fortis bank nederland · 2013. 3. 29. · 2005 us class action settlement agreed 2006 launch of...

“GEo wil Fortis Bank Nederlandbedanken voor de hartelijke gastvrijheid tijdens de 2009 Netherlands Regional Meeting.” “GEo wishes to thank

Fortis Bank Nederlandfor hosting the 2009 Netherlands

Regional Meeting.”

Agenda1 December 2009

13.00 ® Registration & coffee

13.30 ® Welcome by the Dutch chapter coordinators Don Jol and Martijn bedaux

13.40 ® GEo Update Michael bendorf, Executive Director, GEo

13.55 ® Remuneration: Finding the Right balance Robert Watts, Sr. Manager compensation & benefits, Royal Ahold

14:40 ® Trends in Equity Incentives in These Turbulent Markets Gerald Zaalberg, Sr. consultant Executive Remuneration, Hay Group

15.25 ® coffee break

15.40 ® Stock option Grants in a Declining Stock Market Tijmen Kos, Managing Director, Sun Microsystems International b.V.

16.20 ® Identifying Dutch ESo companies; Where are they? Pascale Nieuwland, consultant, SNPI

HoST SPoNSoR:

REGIoNAL SPoNSoR: LocAL SPoNSoR:

HUMAN CAPITAL GROUP

Fortis Bank Nederland


www.globalequity.orgAs a non-profit organization, GEo is dedicated to providing the global equity compensation community with an opportunity to learn from one another. Your support of GEo allows us to provide quality programs throughout the year for our members worldwide. We hope you consider your participation in GEo an invaluable opportunity.

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13.40

® GEo Update

Welcome to the Global Equity Organization


About GEO

• The Global Equity Organization is an internationalnot-for profit membership organization, established in1999 to support corporate executives and stock planprofessionals who deal with the challenges of creatingand managing global equity-based compensationplans and programs.

– Members in 59 countries– 2800 individual members– 1000+ organizations– 20% membership growth in FY2009

Member Benefits

• Join– Access to a broad international member community of share

plan professionals

• Learn– Fifteen active local chapters on four continents– Annual Conference, supplemented by local, regional, and

OneDay events– Monthly webinars, weekly newsletters, and periodic podcasts

• Share– New member website to be unveiled in the coming months– Follow us online

• LinkedIn – Global Equity Organization group• Twitter – globalequityorg



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GEO’s Global Chapter Network

Upcoming Events

• 11th Annual Conference– Single largest annual gathering of

global equity compensation professionals– Dedicated to exploring the use, application, and design of stock

plans in multiple countries

• Local Chapter Meetings– Boston, 1 December– DACH , 1 December

• Regional Meetings– Rotterdam , 1 December– Sydney, Melbourne (TBA)

• Webinars– Information Overload? Filtering What is Meaningful for You – 15

December

For completeinformation and to

register, visitwww.globalequity.org


GEOnomics 2009

• Inaugural book under GEO’s newpublishing imprint

• Individual chapters represent the bestthinking of key contributors

– Baker & McKenzie– Buck Consultants– Cuatrecasas– Deloitte– Fidelity Investments– Global Shares– Intel– Seyfarth Shaw

• Available for purchase on Amazon.com

Thank you for joining us today

• For more information, please contact

– GEO Netherlands Chapter Leaders• [email protected]

– Pam Stetson• Senior Director, Global Development• +1 813-792-7913; [email protected]

– Michael Bendorf• Executive Director• +1 415-418-8112; [email protected]



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13.55

® Remuneration: Finding the Right balance Robert Watts, Sr. Manager compensation & benefits, Royal Ahold

Ahold

an overview

December 2009

Robert Watts

Sr. Mngr Compensation & Benefits


A brief history1887 Albert Heijn opens first store1955 First supermarket opens1977 Expansion into U.S.1995 Expansion into Asia1996 Expansion into Latin America2000 Acquisition of U.S. Foodservice2003 US$ 1bn accounting scandal2003 Launch of Road to Recovery program2004 Restructuring and divestments2005 US Class Action Settlement agreed2006 Launch of Strategy for Sustainable Profitable Growth2007 Divestment of U.S. Foodservice, Poland, and Tops2008 Dividend payment, targets reached, investment grade

reinstated, best performing stock on AEX

3

Our core valuesThink customer, Act customer!

1. Act customer - Customers are our lifeblood. We makeevery day easier for them, bringing innovative andinteresting shopping experiences

2. Engaged associates - We value our diversity andare committed to developing our people and giving themopportunities to grow

3. Integrity always - We act openly and honestly. Wesay what we mean and we do what we say.

4. One team - We are greater than the sum of our parts.We cooperate to leverage our capabilities, scale, strengthsand knowledge.

5. Innovative mindset - We constantly challengeourselves to find better ways and better results.

6. Passion for our business - We love being in thefood business. We set high standards and are neversatisfied in our search for excellence.



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Highlights 2008

Sales / Revenues € 25.7 Billion

Market Cap € 12 Billion

Operating Income € 1.2 Billion

Employee Benefits € 3.3 Billion

Retail Locations 2.897

Employees 200.000

Remuneration:

Finding the RightBalance

December 2009

Robert Watts

Sr. Mngr Compensation & Benefits


Forces Driving Change in Remuneration PracticesExternal Factors• Changing market practices

- Decreased use of options, increased use of shares

• New corporate governance regulations (Tabaksblat)

• Increasing investor demands for clarity and performance linkage

• Changing accounting rules- Option costs must be reflected in the P&L according to the fair value

method

Forces Driving Change in Remuneration PracticesFactors Internal to Ahold• Reinforce Ahold strategy

- Organic growth- Leverage Ahold’s scale- Improve return on assets

• Address diminished value of existing program elements- “Underwater” stock options perceived as having little or no value- Retention- Attraction / recruitment

• Improve the balance between short-term (annual) and long-termincentive programs

• Reinforce alignment with shareholder interests

• Use simple, easy to report performance measures



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Ahold share price 2001 – 2009share price in euros

2001 2003 2009

0

5

10

15

20

25

30

35

40

Basic Framework (through 2005)

PolicyTotal Target

CashCompensation

Three components:

• Base Salary

• Annual Incentive- Based on EVA

• Stock Options


Basic Framework (from 2006)

Total Target

CashCompensation

PolicyTotal Target

DirectCompensation

Three components:

• Base Salary

• Annual Incentive- Based on measures

important to the business

• Long-term Incentive- 3 year conditional shares

(employment condition)

- 5 year conditional shares(Total Shareholder Return &

employment condition)

2006 Changes in the Annual Incentive Plan Design

• Design Criteria:- Fair- Transparent- Line of sight

• Selection Criteria (performance measures):- Simple to understand – measures aligned with internal and external reporting- Alignment to the strategy of Ahold- Easy to report

• Changed the measures (from EVA):- EVA was too complex / difficult to understand- EVA was not used internally for management purposes- EVA results were not reported externally (e.g. annual report)



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Annual Incentive Performance Measures

12,5%

12,5%

25,0%25,0%

25,0%

(12.5%) Sales

(12.5%) Identical Sales

(25.0%) Cost Efficiency

(25.0%) Operating Margin

(25.0%) Working Capital

STI Improvements & Achievements 2005 - today

• Targets supportive to the strategy and defined goals of Ahold;

• Performance measures simple and easy to understand;

• Performance measures fit with Ahold’s accounting and reportingsystems;

• Transparency and openness of the target setting process has improved;

• Targets set, approved and communicated before the year begins;

• Progress on performance reported frequently and consistently;

• Consistency and continuity in the performance measures used;

• Treatment of “unusuals” better streamlined and managed;

• Bonus payout pulled forward to March and paid out timely;


Basic Framework (from 2006)

Total Target

CashCompensation

PolicyTotal Target

DirectCompensation

Three components:

• Base Salary

• Annual Incentive- Based on measures

important to the business

• Long-term Incentive- 3 year conditional shares

(employment condition)

- 5 year conditional shares(Total Shareholder Return &

employment condition)

GRO Design Criteria:• Motivate / retain participants

• Reinforce alignment with shareholder interests

• Reinforce identification with Ahold (corporate glue)

• Simple / easy to understand / administer

• Defendable publicly / align with new Corporate Governance Code (Tabaksblat)

• No particularly negative tax consequences (company or participant)

• More in line with market practice

Changed the instrument (from Stock Options):

• Almost all historical option grants were underwater and had no (perceived) value

• The consequences, for Dutch participants, were even more dramatic as most paidtax upfront so the option program represented an unrecoverable personal loss

New Long-term Incentive programGlobal Reward Opportunity (GRO)



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Key Features GRO - Mechanics

Grant Date

MTI Vesting period of 3 years

T=3

If associate is still employed by Ahold,all granted shares (2,875) vest

1. Target LTI Value of

€ 50,000

2. Prior Year Bonusmultiplier of:

example multiple = 1.15

3. Actual Grant Value:

1.15 x € 50,000 =

€ 57,500

4. Assumed Share Price

of € 10.00

5. Number of Shares to beGranted:

€ 57,500 / € 10.00 =

5,750 shares. Splitequally between 3-year(MTI shares) and 5-year(LTI shares)

T=5

Shares still inpossession of associateat T = 5 are matched 1extra share for each 5

LTI Performance period of 5 years

The number of performance shares that willvest is determined by a TSR performance-ranking (between 0 and 1.5x). The number ofshares that will vest at T = 5 years will be2,875 multiplied by that performance factor.

5-year component: Number of SharesGranted = 5,750 / 2 = 2,875

3-year component: Number of SharesGranted = 5,750 / 2 = 2,875

Total Shareholder Return (illustrative)

Dec.2005

Return Index December 2010based on average share price

1 July 2010 – 31 December 2010

July 2010 Dec. 2010

In the TSR calculationdividends are taken intoaccount, assuming theyare re-invested.

Share Price developmentAhold (illustrative)

Return Index December 2005based on average share price

1 July 2005 – 31 December 2005

July 2005

• Five year TSR is the total return to investors holding on to shares of the companyfor five years, taking into account both share price appreciation and dividend pay-outs;

• For each company in the peer group the return is expressed in a percentage(increase at end date compared to the start);

• Companies are ranked from best to worst performer (e.g relative performance isthe measure);

• Peer Group:

WAL-MART STORES INCSUPERVALU INC.METRO AGCOSTCO WHOLESALE

TESCO PLCSTAPLES INCKROGER CO. (THE)CARREFOUR S.A.

TARGET CORPSAFEWAY INCDELHAIZEAHOLD NV


GRO Performance Incentive Zone GraphPerformance Incentive Zones

LTI component (relative TSR related)

50%

75%

0%

20%

40%

60%

80%

100%

120%

140%

160%

123456789101112

Rank

Pay

-out

as

perc

enta

ge o

f ori

gina

l num

ber

of

perf

orm

ance

sha

res

gran

ted

Approved curve CEB

Approved curve below CEB

Median Performance

Gro – Design Summary• Delivery mechanism is restricted stock

- Reinforce identification with Ahold, alignment with shareholders

• The targeted number of shares to be granted each year is established based on thetargeted value of the GRO grant divided by the 6-month average share pricepreceding the grant date

- Annual market calibration

• The value actually granted to the participant is determined by the level ofperformance measured through the Annual Incentive Program

- Performance driven

• 50% of the shares earned vest 3 years from grant date and 50% of the shares vest 5years from grant date

- The 3-year grant includes a “matching” feature where shares held for 2 additionalyears qualify the participant for a “one share for five” additional grant of shares -Encourages share ownership

- The 5-year grant is contingent on performance on a relative Total Shareholder Return(TSR) basis against peer group companies. The TSR ranking will reduce or increasethe actual number of shares vested - Requires sustainability of results



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LTI: GRO Achievements 2006 – Today• All five of our original key corporate objectives for the redesign were met;• Participants favorably received the program and the results of the first

vesting;• The first GRO shares have vested (March 2009) and payout was achieved;• An effective and easy-to-understand communication program / set to

inform participants from the granting moment until and including thevesting of shares;

• By December 31, 2008 a watertight procedure was implemented that:- supported the 1st vesting of GRO shares,- was designed with input from the relevant partners, and- was communicated thoroughly to all stakeholders;

• With the vesting of the first portion of the share grant, the credibility andthe perceived value of the long-term incentive vehicle as a meaningfuland valuable component of an individual’s compensation package wasregained.

The Right Balance for Ahold• Our strategy for profitable growth is centered around working together to build

powerful brands – and Ahold’s future is dependent on how well we execute thisstrategy. It is important that the way we reward employee performance is alignedwith our strategy, so that employees can participate in Ahold’s future success.

• The objective of the 2006 complete redesign of the pay package was to betterbalance the individual remuneration components. As a result:

- STI performance measures were made simple and easy to understand; and- Options were abandoned and (conditional) shares were introduced;

• Four years later, the first shares have vested under GRO and the plan has beenestablished as an important component of remuneration for key employees.

• Effectiveness, was the result of several factors:- 1 – The programs were designed in line with the “Einstein law”;- 2 – It was the right change at the right time;- 3 – A comprehensive communications and awareness program through multiple

communication channels educated employees on the benefits of the new plans.


2009 GEO Award for Best Plan Effectiveness• Awarded to companies with highly effective equity compensation

programs that contributed to the strategic success of the organizationwhile also delivering considerable value to plan participants.

• The Winner is… AHOLD!



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14:40

® Trends in Equity Incentives in These Turbulent Markets Gerald Zaalberg, Sr. consultant Executive Remuneration, Hay Group

1

LTI in These Turbulent TimesShare Plans offer pay flexibility in uncertain business environment

Gerard ZaalbergGEO Regional Meeting, December 1, 2009


1

2© 2009 Hay Group. All Rights Reserved

Agenda – LTI in these Turbulent Times

!"Brief Historic Overview of LTI

#"Brief Historic Overview of Economic Times

$"Uncertain Times for Companies

%"Ways Forward and LTI Usage

&"Issues with Executive Pay

'"Ways Forward with Executive Pay

("Getting Prepared for the New Reality

Gerard Zaalberg


1. Brief Historic Overview of LTI

LTI started as ‘cheap compensation component’; mainly stock options− No P/L charges for fixed -at the money- options

− Ideal instrument for start-ups with little cash to pay salaries

− Direct ‘company value – personal gain level’ connection

− Often favorable tax treatment (low taxation of awards and tax holidays)

Corporate scandals led towards controlling hidden shareholders costs− Changes in accounting treatment; option value to be expensed

− Retention through time-vesting changed towards performance-based LTI vesting

− Reduction of tax advantages in many countries

Alternative LTI models were designed and implemented− Restricted Stock, Performance Shares, SAR, Phantom Shares

− Different valuations decreased comparability of awards in compensation statistics

Gerard Zaalberg



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2


2. Brief Historic Overview of Economic Times

Bull market 1995 – 2001 (‘New Economy’)

Economic stability promoted confident business attitude

2003 – 2007: Increased debt leverage pumped up equity value

Property Value and Card Credit fuelled Consumption and debt

2008 - ?: Global Crisis

− Property Value fall, Credit Crunch, ‘Consumers Strike’

− This crisis is different and deep

− Indicators point at very uncertain recovery scenarios

Gerard Zaalberg


3. Uncertain Times for Companies

Governments debts against GNP increasing− Saving of financial sector at enormous costs

− Other capital injections to recover economy

− Will have monetary effect on the future

European social systems result in slower decline and recovery− Slower unemployment, slower employment

Consumer confidence strongly reduced

− Reduced lending capacity and confidence in financial products

− Costs of energy

− Healthcare

− Pension costs (to recover from incurred losses)

− Tax policy (cars, mortgage, municipal taxes)

Gerard Zaalberg


3


3. Uncertain Times for Companies (2)Potential scenarios of recovery economy and company prospects Gerard Zaalberg


3. Uncertain Times for Companies (3)

Reduce leverage

Reduce cash costs of employment

Increase flexibility of organization

Increase commitment of management and employees

Promote strategic focus, team spirit and entrepreneurial acumen

Needs to survive in the New Reality Gerard Zaalberg



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4


4. Ways Forward and LTI Usage

Salary freezes and bonus reductions are not sustainable in the long run

Variable income prevails over base salary, to increase flexibility

Annual bonus schemes have disadvantages− High impact on cash-flow

− Disputed mental effects

− Short term oriented (?)

Payout of variable income in shares as an alternative to cash− Low impact on cash-flow, long-term oriented and retention effect

− KPI’s for award of shares, links objectives to share value

− Shares appear better instrument than stock options (volatility, under water risk)

Gerard Zaalberg


5. Issues with Executive Pay

Excessive Executive Pay regarded as a Moral Hazard− Executives have role model for entire organization

− Tone at the top determines company culture

− Greed culture among executives breaches trust from shareholders and others

Areas of concern regarding Executive Pay− Pay for failure (excessive severance pay and pay of undeserved bonuses)

− Windfall profits when selling company (change-in-control clauses)

− Short-termism as result of bonus- and stock option schemes

− Detachment from organization as result of flawed internal consistency

− Lack of visibility of alignment between value creation and executive pay

Gerard Zaalberg


5


5. Issues with Executive Pay (2)

“The concern today is that many executives have done very well with theircompensation, but their shareholders have done very poorly. So how couldit happen that a compensation arrangement whose whole motivation is toincrease shareholder value (and to align compensation with it), has donequite the opposite?”

Sanjai Bhagat, finance professor Leeds School of Business, September 30,2009

Gerard Zaalberg



Fixed number, Fixed Benefit Value or Net Value Transfer?

Fixed number aligns with development shareholders value, but not withcompensation data (statistics)

Fixed Benefit Value aligns with compensation data, but not withdevelopment of shareholders value

Net Value Transfer aims at providing a stake in the market cap, at samelevel as (e.g.) median in a defined peer group

Award Volume Dilemma Gerard Zaalberg



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6



15.000---Yr. 4 1000

15.0005.000--Yr. 31000

15.0005.0003.000-Yr. 21000

15.0005.0003.00010.000Yr. 11000

Yr. 4€ 15

Yr. 3€ 5

Yr. 2€ 3

Yr. 1€ 10

policy # 1000

10.000---Yr. 4667

30.00010.000--Yr. 32000

49.99516.66510.000-Yr. 23.333

15.0005.0003.00010.000Yr. 11000

Yr. 4€ 15

Yr. 3€ 5

Yr. 2€ 3

Yr. 1€ 10

Policy€ 10.000

Fixed Number Fixed Benefit ValueFixed Number versus Fixed Benefit Value Gerard Zaalberg


6. Ways Forward with Executive Pay

Limit severance pay (one year base salary)

Freeze up stock options and share plans in case of take-over bids

Review the essence of the Executive LTI plan against the objectives− Take a critical look at the award policy regarding volume

− Share plans offer better alignment with shareholders than stock options

Choose performance conditions that better reflect managementinvolvement in value creation process:

− Relative TSR no longer the single metric? Vesting below median position?

− ROE over WACC as alternative?

− Long-term value indicators?

− EPS?

Gerard Zaalberg


7


6. Ways Forward with Executive Pay (2)

Profits

Shar

ehol

ders

Valu

e Strategic Choices

Short Term

Long Term

Balancing the company objectives in LTI Performance Metrics Gerard Zaalberg



Profits

Shar

ehol

ders

Valu

e Strategic Objectives

Short Term

Long Term

Balancing the company objectives in LTI Performance Metrics Gerard Zaalberg



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8



Examples of Strategic Objectives− Vertical integration of value chains

− Horizontal integration

− M&A and Alliances

− New Products

− Channel structures

ALSO USEFUL: BALANCED SCORE CARD METHOD DELIVERING 4 PERSPECTIVES

CUSTOMER / MARKET

FINANCIAL

ORGANISATIONAL

INNOVATION AND GROWTH

Strategic Objectives in Performance Metrics Gerard Zaalberg


7. Getting Prepared for the New Reality

Wrap-up of thoughts− Companies will face a longer period of uncertainty, requiring flexibility

− Minimize cash-out: also impacting on cash costs of employment

− Salary freezes and bonus reductions cannot sustain: offer perspective

Share plans dominant instrument: broad based implementation− Get ready for approval of your remuneration strategy at your next AGM!

KPIs for award, depending on role in company− Now is the time to develop longer-term performance indicators for all ranks

Executive pay requires a fresh approach− Visible link between company strategy, values and executive reward practice

− KPIs for LTI need update, but continue to apply to vesting

− Change-in-Control and Clawback provisions to be updated / implemented

Gerard Zaalberg



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15.40

® Stock option Grants in a Declining Stock Market Tijmen Kos, Managing Director, Sun Microsystems International b.V.

Tijmen KosManaging Director Sun Microsystems International B.V.


Sun Microsysems International BV

Agenda

AGENDA

About Sun Microsystems Inc.Stock options @ SunMotivator??Restricted Stock UnitsClosing remarks


About Sun Microsystems Inc.

Sun – founded in 1982 and since then one vision:

The NetworkIs The Computer.



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Sun People and Products Connect Our World



Sun worldwide

Active in more than 100 countries worldwideHeadoffice Santa Clara, California, U.S.A.Approximately 29.000 employeesTurnover financial year 2009 (till 30 June 2009): U.S. $11,449 billion#187 on the Fortune 500 (2009)NASDAQ: JAVA19 April 2009: Announcement intended takeover by Oracle16 July 2009: Approval shareholdersAwaiting “regulatory approvals”



Stock options@Sun

Always aimed to give options across functions and Business Units.Normally granted twice a year.Always conditional and with at least 5 years vesting scheme.First vesting 1 year after grand date.Option price equal to market price at grant date.Whole process outsourced to third party in US.Local Sun entities responsible to ensure compliance with local tax rules.


Motivator??

Depends on timing:Very much appreciated at the time of grant but.......Sun's stock price declined since the Internet bubble in 2000/2001.Result:- In a worst case scenario, employees had to pay taxes without a chance to recover these.- Daily publication of the (declining) stock price on the Internal website did not help to improve motivation.

What could have been done?- Repricing of the grants. That would give people at least the feeling that their options would come 'in the money'.



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Restricted Stock Units

Back in 2006, Sun moved to provide RSU's in stead of stock optionsSame distribution schemesDifferent vesting schemes e.g. first vesting of 50% after 2.5 years)Wage tax taken from payroll on vesting date

VERY good motivator because now people are ALWAYS in the moneyat vesting date!


Closing remarks

Thinks twice about giving stock options when stock price declines year after year

When you give them, ensure flexibility (e.g. re-pricing)Ensure that employees know about their tax compliance

Don't take it for granted they know!Ensure that employees understand fx rate changes in USDEnsure that the third party knows how to deal with Europe

(funds transfer etc.)



Questions?

Tijmen [email protected]



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16.20 ® Identifying Dutch ESo companies;

Where are they? Pascale Nieuwland, consultant, SNPI

11/24/09

Identifying Dutch ESO companies;where are they?

Pascale Nieuwland-Jansen, ConsultantNetherlands Participation Institute (SNPI)


11/24/09

SNPI?

SNPI is a non-governamental and independentorganisation, founded in 1994.

SNPI promotes financial participation (FP) and focuseson employee share ownership.

SNPI has 4 main activities:1. Consultancy2. Lobby3. Information Centre4. Research

Presentation GEO about…

Statistics Radboud University:

Database of listed companies of Erik Poutsma andGeert Braam from Radboud University Nijmegenconsists:

- All listed companies;- Period 1992 – 2006;- Data from annual company reports and databases like AMADEUS and Company.info;- In total 1878 observations over a period of 15 years;- Information about types of FP plans;- Financial and non-financial data.



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11/24/09

Database results on FP:

Options 1992 1999 2006Top Management 8,9 % 7,8 % 7,3 %Management 15,3 % 44,3 % 35,5 %Broad-based 12,9 % 26,1 % 10,9 %Total 37,1 % 78,2 % 53,7 %

Profit sharing 1992 1999 2006Top Management 0,8 % 0,0 % 3,6 %

Management 0,0 % 0,0 % 0,0 %

Broad-based 0,8 % 15,7 % 13,6 %

Total 1,6 % 15,7 % 17,2 %

Database results (continued)

Shares 1992 1999 2006Top Management 0,0 % 1,7 % 14,5 %Management 0,8 % 6,1 % 20,0 %Broad-based 4,8 % 7,8 % 10,9 %Total 5,6 % 15,6 % 45,4 %

FinancialParticipationtotal

1992 1999 2006

Top Management 8,9 % 8,7 % 9,1 %Management 16,1% 40,0 % 39,1 %Broad-based 17,7% 40,0 % 30,0 %Total 42,7% 88,7 % 78,2 %


11/24/09

First observations on the basis ofFP statistics 1992-2006

More companies apply profit sharing schemes; Option plans less popular in 2006 compared to 1999

(change in tax law); Share plans become more popular, especially for top

management and management; Popularity broad-based share plans is lacking

compared to the increase of share plans fortop(management)

Financial participation in total is slightly declining.

More variables in database Radboud:

Other variables in database are:type of industry/net income/ EBIT/ earnings per share/turnover per employee/ personnel costs per employee/profit per employee.

Variables used for 4 types of performance indicators:1. Accounting2. Accounting & Market Based3. Market based4. Operational



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11/24/09

What can we conclude from these data?

Results Radboud University:

1. Profit sharing only for (top)management has asignificant negative result on financial performanceindicators like: return on equity and dividend yield;

2. Broad based profit sharing schemes have significantpositive effect on financial performance indicatorslike: net income, EBIT(DA) and earnings per share;


3. Share plans only for (top)management have asignificant negative effect on the financialperformance indicators like: dividend yield and changeexchange rate per AEX-points;

4. Broad-based share plans have a positive effect onthe financial performance indicators like: earnings pershare and shareholders equity per share;


11/24/09


5. Broad-based option plans have significant negativeeffects on financial performance indicators like:earnings per share and dividend yield.And significant negative effects on non-financialperformance indicators like: turnover per employee.

Conclusions Radboud

Listed companies with broad-based financialparticipation in the form of profit sharing andshare plans perform betterthancompanies without these forms of participation orcompanies with only financial participation for(top)management.

Broad-based option plans have negative effects.



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HUMAN CAPITAL GROUP

11/24/09

Research Kaarsemaker, 2009

Data collection via a telephone survey to 2.500companies. Companies with >10 employees, listed andnon-listed. The response was 27%, 669 companies.

Results: 3,6 % broad-based share plan; 1,0 % broad-based option plan; 3,7 % plans/interested in implementing broad-based

share(option)plans; 5,8 % share and/or option plan for (top)management.

Research Kaarsemaker (continued)

80.000 employee shareholders; 2.460 (3,6%) companies with broad-based share

plans; 680 (1,0%) companies with broad-based option plans; Almost 4.000 (5,8%) companies with share and/or

option plans for (top)management only; Another 2.500 (3,7%) companies is interested in

implementing financial participation plans.


11/24/09

What needs to be done?

Identifying the ESO companies in the Netherlands!Database Financial Participation needs to be filled;

Update of database Radboud in 2010; Promotion of broad-based financial participation and its

benefits; Lobby to create fiscal incentives in NL.

Database Financial Participation SNPI?



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HUMAN CAPITAL GROUP

11/24/09

What happens with database SNPI?

Database will be used for research; Independent index; Information confidential; SNPI offers platform and companies can decide how

and when to be involved:- Index;- Promoting financial participation;- Lobby activities;- Events and meetings (like branch meetings).

Identifying Dutch ESO companies?

Where are they?Help to complete the database!Thank you!



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HUMAN CAPITAL GROUP

® biographiesTijmen Kos, Sun Microsystems International B.V., (NL)

Tijmen Kos is Managing Director of Sun Microsystems International b.V. in Amersfoort, The Netherlands. Next to this role, he is Director EMEA Global Accounting. With the assistance of the local HR Manager in the Netherlands, he is in charge as ‘bestuurder’ for all workers council activities as well as to ensure compliance with local statutory requirements with regards to stock based compensation throughout EMEA: Tijmen joined Sun in July 2001, after a nine years career as European controller at Apple computer, 6 years as Financial controller at Digital Equipment and 13 years in numerous Finance Management positions at Rank Xerox Netherlands.

Pascale Nieuwland-Jansen, Netherlands Participation Institute [SNPI], (NL)Mrs. Pascale Nieuwland-Jansen, consultant at the Netherlands Participation Institute (SNPI) is 35 years old, married and mother of two daughters. Pascale studied International Economics and languages at the University of Leiden (1992-1997) and HRM. She has worked for the chamber of commerce in Amsterdam and VNo-NcW. From 2004 till 2007 she had her own company and worked in the field of HR, training and assessments.

Since December 2005 she works as a consultant for the Netherlands Participation Institute (SNPI). In 2006 she replaced Director Kool at the SNPI and is now forming the management of SNPI together with her colleague Mrs. Marjon Westerhof-Van Gelder. The secretariat of SNPI is formed by two consultants (Pascale and Marjon) and an office manager. SNPI is a non-governmental and independent organization and promotes financial participation/ Employee share ownership. SNPI has four main activities: lobby, research, information sharing and consultancy.

Robert Watts, Royal Ahold (NL)Robert is Senior Manager compensation & benefits (c&b) at Ahold. He is responsible for leading and supporting c&b projects for the Ahold group in areas such as short and long-term incentive plans, benchmarking, and for supporting and advising line and HR management on their c&b policies, procedures and practices.

He received his b.A. in Finance from Towson University and his M.b.A. from Loyola college; he is a qualified Accountant and holds the Global Remuneration Professional designation (GRP).

Gerard Zaalberg, Hay Group (NL)Gerard Zaalberg is service line leader for Executive Remuneration and Expert at Long Term Incentives at Hay Group in The Netherlands.

With the Executive Remuneration team, he advises remuneration committees, executive boards and HR-management on the design, implementation and execution of executive compensation packages for executive- and non-executive board members, as well as higher-ranked management.

Gerard joined Hay Group in January 2005, after a thirteen years career as a tax lawyer, working with baker & McKenzie, Arthur Andersen and Deloitte. At Hay Group, Gerard focuses on variable remuneration principles, performance management and corporate governance aspects of executive pay. Gerard graduated as Master in Tax Law at the Leiden University, in 1990.

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