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Transcript of 0 CS&A Alignment with DSM’s corporate values and strategy Remuneration Policy and Triple Bottom...
1CS&A
Alignment with DSM’s corporate values and strategy
Remuneration Policy
and Triple Bottom line (CSR)Ben W. van DijkSeptember 3rd, 2010
2CS&A
mechanical engineering
chemical engineering
polymer technology
material science
adv. organic chemistry
biotechnology
BioterialsBiologics
Competences
chemistry
Evolution
Coal
Fertilizers
Petro-chemicals
PerformanceMaterials
Life Science Products
Customer intimacy
1902 1930 1950 1970 1990 2000 2010
DSM: A Century of Transformation
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DSM’s Strategy Vision 2010
Exploiting strong market positions and technology platforms
Climate and Energy
Health andWellness
Functionality andPerformance
EmergingEconomies
EBAs
Life SciencesLife Sciences Materials SciencesMaterials Sciences
Nutrition Pharma PerformanceMaterials
PolymerIntermediates
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Leader 2009 / 2010Leader 2009 / 2010
Simultaneously creating value along three dimensions
Environmental: Planet• Improve eco-footprint throughout the value chain• Leader in white biotechnology
Social: People• Sustainability embedded in our company• More diverse workforce • Responsible partner in society
Economic: Profit• Sustainable value creation for our shareholders and customers • CFROI > 8.5%
Triple Bottom Line
DSM’s Triple Bottom Line
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We can’t be successful in a world that fails
Nr. 1
People Planet Profit
World Food Programme
Climate Change
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• Design of new MB Remuneration policy started two years ago.
• Anchor points new policy have been defined, based on consultation of Stakeholders (e.g. Shareholders, Labor Unions, Works council) and external Sustainability/Compensation experts.
• Crisis has confirmed the direction of the redesign Remuneration policy.
• Remuneration Policy approved by the AGM on March 31, 2010 (99,9 % in favor).
New MB Remuneration policy DSMNew MB Remuneration policy DSM
Alignment with DSM’s corporate values and strategy
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• Balanced reflection of DSM’s Strategic direction, Corporate Values and the interests of Stakeholders
• Sustainability fully embedded in the Remuneration policy
• Focus on short-term and long-term value creation• Acceptable remuneration levels, stimulating the
right management behavior• Improved transparency and simplicity• Full compliance with Corporate Governance
requirements
Main Characteristics of new Remuneration policy
Alignment with DSM’s corporate values and strategy
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• Equal distribution of fixed and variable income• Equal distribution of short-term and long-term
variable income.• Sustainability targets nearly 50% of performance
measures for short and long term variable income.• Variable income linked to measurable performance
criteria, predominantly of a long term nature• External remuneration benchmarking only every 3
years • Stock options abolished, performance shares only• Total Direct compensation (base salary plus
variable income) approaching the median of the market
• Competitive position in the labor market secured
Key Elements of New Remuneration Policy
Alignment with DSM’s corporate values and strategy
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Main elements revised remuneration policy
Current New
Base Salary
Yearly benchmark + review 3-yearly benchmark + yearly review by SB
Balance income
No Policy 50% fixed 50% variable
Balance STI –LTI
60% STI40% LTI
50% STI 50% LTI
STIPayout in cash Payout in cash
70% financial measures30% non-financial measures (incl. 10% individual targets)
50% financial measures50% sustainability and other value creating performance measures (incl.10 % individual targets)
LTIPayout in stock options and performance shares
Payout in performance shares only
100% financial measure (TSR) for vesting
50% financial measure (TSR) and50% sustainability measure (GHGE reduction over volume related Revenue) for vesting
Alignment with DSM’s corporate values and strategy
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STI – Performance Measures
Alignment with DSM’s corporate values and strategy
• DSM has defined value creating performance measures in the area of sustainability
• For 2010/2011 ‘first tier’ targets have been defined (see below). Further refinements/improvements of targets and weighting will follow at a later point in time (‘second tier’) based on proper evaluation
• The following shared target areas linked to sustainability have been defined for the STI:– ECO+ products – Profitable ECO+ product development,
consisting of:– Percentage phase transitions ‘Feasibility’ (phase 2) to
‘Development’ (phase 3) that meet ECO+ criteria– Percentage of Product Launches that meet ECO+ criteria
– Energy Consumption Reduction – linked to triple P target of 20% less energy consumption in 2020 compared to 2008
– Engagement Index – Related to the High Performance (HP) Industry norm
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LTI – Performance Measures
Alignment with DSM’s corporate values and strategy
• Managing Board Members will be eligible to performance shares only as part of the Long Term Incentive scheme. Stock options will be abolished
• Vesting of performance shares (3 years after granting) will be based on:
• Comparable TSR versus a peer group (50%)• Greenhouse Gas Emissions (GHGE) reduction
over volume related revenue (50%)
12CS&AUnlimited.