Remuneration policy Board of Management

Remuneration policy Board of Management 2009

The remuneration policy for the Board of Management, as revised by the General Meeting on 11 May 2007, continued to apply throughout 2009. The aim of the remuneration policy is to ensure that the Company is able to attract, motivate and retain qualified and expert Board of Management members.

The underlying principle of the remuneration policy for 2009 and subsequent years is that the total remuneration of the Board of Management should be in line with a labour market peer group of companies which engage in comparable activities and/or are similar in terms of size and/or complexity. The composition of the labour market peer group was changed in 2009 in connection with the acquisition of one of the companies in this group.

The Remuneration & Nomination Committee consults independent remuneration advisors, who use statistical models to gear the remuneration data for the peer group companies to Draka’s size. Draka’s labour market peer group consists of the following companies:

Draka's labour market peer group:
Bekaert - Belgium	Leoni - Germany
Daetwyler Holding - Switzerland	Nexans - France
Fugro - The Netherlands	NKT Holding - Denmark
Heijmans - The Netherlands	Océ - The Netherlands
Imtech - The Netherlands	Prysmian - Italy
Legrand - France	SMB Offshore - The Netherlands

 The remuneration of the members of the Board of Management has been aligned with this European labour market peer group.

 

Remuneration structure

The total remuneration package of the members of the Board of Management consists of:

• Base salary;


• Short term incentive;


• Long term incentive;


• Pension plan.

Base salary

The base salaries are in line with the median market level for Draka’s European labour market peer group.

Short term incentive (bonus)

IThe short-term incentive is based on the following performance criteria:

• one-third based on the Company’s earnings before interest, tax, depreciation of assets, write-downs on loans and amortisation of goodwill (‘EBITDA’);
  
• one-third based on the Company’s average net working capital as percentage of the annual revenue;


• one-third based on the discretionary judgment of and the Remuneration & Nomination Committee's proposals by to the Supervisory Board, related to certain ‘milestones’ and applying a reasonableness test.

 If the predetermined targets for 2009 are met, the members of the Board of Management will receive a bonus of 60% of base salary. If outstanding performance is achieved, a bonus of up to 90% of base salary may be granted to the members of the Board of Management. If performance is below a given threshold, no bonus will be paid.

Draka regards this combination of performance criteria as a good indicator of the Company’s short-term operational performance. The financial statements and financial reports can be used to determine whether the predetermined performance targets have been met. The specific details of the targets are not disclosed because they qualify as competition-sensitive and hence commercially confidential information. On the advice of its Remuneration & Nomination Committee, the Supervisory Board will review the short-term incentive targets each year to ensure that they are challenging, realistic and consistent with Draka’s strategy.

Long term incentive plan

The long-term incentive consists of an annual conditional grant of performance shares. Depending on Draka’s total shareholder return (TSR), the performance shares may vest (i.e. become unconditional) after three years. Draka’s

TSR is being measured against the following companies:

Draka’s TSR performance peer group
Belden CDT  - NYSE	Leoni – Frankfurt Stock Exchange
Commscope – NYSE	Nexans – Euronext Paris
Daetwyler Holding  – Swiss Stock Exchange	Océ - Euronext Amsterdam
Fugro - Euronext Amsterdam	Prysmian - Milan Stock Exchange
Fujikura – Tokyo Stock Exchange	SBM Offshore - Euronext Amsterdam
General Cable Corp – NYSE	LS Corporation – Seoul Stock Exchange
Imtech - Euronext Amsterdam/Dow Jones

The table below shows the number of shares (as a percentage of the number of shares initially granted) that each member of the Board of Management will receive as a function of the relative TSR position achieved by Draka three years after the initial grant.

Consistent with the principles of the Dutch Corporate Governance Code, vested shares must be held for a further two years after vesting.

download als Excel

Position	Number of shares that will vest (as percentage of numbers of shares initially granted)
1	200%
2	166 2/3%
3	133 1/3%
4	100%
5	83 1/3%
6	66 2/3
7	50%
8-14	0%

 

 The annual grant of conditional performance shares is equivalent to 55% of base salary. The Supervisory Board has authority to grant additional performance shares in exceptional circumstances.

Pension arrangements

Pension plans are in principle based on the median level for the labour market in the country of origin of each member of the Board of Management.

Loans

No loans, guarantees or the like are provided to/for members of the Board of Management of Draka.