Retrospect and outlook
Whereas the overall remuneration expenses in 2020 dropped compared to 2019 as a consequence of the CEO change, the remuneration expense in 2021 increased compared to 2020. In this respect, it is to be considered that (until 15 February 2021) the base salary of the Co-CEOs was positioned below base salary of the outgoing CEO, whereas the share units granted to the Co-CEOs in 2018 and vesting in 2021 concerned a grant based on their base salary as Managing Board members (this effect will also occur in 2022).
Considering the strategic update provided in 2021 and the pending review of the Remuneration policy, the Supervisory Board has decided that the goals underlying the Short- and Long-Term Incentive schemes will not be adjusted for 2022. This review was initiated in view of, among other factors, a quick scan conducted early in 2021 and benchmarking DSM’s position within the labor market peer group as defined within the Remuneration policy. The scan showed that DSM had dropped to the lowest position in the peer group as far as targeted total Direct Compensation (annual base salary plus targeted Short-Term Incentive plus targeted Long-Term Incentive) is concerned and was far from approaching the median from below as set out in the Remuneration policy. Although DSM in general has a compelling proposition to attract talent, the company faces more and more difficulties in attracting and retaining senior leaders (one or two reporting levels below the Executive Committee). This is due to the fact that the remuneration of the Managing Board sets a ceiling especially with regard to Short- and Long-Term Incentives. Together with the fact that the Managing Board’s targeted Total Direct Remuneration is positioned below the 25th percentile of the labor market peer group, action was required. In the meantime, a policy review project has started. This was necessary on the one hand to further align actual remuneration of the Managing Board with the market and on the other hand to enable DSM to submit compelling and competitive remuneration propositions to attract and retain senior talents that will help shape the company’s future success. The review project is well under way. In the course of 2022, we will consult with investors and proxy advisors to explore views and opinions.
