LeasePlan’s Group Remuneration Framework
The Group Remuneration Framework is designed to provide appropriate 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 (i) general remuneration principles and their governance applicable to all staff and (ii) specific details about the remuneration structure of the Identified Staff, i.e. staff considered to have a material impact on LeasePlan’s risk profile.
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, 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 performance indicators are specific, measurable, attainable, relevant and time-bound;
- Variable remuneration cannot 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 market practice;
- Severance payments do not reward for failure or misconduct. For LeasePlan’s daily policy makers severance payments are capped at 100% of fixed remuneration;
- Claw back and malus provisions are applicable to all variable remuneration awarded;
Remuneration Identified Staff
Annually a review is conducted to ensure the correct jobs are identified as Identified Staff In addition to the general remuneration principles applicable to all staff, for Identified Staff the following principles apply:
- In principle the maximum total at-target level of Variable Remuneration for Identified Staff is set at 50% of the annual Fixed Remuneration with stretched levels per function level but in no case exceeding 100% of the annual Fixed Remuneration in case of material outperformance.
- Variable remuneration is capped at 50% for the heads of Risk Management, Compliance and Audit (jointly referred to as Control Functions);
- Variable remuneration for Identified Staff consists of cash (50%) and non-cash instruments (50%). The non-cash element of variable remuneration consists of Phantom Share Units (PSUs). The value of the PSUs is set by the Supervisory Board after a recommendation is made by an external valuation expert;
- Fifty percent (50%) of the total annual variable remuneration will be granted upfront (both cash and PSUs) and fifty percent (50%) of the total Variable Remuneration will be deferred for a period of three years whereby annual vesting is applied;
- After vesting, an additional holding period of one year applies to all vested PSUs
- 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:
- Managing Board members are appointed for the duration of four years;
- A notice period of three months in case of voluntary resignation by a Managing Board member and six months in case of termination by the Employer applies;
- In line with the Dutch Banking Code the remuneration positioning of the Managing Board will, in general, be set just below the median of the relevant market;
- Managing Board members are entitled to a variable remuneration of 50% at target and 100% at maximum;
- Each Managing Board member has agreed to voluntarily cap their variable remuneration at 20% of 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;
- For the Managing Board in principle 60% of variable remuneration will be paid in the form of PSUs;
- Managing Board members in principle fully participate in LeasePlan’s pension scheme. Where the applicable retirement age (‘pensioengerechtigde leeftijd’) is however reached during the appointment period, a fixed gross 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;
- Managing Board members are entitled to a company car as per the applicable car policy of LeasePlan Global b.v. Managing Board members who are expatriated to Netherlands are entitled to compensation of costs related to housing and other expatriate related expense reimbursement as per the applicable policy.
The remuneration governance within LeasePlan is as follows:
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).
The following corporate bodies and functions within LeasePlan are involved in the remuneration governance: the Managing Board, the Supervisory Board, the Remuneration Committee, Human Resources (‘HR’), and the Control Functions Risk Management, Compliance and Audit.
The Supervisory Board advised by the Remuneration Committee
The main responsibilities of the Supervisory Board advised by the Remuneration Committee as stated in the Remuneration 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 performance indicators and targets 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.
During the 2019 Remuneration Committee meetings among other things, the following topics were discussed:
- Regulatory updates;
- Selected Identified Staff positions;
- Variable remuneration performance indicators and targets;
- Remuneration of the Managing Board;
- Ex-ante risk assessment and Ex-post risk assessment.
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.
In line with remuneration regulations, the Control Functions Risk, Compliance and Audit review and monitor the execution of the Framework together with the Human Resources department.
Performance indicators and targets
Global performance indicators are set by the (Remuneration Committee of the) Supervisory Board for the Identified Staff on an annual basis. The indicators need to comply with relevant remuneration regulations, are 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 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 indicators that are derived from LeasePlan’s business strategy for performance year 2019:
For all performance indicators, a threshold and stretch level is defined. In addition, for all non-financial performance indicators a financial threshold applies. Where appropriate, more specific and personal performance indicators may apply for certain Identified Staff positions.
The performance indicators for Control Functions may not 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 performance indicators relevant to their position.
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 2019
In 2019, the LeasePlan’s Remuneration Framework was updated to remain in alignment with the European Banking Authority Remuneration Guidelines, the organisational changes and corporate strategy.
For 2020, no material changes are expected to the LeasePlan’s Remuneration Framework.
In line with the Dutch Remuneration Policy for Financial Enterprises Act (Wbfo), the following summarises (i) the total amount of aggregated variable remuneration expenses for the year 2019 and (ii) the number of individuals employed by LeasePlan who received a total remuneration of more than EUR 1 million.
- Total aggregated variable remuneration expenses for all staff within LeasePlan globally: EUR 60.2 million
- Number of individuals that received (i.e. were awarded) more than EUR1million 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 4 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 page 43 qualitative and quantitative remuneration information with respect to Identified Staff.