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Remuneration report

The remuneration report sets out LeasePlan’s remuneration policy, as laid down in the Group Remuneration Framework, which is in accordance with all relevant legal requirements and guidelines, including the Banking Code, the Regulation on Sound Remuneration Policies pursuant to the Financial Supervision Act 2014, the Dutch Act on Remuneration Policies for Financial Enterprises (the WBFO) and Book 2 of the Dutch Civil Code (DCC).

LeasePlan’s Group Remuneration Framework

The Group Remuneration Framework is designed to provide appropriate, restrained and sustainable remuneration for all employees in support of LeasePlan’s long-term strategy, risk appetite, objectives and values.

The Framework applies to all entities and staff members within LeasePlan, including the Managing Board. It includes general remuneration principles applicable to all staff and specific details about the remuneration structure of the Identified Staff, i.e. staff considered to have a material impact on the risk profile of LeasePlan.

General remuneration principles

The following general remuneration principles apply to all staff:

  • The remuneration policy and structure are aligned with LeasePlan’s business strategy, long-term interests, objectives, corporate values and risk appetite and support robust and effective risk management
  • Fixed and variable remuneration will be used to align individual performance with aforementioned strategy and objectives
  • The remuneration positioning will, in general, be set at the median of the relevant market, assuming a comparable split between fixed and variable remuneration
  • Variable remuneration is performance-related, consists of a well-thought-out mix of financial (at maximum 50%) and non-financial elements and reflects both short- and long- term strategic goals
  • Variable remuneration targets are specific, measurable, attainable, relevant and time-bound
  • Variable remuneration can never exceed 100% of fixed remuneration. For staff who are employed by one of the Dutch operating companies this maximum is further capped at 20% on average
  • Pension schemes are recognised in accordance with the applicable accounting standards. LeasePlan does not award discretionary pension benefits as part of the variable remuneration
  • Other benefits for staff are provided in line with local market practice
  • Severance payments reflect performance over time and do not reward for failure or misconduct. For LeasePlan’s daily policymakers severance payments are capped at 100% of fixed remuneration
  • Claw back and malus provisions are applicable to all variable remuneration awarded

Remuneration Identified Staff

In addition to the general remuneration principles applicable to all staff, for Identified Staff the following principles apply:

  • Variable remuneration is capped at 50% for the heads of Risk Management, Compliance and Audit (jointly referred to as Control Functions)
  • The remuneration positioning for Identified Staff is based on a relevant peer group as approved by the (Remuneration Committee of the) Supervisory Board
  • Variable remuneration for Identified Staff consists of cash (50%) and non-cash elements (50%), i.e. phantom share units (PSUs)
  • 60% of the variable remuneration for Identified Staff is paid upfront and 40% of the variable remuneration of Identified Staff is deferred for a period of three years, whereby every year one-third vests
  • PSUs have a retention period of one year after vesting
  • For variable remuneration that deviates from the Framework, approval is required by the (Remuneration Committee of the) Supervisory Board

Remuneration Managing Board

In addition to the general remuneration principles applicable to all staff and Identified Staff, for the Managing Board the following principles apply:

  • In line with the Dutch Banking Code the remuneration positioning of the Managing Board is set below the median for comparable positions in and outside the financial industry, taking into account the relevant international context
  • Managing Board members are entitled to a variable remuneration of 50% at target and 100% at maximum, with the exception of the chief risk officer, being a control function, who is subject to a 50% maximum
  • Each Managing Board Member has agreed to voluntarily cap its variable remuneration at 20% of its base salary until a change of control, asset sale, winding-up or IPO (“Settlement”) and to fully waive any possible rights under the relevant remuneration policies of the Company to a variable remuneration that would exceed such 20% cap for the period until Settlement, which waiver has been accepted by the Supervisory Board
  • Managing Board members are appointed for the duration of four years
  • A fixed notice period of 3 months in case of termination by a Managing Board member and 6 months in case of termination by the Employer applies
  • Managing Board members in principle fully participate in LeasePlan’s pension scheme. Where the applicable retirement age (‘pensioenrichtleeftijd’) is however reached during the appointment period, a fixed allowance of 18.7% over the gross annual salary is paid
  • Managing Board members are entitled to a net expense allowance of EUR 550 on a monthly basis

Remuneration governance

The remuneration governance within LeasePlan is as follows:

The Remuneration Committee of the Supervisory Board

The main responsibilities of the Remuneration Committee of the Supervisory Board concerning the Framework are the following:

  • Reviewing and approving the Framework and supervising its implementation (if it includes changes applicable to the Managing Board, in addition the General Meeting of Shareholders will be requested for approval)
  • Approving the selection of Identified Staff on an annual basis
  • Approving the financial and the non-financial target areas and levels for Identified Staff
  • Reviewing and approving the award of any fixed and variable remuneration for Identified Staff
  • Reviewing and approving significant severance payments for Identified Staff

In order to support sound decision making, external advice may be sought by the (Remuneration Committee of the) Supervisory Board.

The Managing Board

The main responsibilities of the Managing Board concerning the Framework are the following:

  • Developing and adopting the Framework
  • Recommending fixed and variable remuneration levels/payments for Identified Staff, other than for Managing Board members, in line with the Framework
  • Setting the financial and non-financial targets for Identified Staff, excluding those of Managing Board members, in line with the short- and long-term corporate strategy and objectives

Control Functions

In line with remuneration regulations, the Control Functions Risk, Compliance and Audit review and monitor the execution of the Framework together with the Human Resource department.

Performance targets

Global performance targets are set by the (Remuneration Committee of the) Supervisory Board for the Identified Staff on an annual basis. The targets need to comply with relevant remuneration regulations set to support the achievement of the long-term strategy of LeasePlan and consider the interests of all relevant stakeholders.

After the performance year the performance achievement of the Identified Staff is reviewed by HR. Separately, the Control Functions Risk and Compliance perform an ex ante risk analysis and report their findings to the (Remuneration Committee of the) Supervisory Board.

In case of deferred variable remuneration, the ultimate payment is also subject to an ex post risk analysis, as performed by the Control Functions Risk and Compliance and subject to approval by the (Remuneration Committee of the) Supervisory Board. The extent to which the performance targets have been achieved by each individual Identified Staff member is ultimately determined and approved by the (Remuneration Committee of the) Supervisory Board after the end of each performance period.

The table below provides an overview of the global performance targets that are derived from LeasePlan’s business strategy:

Strategy Financial growth Growth in volume, efficiency and
customer satisfaction
Financial Non - Financial
Target Net Result Return on Equity
(MB only)
Weighted Fleet
Growth
One LP + Trim

For all targets, a threshold and stretch level is defined. In addition, for all non-financial targets a financial threshold applies. Where appropriate, more specific and personal targets may apply for certain Identified Staff positions.

The targets for Control Functions exclude any targets that may create a conflict of interest and the function holders are remunerated on the basis of the achievement of non-financial Group objectives and non-financial targets relevant to their position.

Share based payments

Selected managers of the LeasePlan Management, including the Managing Board members, participate in the share capital of an indirect parent company of The Group. The Company or another group entity will under no circumstances be required to settle the shares in cash with the participating managers. Accordingly, this arrangement is classified as an equity-settled share-based payment arrangement.

Execution in 2018

In 2018, LeasePlan’s Remuneration Framework was updated to remain in alignment with the European Banking Authority Remuneration Guidelines, the organisational changes and corporate strategy.

Remuneration disclosures

In line with the Wbfo, we summarise the following remuneration disclosures;

  • The total aggregated variable remuneration expenses for all staff within LeasePlan globally: EUR 56.9 million
  • The number of individuals that received (i.e. were awarded) more than EUR 1 million of total remuneration: 1 head office

More remuneration information can be found in:

  • Note 5 of the consolidated Financial Statements as included in the Annual Report: Staff expenses;
  • Note 24 of the consolidated Financial Statements as included in the Annual Report: Trade and other payables and deferred income;
  • Note 32 of the consolidated Financial Statements as included in the Annual Report: Managing Board and Supervisory Board Remuneration;
  • Pillar III report, remuneration section, as published on 14 March.
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End of Chapter 13

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Governance