2. Remuneration policy of TenneT Holding B.V.
The remuneration policy approved by the shareholder consists of the following elements:
Fixed salary
The fixed salary of the Board of Management (registered directors) is based on a job evaluation. Under this evaluation, the remuneration attached to the position is benchmarked against the remuneration of positions of a similar level in the general remuneration market in the Netherlands. The job evaluation and benchmark are performed once every two years (for the next time in 2009) in order to keep in step with developments in the organisation and in the general labour market. The median of the benchmark is used as a basis for determining the desired level of fixed remuneration, i.e. 50% of the reference group has a higher fixed salary and 50% a lower salary.
If there is a deficit compared with the median, it is company policy to close it within a period not exceeding four years on condition of normal good performance. Additionally, the Supervisory Board may decide from year to year to index-link the salaries of executive directors.
The size and structure of remuneration must make it possible to recruit and retain qualified executive directors who possess experience in a position of similar level outside or within the sector, even if there are developments within the company that result in greater complexity and thus more burdensome executive directorships.
Variable salary
The remuneration policy provides for a maximum of 25% of fixed salary to be awarded as variable remuneration. The amount of variable remuneration awarded is based on the extent of attainment of pre-agreed targets. These targets are set in four categories:
- profitability;
- strategic targets;
- operating targets;
- personnel, safety and reliability.
Each year the Supervisory Board presets the specific targets for members of the Board of Management and the associated weighting factor. At the end of the year in question the Supervisory Board determines the extent to which the targets were achieved.
Variable remuneration provides year-on-year motivation to fulfil the defined targets and exhibits good balance between its purpose and size. The variable remuneration is based on a simple system with a view to its practicability and transparency.
Pension costs
The pensions of all members of the Board of Management are administered by the ABP Pension Fund. Pension accrual is based on a career-average salary system. Besides the ABP pension, the President and CEO will accrue additional pension to facilitate retirement at 61 years of age, under a non-contributory pension plan agreed with him when he joined the company. This accrual occurs through a life-course scheme for which the remitted contributions have been included in the stated pension contributions.
Severance pay
Severance pay for members of the Board of Management is in conformity with the Dutch Corporate Governance Code (Tabaksblat Code) and equals one gross annual salary.
Other compensations and secondary benefits
TenneT offers its executive directors and employees a competitive package of secondary benefits. These benefits may include reimbursement of expenses, allowances towards medical insurance premiums, accident insurance, a scheme for incapacity for work, a company car and directors’ liability insurance.
Future remuneration policy
Given the company’s substantial growth over the past two years and developments in society regarding remuneration policy, the Supervisory Board intends to submit to the shareholder in 2009 a proposal for a new remuneration policy.
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