Summary of the remuneration policy of the Managing Board of Koninklijke DSM N.V.
The remuneration policy of the Managing Board is designed to attract and retain qualified leaders who can shape our purpose-led, performance-driven strategy, engage our people and other stakeholders, and ultimately achieve results – putting customers first and delivering on our company’s promises. The policy provides clear focus: improving company performance and enhancing purpose-led, long-term value creation across multiple dimensions (People: individual and societal; Planet: environmental and ecological; and Profit: economic and financial) while recognizing the interests of all our stakeholders (our customers, employees, shareholders, as well as society at large).
Remuneration is linked to company and individual performance. Based on the company’s short- and long-term strategic objectives as well as our business drivers, results are measured on the basis of specified targets, balancing short- and long-term outcomes, serving the interests of all our stakeholders. To be competitive and to ensure alignment internally, Total Direct Remuneration offered by DSM approaches – from below – the median of a predefined peer group. Reward levels are benchmarked against the Dutch/European labor market peer group, while the design of various reward components is reviewed against the broader perspective of best market practices.
Labor market peer group
European industry peers:
- Clariant AG
- Covestro AG
- Evonik Industries AG
- Givaudan SA
- Johnson Matthey Plc
- LANXESS AG
- Lonza Group AG
- Solvay SA
Dutch AEX-listed peers:
- Koninklijke Ahold Delhaize N.V.
- Akzo Nobel N.V.
- ASML Holding N.V.
- Heineken N.V.
- Koninklijke KPN N.V.
- Koninklijke Philips N.V.
- Randstad N.V.
- Wolters Kluwer N.V.
The full version of the remuneration policy of the Managing Board Koninklijke DSM N.V., as approved by the 2019 AGM, is available on the company website. The following table specifies the elements of the remuneration policy, describing their purpose, design, and link to our company strategy, as well as their potential value.
Purpose |
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Design and link to strategy |
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Value |
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Goal |
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Total Direct Compensation |
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Includes base salary and variable income. Variable income concerns the performance-related Short-Term Incentive (STI) and the STI deferral & matching plan, as well as the Long-Term Incentive plan (LTI). In addition, Managing Board members are entitled to certain benefits. |
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Value of each respective item is included hereafter. |
Base salary |
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Aims to provide a fair and competitive basis for the total pay level to attract and retain qualified leaders. Annual review based on the market movement for executives based in the Netherlands and peer companies. Regular in-depth benchmark. |
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Base salaries at DSM approach – from below – the median of the labor market peer group. |
Short-Term Incentive (STI) |
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The Supervisory Board sets goals and targets for the respective performance year and determines the extent to which these have been achieved. By ensuring that strategic objectives are properly reflected in stretching yet achievable targets, the realization of strategic business objectives is addressed. Half of the at-target STI is linked to financial objectives; the other half is tied to sustainability aspirations and individual goals. |
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On-target performance: 50% of annual base salary. Maximum opportunity capped at 100%. Threshold: no STI pay-out in case the target for Adjusted EBITDA is not achieved to the level of at least 75%. |
STI deferral & matching |
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Conversion of STI into shares, with a 1:1 company match delivered in Performance Share Units (PSUs). The PSUs vest upon the realization of predefined goals (same as LTI program), observing a three-year vesting period. By linking the vesting of the PSUs to the targets of the LTI program, it is ensured that decisions regarding short-term results are aligned with long-term value creation. |
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Mandatory conversion: 25% of STI achieved; voluntary conversion: 0–25%, with incremental steps of 5%. Maximum number of matching PSUs to vest is equal to number of PSUs granted. |
Long-Term Incentive (LTI) |
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PSUs are awarded every year, to be converted into shares upon realization of predefined targets, observing a three-year vesting period. A five-year holding period (starting at grant date) applies. Performance goals are based on company strategy, driving long-term value creation. Half of the target LTI is linked to financial goals; the other half is linked to sustainability aspirations. Performance is measured over three financial years, starting with the year of grant. |
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Based on face value, the at-target grant equals 100% of base salary; the number of PSUs granted equals the maximum to vest (i.e., 150% of base salary). Therefore, the maximum vesting opportunity is 100% of the number of PSUs granted. |
Shareholding requirement |
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Managing Board members are expected to build up a shareholding in the company; the minimum shareholding requirement must be accrued in four years. Considered are shares privately purchased and vested shares granted under DSM share-based compensation plans. |
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The minimum share-holding requirement is 300% of annual base salary for both Co-CEOs and 200% for other Managing Board members. |
Pension and other benefits |
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Mandatory enrollment in basic pension plan as applicable to all DSM employees in the Netherlands (Collective Defined Contribution). In addition, a company-paid contribution to allow participation in the so-called Net Pension Plan under conditions as applicable to Netherlands-based employees (Individual Defined Contribution). |
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Pension scheme aligned with plans in place for employees in the Netherlands. |
Goal- and target-setting |
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The Supervisory Board sets goals, their respective weight, and targets (i.e., metric to be achieved) for the respective performance year under the STI and LTI scheme, considering:
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Targets must be stretching yet achievable. |
The company website contains an overview of the main terms and conditions of employment of both Co-CEOs.
