2018Governance

Information about the DSM share

Shares and listings

Ordinary shares in Koninklijke DSM N.V. are listed on the Euronext stock exchange in Amsterdam (Netherlands) (Stock code 00982, ISIN code NL0000009827). Options on ordinary DSM shares are traded on the European Option Exchange in Amsterdam (Euronext.liffe). In the US, a sponsored unlisted American Depositary Receipts (ADR) program is offered by Deutsche Bank Trust Co. Americas (DR ISIN US7802491081), with four ADRs representing the value of one ordinary DSM share.

Besides the ordinary shares, 44.04 million cumulative preference shares A (cumprefs A) are in issue, which are not listed on the stock exchange; these have been placed with institutional investors. The cumprefs A have the same voting rights as ordinary shares, as their nominal value of €1.50 per share is equal to the nominal value of the ordinary shares.

The dividend percentage of the cumprefs A is based upon the dividend yield of the ordinary shares (dividend as a percentage of the average share price). This percentage may be increased or decreased by a markup or discount of no more than one hundred (100) basis points, to be determined by the Managing Board in consultation with the Supervisory Board. The basis of computation of the dividend on the Preference Shares is €5.2942.

Transfer of the cumprefs A requires the approval of the Managing Board, unless the shareholder is obliged by law to transfer his shares to a previous shareholder.

The average number of ordinary shares outstanding in 2018 was 175,322,889. All shares in issue are fully paid. On 31 December 2018, the company had 175,650,575 ordinary shares outstanding.

Issue of shares

The issue of shares takes place by a decision of the Managing Board. The decision is subject to the approval of the Supervisory Board. The scope of this power of the Managing Board shall be determined by a resolution of the General Meeting of Shareholders and shall relate to at most all unissued shares of the authorized capital, as applicable now or at any time in the future. In the Annual General Meeting of Shareholders of 9 May 2018 this power was extended up to and including 9 November 2019, on the understanding that this authorization of the Managing Board is limited to a number of ordinary shares with a nominal value amounting to 10% of the issued capital at the time of issue, and to an additional 10% of the issued capital at the time of issue if the issue takes place within the context of a merger or acquisition within the scope of DSM's strategy as published on the company website. The issue price will be determined by the Managing Board and shall as much as possible be calculated on the basis of the trading prices of ordinary shares on the Euronext Amsterdam Stock Exchange.

Distribution of shares

Under the Dutch Financial Markets Supervision Act, shareholdings of 3% or more in any Dutch company must be disclosed to the Netherlands Authority for the Financial Markets (AFM). According to the register kept by the AFM, the following shareholders had disclosed that they have a direct or indirect (potential) interest between 3% and 10% in DSM's total share capital on 31 December 2018:

• ASR Nederland N.V.
• BlackRock, Inc.
• Capital Research and Management Company and Capital Group International Inc.
• NN Group N.V.
• Rabobank Nederland Participatie B.V.

Repurchase of own shares

The company may acquire paid-up own shares by virtue of a decision of the Managing Board, provided that the par value of the acquired shares in its capital amounts to no more than one tenth of the issued capital. Such a decision is subject to the approval of the Supervisory Board. In the Annual General Meeting of Shareholders of 9 May 2018, the Managing Board was authorized to acquire own shares for a period of 18 months from said date (i.e. up to and including 9 November 2019), up to a maximum of 10% of the issued capital, provided that the company will hold no more shares in stock than at maximum 10% of the issued capital.

DSM repurchased a number of its own shares during 2018 for the purpose of covering the company's commitments under existing management and employee option plans, share (unit) plans and stock dividend.

In 2018, DSM launched a first share buy back from 19 March 2018 for 1,600,000 shares for a total consideration of €137 million. This program was destined to cover share-based compensation plans (500,000 shares) and stock dividend as part of the final dividend 2017 (1,100,000 shares). DSM launched a second share buy back from 13 August 2018 for 1,100,000 shares for a total consideration of €99 million. This program was aimed at covering commitments under share-based compensation plans (500,000 shares) and commitments for stock dividend as part of the interim dividend 2018 (600,000 shares).

In 2018, DSM repurchased 2,700,000 of its own shares in total for a combined consideration of €236 million.

Article 10 of Directive 2004/25

With regard to the information referred to in the Resolution of article 10 of the EC Directive pertaining to a takeover bid which is required to be provided according to Dutch law, the following can be reported:

• Information on major shareholdings can be found above (Distribution of shares)
• There are no special statutory rights attached to the shares of the company
• There are no restrictions on the voting rights of the company's shares. When convening a General Meeting of Shareholders, the Managing Board is entitled to determine a registration date in accordance with the relevant provisions of the Dutch Civil Code
• The applicable provisions regarding the appointment and dismissal of members of the Managing Board and the Supervisory Board and amendments to the Articles of Association can be found in the chapter Corporate governance
• The powers of the Managing Board regarding the issue and repurchase of shares in the company can be found in the sections Issue of shares and Repurchase of own shares above
• Other information can be found in the 'Notes to the consolidated financial statements' (16 Equity, 19 Borrowings, 27 Share-based compensation)

Dividend on ordinary shares

DSM's dividend policy is to provide a stable and preferably rising dividend. DSM proposes to increase the dividend to €2.30 per ordinary share for 2018. This will be proposed to the Annual General Meeting of Shareholders to be held on 8 May 2019. An interim dividend of €0.77 ordinary share having been paid in August 2018, the final dividend would then amount to €1.53 per ordinary share. The dividend will be payable in cash or in the form of ordinary shares at the option of the shareholder, with a maximum of 40% of the dividend amount available for stock dividend. If more than 40% of the total dividend is requested by the shareholders to be paid out in shares, those shareholders who have chosen to receive their dividend in shares will receive their stock dividend on a pro-rata basis, the remainder being paid out in cash. Dividend in cash will be paid after deduction of 15% Dutch dividend withholding tax. The ex-dividend date is 11 May 2019.

Dividend on Cumulative Preference Shares A

DSM will pay a dividend of €0.17 per share for 2018, identical to the dividend on the cumprefs A for 2016 and 2017.

The dividend on the cumprefs A is based on the dividend yield of the ordinary shares, being about 2.74% for 2018. The Managing Board in consultation with the Supervisory Board decided to use their discretionary option to increase this percentage by about 52 bps to 3.26%. While the proposed dividend for the ordinary shareholders will increase by about 25% versus 2017, the Managing Board felt it appropriate to keep the dividend on the cumprefs A equal to 2017.