Summary of the remuneration policy

The remuneration policy must be such that it enables the recruitment and retention of qualified managers on market terms. In implementing this policy, account is taken of the individual board members’ job requirements, responsibilities and the risks associated with their position as a member of the Executive Board. For that reason, a distinction is made between the remuneration of the Chairman of the Executive Board and that of the other members of the Executive Board (currently one member).

When fixing the total remuneration, proportionality of remuneration within the company is taken into consideration. In order to ensure that the employment conditions are on market terms, Board-level positions are weighted using the same method (Hay job evaluation system) as is used for the entire management, enabling consistent market comparison of salary levels. This uniform method contributes significantly to the establishment and monitoring of proportionate remuneration within the company.

Contracts of employment of members of the Executive Board

Mr Van Reeuwijk has been appointed for four years (extended until the first General Meeting of Shareholders after this period). This is in accordance with the Code. Mr Van Reeuwijk has a contract of employment with Gamma Holding of unlimited duration; that was the case before his appointment as a member of the Executive Board.

Mr Albers has been appointed for three years (extended until the first General Meeting of Shareholders after this period). This is in accordance with the Code. Mr Albers has a contract of employment with Gamma Holding of limited duration, which is equal to the duration of his term of office.

The period of notice to be observed by Gamma Holding and both members of the Executive Board in the event of premature termination of the contract of employment is four months if the contract of employment is terminated by Gamma Holding and two months if the contract of employment is terminated by the respective member of the Executive Board. Newly appointed members of the Executive Board shall, in principle, be subject to a similar arrangement, except in special circumstances.

Compensation for dismissal

The contracts of employment with Messrs Albers and Van Reeuwijk include agreed compensation in the event of (premature) dismissal of a maximum of one time the annual salary, comprising the fixed salary. When calculating the above-mentioned compensation, this is also understood to include a situation whereby, due to a change in the control in Gamma Holding, as a result of which the current Executive Board no longer has actual control to determine policy under the supervision of the Supervisory Board, one of the parties terminates the contract of employment.

In 2009 the entire sitting Executive Board was replaced by a new Executive Board. For Mr Frequin, the contractually agreed severance payment amounted to one time the last gross annual income excluding emoluments. This is in accordance with the Code. This payment is recognised in the financial statements of the annual report 2009. The contractually agreed severance payment for Mr Veninga amounted to two times the last gross annual income plus emoluments. The annual income is understood to be the fixed annual income plus the bonus received annually, averaged over the last three years. This payment is recognised in the financial statements of the annual report 2009. When issuing new contracts of employment, Gamma Holding shall decide in each individual case, according to the circumstances, whether a severance payment is to be agreed upon and how much this shall amount to. In so doing, the company shall comply with the standards set out in the Code.

Remuneration package

In order to safeguard the short and long-term interests of the company as effectively as possible, the remuneration package for the members of the Executive Board at Gamma Holding is made up of four components, i.e. the fixed salary including secondary employment conditions, the variable remuneration on short-term results, the variable remuneration on long-term results (share plan) and a pension plan.

The short-term variable component amounts to a maximum of 60% of the fixed gross annual salary (over the year of performance). The long-term variable component consists of conditionally granted shares representing a value of at most 50% of the fixed gross annual salary (over the year of performance). On the date on which the shares vest unconditionally - three years after the grant - they may represent a value of at most 75% of the fixed gross annual salary at that moment.

With this distribution, the Supervisory Board strives for a healthy balance between a short-term and a long-term focus in the variable income, with – given the maximum pay-out on both elements – the long term being predominant. The Supervisory Board considers the total level of the variable components to be appropriate to the role, company profile and risk profile.

Fixed salary

The fixed salary is set annually in December to come into effect on 1 January of the following year. If the individual in question has functioned satisfactorily, at the very least the usual indexation is taken into account; in addition, the general remuneration market increases for senior executives in the Netherlands can be included as well. Adjustments to salaries are checked against the salaries in other internationally operating listed companies of comparable size and turnover whose head office is located in the Netherlands.

At the time of Mr Van Reeuwijk’s appointment his fixed gross annual salary was € 260,000. In 2009 his contract of employment was amended, whereby his fixed gross annual salary was increased to € 330,000 with effect from 1 July 2009. Mr Albers’ fixed gross annual salary is € 450,000.

Variable remuneration

The variable remuneration for a member of the Executive Board shall amount to a maximum of 60% of the fixed gross annual salary applicable for the year for which the variable salary is being set. The level of the variable element is three-quarters related to financial performance criteria and one-quarter related to specific personal performance criteria to be set each year. The performance criteria and related targets are set each year by the Supervisory Board. The degree to which the financial performance criteria are achieved is determined on the basis of the company’s financial statements drawn up by the Executive Board and examined by the auditor, as submitted for adoption by the General Meeting of Shareholders. The degree to which the personal performance criteria are achieved is determined at the discretion of the Supervisory Board. In special circumstances, the Supervisory Board can, at its discretion, set the variable remuneration higher or lower than would follow from the application of the criteria and targets set beforehand.

In accordance with the current remuneration policy, in 2009 the following financial performance criteria were set for the short-term variable income of the sitting Executive Board as of 1 January 2009: operating result, return on average capital employed and average working capital.

These financial parameters were chosen for the short-term variable remuneration as they are the most relevant when it comes to assessing the company’s performance in relation to its strategic targets. The personal performance criteria are all about contributing to the continuity of the company.

In view of the specific primary focal areas of the newly appointed members of the Executive Board, the performance criteria applicable to them were changed at the beginning of September 2009. In view of the situation in which the company found itself at that moment, the Supervisory Board departed from the usual financial criteria. For 2009, and prorated to the period of appointment in 2009, two financial performance criteria have been set, which are directly related to the company’s result (EBITDA) and debt position. With the personal performance criteria, the emphasis is on restoring confidence in the company. The Supervisory Board shall assess the degree to which the performance criteria are achieved.

Share plan

Following approval at the General Meeting of Shareholders on 24 April 2008, a new share plan came into force with effect from 1 January 2008. As part of this plan, the members of the Executive Board are granted shares in Gamma Holding on a conditional basis each year. The number of shares to be granted on a conditional basis is equal to 50% of the fixed gross annual salary divided by the current closing price of the share on the date of granting. The shares are granted immediately after the annual General Meeting of Shareholders at which the financial statements are adopted.

A conditional grant can vest unconditionally after a period of three years, if and insofar as the performance criteria set beforehand have been met, as defined in the remuneration report . On the date on which these shares vest unconditionally their value must not exceed 75% of the individual’s fixed gross annual salary at the time. If it does, the number of shares vesting unconditionally will be reduced accordingly. This provision is designed to prevent members of the Executive Board taking risks that are inconsistent with the company’s adopted strategy in order to boost the value of the share. Unless the Supervisory Board decides otherwise in individual cases, all shares granted on a conditional basis lapse if the contract of employment with the member of the Executive Board is terminated prior to the date on which these shares were to vest unconditionally.

Under the terms of this plan, Mr Veninga and Mr Van Reeuwijk were conditionally granted 25,249 and 7,469 shares respectively on 23 April 2009. As a result of the termination of the contract of employment with Mr Frequin, the shares granted to him conditionally in 2008 have lapsed. This also applies to the shares granted conditionally to Mr Veninga in 2008 and 2009.

Pension plan

The retirement age for members of the Executive Board has been determined in accordance with the current pension plan, with 65 years as the recommended age of retirement. It is an index-linked, contributory average-pay plan. The member’s contribution to the pension plan amounts to 7% of the pensionable salary derived from the fixed annual income.

The contract of employment with Mr Veninga was terminated in 2009, with due observance of the applicable period of notice of six months. His contract of employment therefore ended as of 1 February 2010. Because the contract of employment stipulated that employment would end at the age of 62 years, the cost of the pension benefit between the ages of 62 and 65 years (impacted since 2006 by the accrual of ‘life course’ benefits) has been borne in full by Gamma Holding. If the contract of employment had continued until he reached the age of 62, the benefit paid during this period would have amounted to 70% of the last fixed annual income. Now that the contract of employment has ended two years and four months before he reaches the age of 62, the cost of the pension benefit between the ages of 62 and 65 years, calculated on a time-proportional basis, will be borne by the company. After the age of 65 years the amount of pension benefit paid will be determined by the prescribed accrual.

The full remuneration report can be downloaded in pdf-format (in Dutch only).