3.4.1Management Board Remuneration Policy
RP 2018 was adopted at the 2018 January 1, 2018. Full details and the principles and rationale for the 2018 are available on SBM Offshore’s website in the remuneration policy section under Corporate Governance.and became effective
The Company remunerates members of the Management Board for long-term value creation. SBM Offshore. It is built on six reward principles: simplicity, flexibility, predictability, competitiveness, alignment and, most importantly, driving the right results.2018 is based on competitive remuneration aligned with the long-term performance of
Shareholder Rights’ Directive and proposal for amendment to RP 2018
In December 2019, new legislation entered into force, implementing the EU Shareholder Rights’ Directive (SRD II) in the Netherlands. During the2020, changes to 2018 were proposed to bring the policy into accordance with the new legislation. The voted against the adoption of this revised policy. A new remuneration policy will be proposed during the 2021 AGM. The details of this new policy will be included in the agenda of the .
This remuneration report has been drafted in accordance withas implemented in the Netherlands.
Explanation of RP 2018
SBM Offshore believes the oceans will provide the world with safe, sustainable and affordable energy for generations to come. Our mission is to share our experience to make it happen. In executing our strategy we are guided by our Core Values: Integrity, Care, Entrepreneurship and Ownership.
The underlying principles of the remuneration policy of the Management Board of SBM Offshore N.V. support the vision and ambition and aim for long-term value creation of the Company through the Value Creation Stake balanced with pay for performance through the Short-Term Incentive (STI). Sustainability is an integral part of the performance areas (through Health, Safety, Security and Environment).
The Company’s strategy is aimed at optimizing, transformation and innovation of SBM Offshore’s business processes in order to grow in size and create value. This is reflected in the performance areas of Profitability, Growth and (Sustainability). Through the performance areas, Management Board remuneration is directly linked to the success of the Company and the value delivered to shareholders.
Employment conditions and pay of the Company’s employees within SBM Offshore are being taken into account when formulating the remuneration policy, for instance regarding the performance areas and payment dates. Employment conditions for Management Board members may differ from those applicable to employees, also because Management Board members have a service contract rather than an employment relationship. The principles of the remuneration policy are used as a guideline for employment conditions at SBM Offshore as a whole.
The four components of the remuneration package of Management Board members under2018 are: (1) Base Salary, (2) , (3) Value Creation Stake and (4) Pension and Benefits.
1. Base salary
The Base Salary is set by the Supervisory Board and is a fixed component paid in cash. Depending on internal and external developments such as market movements, the Supervisory Board may adjust Base Salary levels.
2. Short-Term Incentive
Theis designed to create a rigorous pay for performance relationship and is a conditional variable component. The key performance indicators focus on three performance areas: (i) Profitability, (ii) Growth and (iii) 1. The Supervisory Board, upon the recommendation of the determines for each of the performance measures the specific performance targets and their relative weighting in the beginning of the financial year.
The three performance areas are specified as follows:
- Underlying and directional is used as an indicator of overall short-term profitability.
- Order Intake and/or the number of s is used as an operational indicator of top line growth.
- regards Sustainability performance. This includes targets around the UN Sustainable Development Goals.
If the Supervisory Board is of the opinion that another measure would be more qualified as an indicator for profitability, growth or, it will inform the shareholders in the remuneration report. Performance measures will never be adjusted retrospectively.
Performance ranges – threshold, targeted and maximum - are set for each of the key performance indicators. The 1.5 times target. A linear pay-out line applies between threshold and maximum. Below threshold, the pay-out is zero.is set at a target level of 100% of the Base Salary for the CEO and 75% of the Base Salary for any other member of the Management Board. The threshold pay-out is at 0.5 times target and maximum pay-out will not exceed
The Supervisory Board appreciates that transparency and accountability require a precisemeasurement. As decided in 2019, the Supervisory Board will no longer apply discretion to increase the outcome of the . The Supervisory Board may still adjust the outcome of the down by up to 10%, which adjustment will be reported on in the remuneration report.
At the end of the performance year, the performance is reviewed by the Supervisory Board and the pay-out level is determined. The performance measures, target setting, and realization are published in this remuneration report. For reasons of commercial and/or market sensitivity, these details are not published at the start of the performance period. In general, details regarding order intake will not be shared. Theis payable in cash after the publication of the Annual Report for the performance year.
3. Value Creation Stake
The Value Creation Stake is an award of restricted shares to create direct alignment with long-term shareholder value. The awarded shares must be held for at least five years. After retirement or termination, the shares cannot be sold for the duration of two years. The gross annual grant value for each of the Management Board members is 175% of Base Salary. The number of shares is determined by a four-year average share price (volume-weighted). The Value Creation Stake has a variable element to the extent that the share price develops during the holding period. The Supervisory Board retains the discretion not to award the Value Creation Stake in exceptional market or business circumstances (‘underpin‘).
All members of the Management Board are required to build up Company stock of at least 350% of Base Salary. The value of the share ownership is determined at the date of grant.
4. Pension and Benefits
In principle, the Management Board members are responsible for their own pension arrangements and receive a pension allowance equal to 25% of their Base Salary for this purpose.
The Management Board members are entitled to additional benefits, such as a company car allowance, medical and life insurance and (dependent on the personal situation of the Management Board member) a housing allowance.
key elements employment agreements
Each of the Management Board members has entered into a four-year service contract with the Company, the terms of which have been disclosed in the explanatory notice of the General Meeting of Shareholders at which the Management Board member was (re-)appointed. Next to his service contract, Bruno Chabas has an employment contract with Offshore Energy Development Corporation S.A.M., in relation to a split pay-out of his remuneration.
Adjustment of remuneration and claw-back
The service contracts with the Management Board members contain an adjustment clause giving discretionary authority to the Supervisory Board to adjust the payment of theand (as granted under 2015), if a lack of adjustment would produce an unfair or unintended result as a consequence of extraordinary circumstances during the period in which the performance criteria have been, or should have been achieved. However, the Supervisory Board has determined that upward adjustments will not be considered as part of 2018 based on shareholder feedback.
A claw-back provision is included in the services contracts enabling the Company to recover the Value Creation Stake,and/or (as granted under 2015) on account of incorrect financial data.
The Supervisory Board will determine the appropriate severance payment for Management Board members in accordance with the relevant service contracts and Corporate Governance Code. The current Corporate Governance Code provides that the severance payment will not exceed a sum equivalent to one times annual Base Salary. This also applies in a situation of a change in control.
SBM Offshore does not grant loans, advance payments or guarantees to its Management Board members.