Agrifirm, FrieslandCampina and Vion, and the other one consisted of thirteen (13) small- and mid-cap funds, including Sligro, Wessanen and GrandVision. When determining the peer groups, their comparability in scope, complexity, importance and result was examined. The peer groups are comparable to the previous survey conducted in 2012. The outcome of the survey was used to determine the total direct remuneration (fixed salary, short – and long term bonus) of Arnout Traas and Jan Potijk effective from 1 January 2016. In addition, the outcome of the survey will be used to determine the total direct remuneration of Yoram Knoop in case a new contract will be concluded with him. In 2016, the Remuneration committee did not make use of services of an external remuneration advisor to determine the remuneration of the members of the Executive Board. In the period under review, the employment contracts of Arnout Traas and Jan Potijk were converted into temporary contracts in line with their term of office as a member of the Executive Board, i.e. 4 years (ending at the end of the Annual General Meeting in 2020), and 3 years (ending at the end of the Annual General Meeting in 2019) respectively. The terms of office of respectively 4 and 3 years were chosen to avoid that the terms of Arnout Traas and Jan Potijk would end simultaneously.
Prior to the preparation of the remuneration policy and the adoption of the remuneration of individual members of the Executive Board, the Supervisory Board analysed the potential outcome of the variable remuneration components and the consequences thereof for the remuneration of the members of the Executive Board.
Annual salary for members of the Executive Board
The fixed basic salaries of the members of the Executive Board were indexed on 1 January 2016 by a percentage as presented below. The Supervisory Board made an estimate of the expected inflation development.
Yoram Knoop
(+1% vs, 2015)
Arnout Traas
(+4% vs, 2015)
Jan Potijk
(+19% vs, 2015)
1.6.5.3
Short- and long-term performance bonus of members of the Executive Board
The targets for the short-term performance bonus for 2016 were 70% related to financial targets and 30% to qualitative targets.
The targets for the long-term performance bonus were 60% related to financial targets and 40% to qualitative targets. The long-term performance bonus is determined over a period of 3 years, i.e. 2014-2016.
The overview below shows which bonus percentages have been achieved as compared with the maximum by each individual member of the Executive Board.
1.6.5.4
Variable short-term bonus %
Short-term % of maximum target (of 120%)
Long-term bonus %
Long-term % of maximum target (of 120%)
Yoram Knoop
64.7%
89.8%
60%
100%
Arnout Traas
42.4%
87.8%
40%
100%
Jan Potijk
46.9%
97.7%
40%
100%
*Explanation: The maximum percentage is 120% vis a vis the ‘on target’ percentage.
1.6.5.5
For the short-term performance bonus, the financial targets over the financial year were related to the net profit or EBIT (for 70%) and the percentage of overdue receivables (for 5% or 10%, depending on the concerned member of the Executive Board). The qualitative targets related to specific projects for 2016 as part of the implementation of Horizon 2020 such as the set-up of world-class teams, implementation of the CRM application, filling (in) of the M&A portfolio and listing on Euronext Amsterdam. Depending on the concerned member of the Executive Board, a project is taken into account for 5% up to 20% of the target. The scores as regards the financial targets in 2016 came out in a range of 92.3% to 96.7%. The scores as regards the qualitative targets came out in a range of between 77.5% and 100% of the previously agreed maximum level. The main cause of not achieving the maximum scores was that reducing overdue debtor amounts was not achieved in all clusters, and that the qualitative objectives were not met in all cases.
For the long-term performance bonus 2014-2016, the (cumulative) financial targets related to the realisation of net-profit growth over three years, both like-for-like profit growth (25%) as well as through acquisitions (25%). Achieving these targets account for 50% of the long-term performance bonus. The qualitative targets related to the preparation and set-up of the governance structure for the listing on Euronext Amsterdam (for 25%) and to the progress of the Horizon 2020 strategy (for 25%). For the long-term performance bonus 2015-2017, the (cumulative) financial targets are for 60% related to the net-profit growth (both like-for-like and through acquisition) and the qualitative targets are related to implementation of Horizon 2020 for 20%, to the realisation of sustainability targets for 10% and for 10% to the realisation of the listing on Euronext Amsterdam. With respect to the long-term performance bonus 2016-2018, the target elements are similar to the elements of 2015-2017 albeit that the listing on Euronext Amsterdam has been replaced by the progress made in relation to the employee engagement survey target. The long-term financial targets were achieved to a level of 100%. All financial and non-financial objectives from the 2014-2016 programme were achieved.
The actual targets are not disclosed as they are (or may be) commercially confidential and potentially price-sensitive. When establishing the bonuses, the Supervisory Board used the report by the accountant on the actual findings regarding the realisation of the bonus performance targets for the Executive Board. The members of the Executive Board have allocated their short-term performance bonus and fixed short-term bonus, or part thereof, to participation in the senior management employee participation plan, which resulted in the acquisition of 58,305 depositary receipts for shares by Yoram Knoop, 15,024 depositary receipts for shares by Arnout Traas and 20,347 depositary receipts for shares by Jan Potijk. A lock-up period of three years and a discount of 20% on the regular acquisition price, which was granted in the form of allocation of additional depositary receipts for shares, apply to the depositary receipts that were acquired based on this scheme, as referred to in Article 2:135, section 5 of the Dutch Civil Code as approved by the Annual General Meeting of 15 April 2016.
As at 31 December 2016, the members of the Executive Board held the following shares or depositary receipts:
1.6.5.6
Depositary receipts in lock-up with release in 2017
Depositary receipts in lock-up with release in 2018
Depositary receipts in lock-up with release in 2019
Depositary receipts/Shares (not in lock-up)
Yoram Knoop
39,151
63,011
58,305
62,500
Arnout Traas
35,449
14,757
15,024
35,005
Jan Potijk
32,465
21,007
20,347
802,726
Total
107,065
98,775
93,676
900,231
1.6.5.7
The Company did not allocate remuneration in the form of options, shares or depositary receipts to members of the Executive Board and or the Executive Committee. The remuneration of the members of the Executive Board does not depend on a change of control in the Company. Loans were not provided to members of the Executive Board.
An overview of the costs incurred by ForFarmers N.V. (the ‘Company’) in the financial year 2016 in relation to Executive Board remuneration is included below. This overview provides a summary of the remuneration of the individual members of the Executive Board. No fees other than those shown in the overview were paid to members of the Executive Board in the financial year.
1.6.5.8
1.6.5.9
The Supervisory Board has seen no reason in the financial year to make use of its special powers to add to or claw back any allocated variable or long-term remuneration. Over the financial year, no severance payments or other special payments were granted to members or former members of the Executive Board.
Remuneration policy 2017 and subsequent years
An adjusted remuneration policy will be submitted to the 26 April 2017 General Meeting of shareholders for adoption. On the advice of the Remuneration committee, a proposal is made to adjust the remuneration policy, in connection with, inter alia, the new Dutch Corporate Governance Code 2016 and the proposed extended lock-up period with respect to the employee participation plan for senior management.
Remuneration of members of the Supervisory Board
The annual remuneration of members of the Supervisory Board amounts, in accordance with the policy established at the AGM of 15 April 2014, to:
€50,000 for the Chairman, €35,000 for the Vice-Chairman and €30,000 for the other members of the Supervisory Board with a surcharge of €7,500 for each Supervisory Board member who chairs a committee established by the Supervisory Board and €5,000 for each Supervisory Board member who is a member and not the Chair of one of these committees established by the Supervisory Board. The amounts stated do not include VAT. The members of the Supervisory Board receive a fixed annual expenses allowance of €500.
In 2016 the following remuneration was granted to members of the Supervisory Board.
1.6.5.10
1.6.5.11
In the period under review, the Supervisory Board has not granted any additional remuneration to members of the Supervisory Board in connection with the fulfilment of extra tasks.
During the Annual General Meeting of 15 April 2014, the remuneration of the Supervisory Board was established for a period of three years. In the period under review, the remuneration committee submitted the remuneration committee of the Supervisory Board to an external consultancy agency for assessment. For this assessment, a comparison was made with two peer groups. The first peer group consists of companies that are active in the agricultural sector in Europe and the other one consists of small- and mid-cap funds and are equal to the peer groups used for the determination of the remuneration of the Executive Committee. When determining the peer groups, their comparability in scope, complexity, importance and result was examined. During the General Meeting of Shareholders of 26 April 2017, adjustments to the remuneration of the Supervisory Board will be proposed for a new period of three years, i.e. 2017-2020.
As at 31 December 2016, the members of the Supervisory Board held the following shares or depositary receipts:
1.6.5.12
| Depository receipts/Shares | Paticipation accounts | Total | |
| J.W. Eggink | 7,179 | 12,130 | 19,309 |
| H. Mulder | 49,500 | - | 49,500 |
| J.W. Addink-Berendsen | 9,640 | 11,187 | 20,827 |
| V.A.M. Hulshof | - | 6,480 | 6,480 |
| C.J.M. van Rijn | - | - | - |
| W.M. Wunnekink | - | - | - |
| Total | 66,319 | 29,797 | 96,116 |
1.6.5.13
The Company did not allocate options, depositary receipts or shares to members of the Supervisory Board. The remuneration of the members of the Supervisory Board does not depend on the results of the Company or on a change of control in the Company.
Loans were not provided to members of the Supervisory Board.
Lochem, 13 March 2017
Supervisory Board
Corporate site
