Dear reader,

2020 was a turbulent year for SBM Offshore. Whereas 2020 initially looked like a year of growth, the sudden global effects of the COVID-19 pandemic brought a complex challenge for SBM Offshore and its employees. Despite these challenging circumstances, the Company delivered excellent results. The focus on the Company values, Care, Entrepreneurship, Ownership and Integrity served as guidance for both management and all employees. The Supervisory Board is grateful for the commitment and performance of all SBMers during this challenging period of time.

The strategy of the Company showed to be the right one: strong in executing projects and safe and reliable operations ongoing in the traditional business while gradually including more renewable solutions. To execute the strategy more effectively, the Management Board took decisive actions to adjust the organization and to reduce costs. At the same time, investments in Research and Development, especially to support the energy transition and lower emissions, were made as planned.

During the 2020 AGM, CEO Bruno Chabas was re-appointed with a 99.9% vote. This re-appoinment included a Base Salary increase of 20%. The implementation of this increase was deferred to a later date when the Supervisory Board would have better visibility on the impact of COVID-19. With more visibility during the course of the year and considering the financial results and the position of the Company, the Supervisory Board resolved in November to implement the increase of Bruno Chabas’ Base Salary effective January 1, 2020.

This year’s remuneration report is based on Remuneration Policy 2018 (RP 2018), which was adopted by shareholders in 2018 with ca. 70 percent of the votes. However, due to legislation implementing the EU Shareholder Rights’ Directive in the Netherlands, remuneration policies now require the approval by 75% of shareholder votes.

During the AGM in April 2020, the shareholders voted positively on the Remuneration Report 2020, expressing support for the execution of RP 2018 in 2020. During the same meeting, RP 2018 was proposed to our shareholders again. This RP 2018 was proposed to be amended only to implement legally required changes. Although the proposal again was endorsed with 70% of the votes, it did not reach the required 75% of the votes. As a result, a new proposal is to be made to shareholders in 2021. For 2020, RP 2018 supported by 70% shareholders remained applicable. We do not repeat in the same detail all rationale for the RP 2018 policy in this chapter as a detailed explanation can be found in the 2019 annual report.

The Supervisory Board reviewed the elements of the existing policy and engaged with shareholders and other stakeholders for feedback on the remuneration policy. This input has been translated into a proposal for a new remuneration policy to be submitted to the 2021 AGM (RP 2022).

Input from stakeholders included feedback by some shareholders that they are not satisfied with the lack of a concrete underpin in place for the Long-Term Incentive (LTI) in the form of the Value Creation Stake (VCS). Other feedback related to the selection of companies used for the external reference group to determine Management Board pay levels. Some stakeholders raised questions about the quantum of the Management Board’s remuneration.

The underpin and the reference group feedback will be addressed in the proposal for RP 2022. Anticipating the proposal for a new policy, the Supervisory Board already applied a more concrete underpin test prior to the grant of the 2021 Value Creation Stake. The Supervisory Board is not proposing a change to the overall quantum because it regularly monitors the international competitive landscape within which we compete for talent.

As part of the reconsiderations, the Supervisory Board confirmed its belief that the most direct and effective linkage of executives’ interests and long-term shareholder value is in the form of long-term share ownership by executives through the Value Creation Stake. In line with the long-term intention of this instrument, shares are subject to a holding period of five years. This way the VCS aligns with the aim to create long-term value for all stakeholders, including members of the Management Board.

Without losing focus on the importance of long-term value creation, short-term performance is rewarded by the Short-Term Incentive (STI). The STI performance measures – EBITDA, Growth, and HSSE are based on key success factors for the Company. Despite the challenging circumstances, performance as measured by the STI performance measures was very good. This is detailed in sections 3.4.2 and 3.4.3 of this report.

The Supervisory Board remains committed to relevant and clear remuneration in line with best international practices. We are providing additional information in this report to improve transparency. I look forward to discussing the remuneration policy, actual remuneration as well as any other questions arising from this report at the 2021 AGM.