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0 CS&A Alignment with DSM’s corporate values and strategy Remuneration Policy and Triple Bottom line (CSR) Ben W. van Dijk September 3rd, 2010.

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Presentation on theme: "0 CS&A Alignment with DSM’s corporate values and strategy Remuneration Policy and Triple Bottom line (CSR) Ben W. van Dijk September 3rd, 2010."— Presentation transcript:

1 0 CS&A Alignment with DSM’s corporate values and strategy Remuneration Policy and Triple Bottom line (CSR) Ben W. van Dijk September 3rd, 2010

2 1 CS&A mechanical engineering chemical engineering polymer technology material science adv. organic chemistry biotechnology Bioterials Biologics Competences chemistry Evolution Coal Fertilizers Petro- chemicals Performance Materials Life Science Products Customer intimacy 1902 1930 1950 1970 1990 2000 2010 DSM: A Century of Transformation

3 2 CS&A DSM’s Strategy Vision 2010 Exploiting strong market positions and technology platforms Climate and Energy Health and Wellness Functionality and Performance Emerging Economies EBAs Life Sciences Materials Sciences Materials Sciences NutritionPharma Performance Materials Polymer Intermediates

4 3 CS&A Leader 2009 / 2010 Simultaneously creating value along three dimensions Environmental: Planet Improve eco-footprint throughout the value chain Leader in white biotechnology Social: People Sustainability embedded in our company More diverse workforce Responsible partner in society Economic: Profit Sustainable value creation for our shareholders and customers CFROI > 8.5% Triple Bottom Line DSM’s Triple Bottom Line

5 4 CS&A We can’t be successful in a world that fails Nr. 1 People PlanetProfit World Food Programme Climate Change

6 5 CS&A Design of new MB Remuneration policy started two years ago. Anchor points new policy have been defined, based on consultation of Stakeholders (e.g. Shareholders, Labor Unions, Works council) and external Sustainability/Compensation experts. Crisis has confirmed the direction of the redesign Remuneration policy. Remuneration Policy approved by the AGM on March 31, 2010 (99,9 % in favor). New MB Remuneration policy DSM Alignment with DSM’s corporate values and strategy

7 6 CS&A Balanced reflection of DSM’s Strategic direction, Corporate Values and the interests of Stakeholders Sustainability fully embedded in the Remuneration policy Focus on short-term and long-term value creation Acceptable remuneration levels, stimulating the right management behavior Improved transparency and simplicity Full compliance with Corporate Governance requirements Main Characteristics of new Remuneration policy Alignment with DSM’s corporate values and strategy

8 7 CS&A Equal distribution of fixed and variable income Equal distribution of short-term and long-term variable income. Sustainability targets nearly 50% of performance measures for short and long term variable income. Variable income linked to measurable performance criteria, predominantly of a long term nature External remuneration benchmarking only every 3 years Stock options abolished, performance shares only Total Direct compensation (base salary plus variable income) approaching the median of the market Competitive position in the labor market secured Key Elements of New Remuneration Policy Alignment with DSM’s corporate values and strategy

9 8 CS&A Main elements revised remuneration policy CurrentNew Base Salary Yearly benchmark + review3-yearly benchmark + yearly review by SB Balance income No Policy50% fixed 50% variable Balance STI –LTI 60% STI 40% LTI 50% STI 50% LTI STI Payout in cash 70% financial measures 30% non-financial measures (incl. 10% individual targets) 50% financial measures 50% sustainability and other value creating performance measures (incl.10 % individual targets) LTI Payout in stock options and performance shares Payout in performance shares only 100% financial measure (TSR) for vesting 50% financial measure (TSR) and 50% sustainability measure (GHGE reduction over volume related Revenue) for vesting Alignment with DSM’s corporate values and strategy

10 9 CS&A STI – Performance Measures Alignment with DSM’s corporate values and strategy DSM has defined value creating performance measures in the area of sustainability For 2010/2011 ‘first tier’ targets have been defined (see below). Further refinements/improvements of targets and weighting will follow at a later point in time (‘second tier’) based on proper evaluation The following shared target areas linked to sustainability have been defined for the STI: – ECO+ products – Profitable ECO+ product development, consisting of: – Percentage phase transitions ‘Feasibility’ (phase 2) to ‘Development’ (phase 3) that meet ECO+ criteria – Percentage of Product Launches that meet ECO+ criteria – Energy Consumption Reduction – linked to triple P target of 20% less energy consumption in 2020 compared to 2008 – Engagement Index – Related to the High Performance (HP) Industry norm

11 10 CS&A LTI – Performance Measures Alignment with DSM’s corporate values and strategy Managing Board Members will be eligible to performance shares only as part of the Long Term Incentive scheme. Stock options will be abolished Vesting of performance shares (3 years after granting) will be based on: Comparable TSR versus a peer group (50%) Greenhouse Gas Emissions (GHGE) reduction over volume related revenue (50%)

12 11 CS&A Unlimited.


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