Remuneration Report
The following remuneration report of the Supervisory Board (the ‘Board’) contains an overview of how the remuneration policy is implemented. The remuneration policy was adopted by the General Meeting of Shareholders of 26 April 2017.
Remuneration 2018
In 2017, an external advisor compared the remuneration package of the Executive Board with that of a number of companies of a comparable scale, complexity and results: the ‘peer group’ (once every three years). The peer group is made up of companies that were at numbers 15 to 25 of the AMX (mid-cap index) and on numbers 1 to 10 of the AScX (small-cap index) on Euronext Amsterdam in the last quarter of 2016. The outcome of the comparison was used to determine the total direct remuneration (fixed salary, short- and long- term bonus) of the members of the Executive Board.
Prior to the preparation of the remuneration policy and the adoption of the remuneration of individual members of the Executive Board, the Board analysed the aspects as referred to in best practice provision 3.1.2 of the Dutch Corporate Governance Code (the ‘Code’) on the basis of a proposal by the Remuneration committee. In formulating the proposal for the remuneration of the members of the Executive Board, the Remuneration committee ascertained the individual directors’ vision of the level and structure of their own remuneration.
Annual salary for members of the Executive Board
The fixed salary of Mr Yoram Knoop was determined again* in view of his reappointment during the AGM of 26 April 2018. The fixed salaries of Messrs Arnout Traas (CFO) and Jan Potijk (COO) were indexed on 1 January 2018. In respect of this indexation, the Board made an estimate of the expected inflation development and the relative range of salaries in comparison with the outcome of the peer group. The percentages used and the salaries as at 1 January 2018 were:
Yoram Knoop €535,000 per year (+18,8%* vs. 2017)
Arnout Traas €374,554 per year (+2% vs. 2017)
Jan Potijk €389,992 per year (+2% vs. 2017)
*In light of his reappointment as member of the Executive Board as of 26 April 2018, the fixed salary of Yoram Knoop, taking into consideration the remuneration policy, was determined again as of 1 January 2018. The fixed short-term bonus, which he received during 2014 – 2018, of €100,000 per year was ended per that date and as of 2018 the fixed salary was determined based on the peer group.
Short term performance bonus of members of the Executive Board
The targets for the short-term performance bonus for each individual member of the Executive Board for 2018 were 70% related to financial targets and 30% to qualitative targets. The realisation of the previously established short-term performance bonus targets for 2018 was determined at the beginning of 2019. The table below shows the various performance criteria as well as the results per Executive Board member, including the target percentage and the percentage of the basic salary actually achieved.
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The financial targets over the year under review were related to net profit of ForFarmers and for the COO of ForFarmers the Netherlands also the operating profit (EBIT) of this cluster, excluding (pre-)established incidental expenses and/or income. The qualitative targets related to accounts receivable management and specific strategic projects for 2018 such as the composition of the M&A portfolio, increasing efficiency in the supply chain and the creation of world-class teams. Depending on the member of the Executive Board in question, a project counts for a share of between 5% and 20% of the target. If performance remains below the 90% of the agreed target, no bonus will be paid for that target. The maximum bonus will be paid when at least 110% of the target has been realised.
Long term performance bonus of members of the Executive Board
The targets for the long-term performance bonus for each individual Executive Board member were 60% related to financial targets and 40% to qualitative targets. The long-term performance bonus was determined over a period of three years, i.e. 2016-2018.
The realisation of the long-term performance bonus targets, as established beginning 2016, for the years 2016-2018 was also determined at the beginning of 2019.
The table below shows the various performance criteria as well as the results per Executive Board member, including the target percentage and the percentage of the basic salary actually achieved.
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For the long-term performance bonus 2016-2018, the (cumulative) financial targets were related to the realisation of net-profit growth over three years, both organically and through acquisitions. The qualitative targets related to sustainability, implementation of Horizon 2020, and the progress in employee engagement goals. The targets are the same for the long-term performance bonus 2017-2019.
For the long-term performance bonus 2017-2019 and 2018-2020, the financial targets are the development of earnings per share after tax (EPS), (corrected for the share buy-back), total shareholder return, and return on average capital employed ('ROACE'). The topics of the qualitative targets for 2018-2020 relate to the still to be determined strategy 2025 and its implementation, M&A and sustainability. If performance remains below the 90% of the agreed target, no bonus will be paid for that target. The maximum bonus will be paid when at least 110% of the target has been realised. The applicable percentages with respect to the ROACE target are 80% and 120%.
For the Total Shareholder Return (TSR) targets (2018- 2020 and 2019-2021), the Board established in advance which companies form part of the peer group. These are the ten companies that were at numbers 15 to 25 of the AMX (mid-cap index) of Euronext Amsterdam and the ten companies at numbers 1 to 10 of the AScX (small-cap index) as at 1 October 2017/2018. The percentage bonus allocated for TSR is determined using the position occupied by ForFarmers within the peer group based on the following scale.
| Position | 11-20 | 10 | 9 | 8 | 7 | 4-6 | 1-3 |
| Realisation % | 0 | 50 | 66.7 | 83.4 | 100 | 110 | 120 |
The overview below show the bonus percentages for the 2018 short-term performance bonus and the 2016-2018 long-term performance bonus, which have been achieved by each individual member of the Executive Board.
The members of the Executive Board used (part of) the short-term performance bonus and the fixed short-term bonus (of 2017) to participate in the employee participation scheme for senior management. Yoram Knoop participated with 20,541 depositary receipts, Arnout Traas with none and Jan Potijk with 19,965. A lock-up period of five years applies to the depositary receipts that were acquired based on this scheme in 2018. A discount of 20% was given on the regular purchase price, in accordance with the remuneration policy and the rules as referred to in Article 2:135, paragraph 5 of the Dutch Civil Code as approved by the General Meeting of 26 April 2017.
As at 31 December 2018, the members of the Executive Board hold the following shares or depositary receipts:
| Depositary receipts in lock-up for 3 years with release in 2019 | Depositary receipts in lock-up for 3 years with release in 2022 | Depositary receipts in lock-up for 5 years with release in 2023 | Depositary receipts/Shares (not in lock-up) | Total | |
| Yoram Knoop | 58,305 | 61,034 | 20,541 | 164,662 | 304,542 |
| Arnout Traas | 15,024 | 9,094 | - | 85,211 | 109,329 |
| Jan Potijk | 20,347 | 26,048 | 19,965 | 556,198 | 622,558 |
| Total | 93,676 | 96,176 | 40,506 | 806,071 | 1,036,429 |
The remuneration policy includes a target with respect to the ownership of ForFarmers shares. The members of the Executive Board shall hold (depositary receipts of) shares in the Company with a value amounting to at least two times their gross annual fixed salary.
In accordance with the remuneration policy, ForFarmers did not allocate remuneration in the form of options, shares or depositary receipts to members of the Executive Board and/or the Executive Committee. The remuneration of the members of the Executive Board does not depend on a change of control in the Company. No loans were granted to members of the Executive Board.
An overview of the costs incurred by ForFarmers N.V. in the financial year 2018 in relation to Executive Board remuneration gives a summary of the remuneration of the individual members of the Executive Board. No fees other than those shown in the overview were paid to members of the Executive Board in the financial year. Please also refer to Note 37 of the financial statements.
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The Board has seen no reason in the year under review to make use of its special powers to add to or claw back any allocated variable or long-term remuneration. Over the financial year, no severance payments or other special payments were granted to members or former members of the Executive Board.
Pay ratios
To determine pay ratios within the Company, the total direct remuneration (i.e. the fixed salary and the (short- and long-term) variable salary) of all ForFarmers employees was used. Partly due to the countries in which ForFarmers operates at the moment, this provides a relatively uniform and representative reference group.
This principle will be re-assessed every year.
The average for the total direct remuneration of all ForFarmers staff (except the members of the Executive Board) came to €43.887 gross in 2018 (compared to €45.903 gross in 2017). This amount is calculated based on the assumption that all employees work full time. This means that the real average is lower. This amount offset against the total direct remuneration of Mr Knoop (CEO) in 2018, i.e. €1,148,784 gives a pay ratio of 1:26.2 (2017: 1:24.1). The ratio rose because in 2018 the average remuneration of the employees in Poland was included in the average. For Arnout Traas (CFO) and Jan Potijk (COO) the pay ratio compared to Yoram Knoop (CEO) is 1:1.6 and 1:1.6 respectively.
Remuneration of members of the Supervisory Board
The annual remuneration of the members of the Board amounts, in line with the policy adopted at the General Meeting of Shareholders of 26 April 2017, to €60,000 for the Chairman, €46,000 for the Vice-Chair and €43,000 for the other members of the Board with an additional compensation of: €10,000 for the chairman of the Audit committee, €7,500 for the chairman of one of the other committees, €7,000 for the member of the Board who is a member (not the chairman) of the Audit committee and €6,000 for the member of the Board who is a member (not the chairman) of one of the other committees of the Board. These are gross amounts. The members of the Board receive a fixed annual expenses allowance of €500. In 2018, the following remuneration payments were made to members of the Supervisory Board.
In the period under review, the Board has not granted any additional remuneration to members of the Board in connection with the fulfilment of extra tasks.
As at 31 December 2018, the members of the Board hold the following shares or depositary receipts in ForFarmers N.V. and/or a balance on the participation account of FromFarmers U.A.
ForFarmers did not allocate options, depositary receipts or shares to members of the Supervisory Board. The remuneration of the members of the Board does not depend on the results of the Company or on a change of control in the Company. Loans were not provided to members of the Board.
Lochem, 12 March 2019
Supervisory Board
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