The current remuneration policy of a.s.r. applies from 1 January 2020.
a.s.r.’s starting point is that society experiences it as a useful insurer which deals responsibly with the funds entrusted to it and the environment in which it operates. With this in mind, the following four perspectives are used as a basis for the remuneration policy:
The organisational perspective: in line with how a.s.r. presents itself as a company.
The internal perspective: consistency in the internal salary structure.
The external perspective: competitive with the external market.
The stakeholders’ perspective: taking account of the views on remuneration of different stakeholder groups: customers, shareholders, employees and society.
1. The organisational perspective
It is a.s.r.’s view that society may expect it to be an efficient insurer which handles the funds entrusted to it and the environment in which it operates, in a responsible way. With respect to the remuneration of the EB, society may expect this to be appropriate to a.s.r.’s character, and that the remuneration policy and the level of the remuneration of directors can be explained in accordance with that perspective.
For this reason, a.s.r. has no variable remuneration scheme. a.s.r. is of the opinion that such a scheme is not in line with the company’s culture. The sentiment in society with respect to variable remuneration in the financial sector has also been taken into account in this respect.
2. The internal perspective
All a.s.r. employees have job-weighted salaries based on a classification of salary scales that they progress through in stages. The remuneration of the EB members is also fixed on the basis of a classification of salary scales. This creates a link with the salary scales for the other employees. The EB and other employees are covered by a salary scale ranging from 70% to 100%. For both groups, this maximum is just below the median of the adjusted reference group.
In principle, EB members progress through the salary scales in the same way as employees. For employees, this involves an annual increase of 3% (provided there is room in the scale). For EB members, the SB has the option of slightly adjusting this growth path up or down (increase of 0% to 6%). The a.s.r. CLA applies to the EB as regards the indexation of pay.
3. The external perspective
a.s.r. pays its employees a market-compliant salary. Market compliance is determined against a reference group. The reference group for the EB consists of Dutch organisations only, many of which have a social nature, distinguished according to comparable Dutch-listed companies and Dutch financial institutions, including insurance companies. The non-financial institutions must meet at least two of the three criteria set with respect to similar sized companies for inclusion in the reference group. These criteria are: turnover, market capitalisation and employee complement¹. a.s.r. lies around the middle of this reference group. In addition, all remuneration data of the organisations in the reference group must be published individually. The median is established using a conversion factor of 0.5 of the ‘at target’ variable to the fixed salary for the companies in the reference group which have a variable remuneration component.
The reference group for the other employees is the general market. The reference group for some positions within Group Asset Management and Real Estate, is Asset Management. To prevent the salary scales of the employees and the EB from diverging too much, partly as a result of the difference in reference groups, the salary scales of the EB are checked every two years against the reference group of the employees (the general market). If the gap widens too much, this may be a reason to adjust the extent to which the maximum of the salary scales of the EB members is below the median. The remuneration ratio between the remuneration of the CEO and the median of the remuneration of the employees at a.s.r. will be less than 20.
Each year, the SB assesses whether, in addition to the increase in accordance with the CLA wage index, there is an argument for a salary increase for the EB members within the salary scale. In principle, the members of the EB progress through the salary scales in the same way as the employees. For employees, this involves an annual growth of 3% (provided there is room in the salary scale). For the EB members, the SB has the option of adjusting this growth path slightly up or down in exceptional circumstances (a growth of 0% to 6%, provided there is room in the salary scale). In doing so, the SB will take into account the performance of a.s.r. and the principles laid down in the remuneration policy. The SB will account for this in the annual remuneration report.
4. The stakeholders’ perspective
The structure of the remuneration policy has been tested against the views of shareholders, customers, employees and society. A proposal to change the remuneration policy will be discussed with various stakeholders. The remuneration policy will take into account the views and interests of these various stakeholder groups as far as possible.
Periodical test / review
The Remuneration Committee tests the principles of the remuneration policy (at least) once every four years against the four perspectives. The remuneration policy will be put to the vote (at least) once every four years at the General Meeting of Shareholders. The market comparison (remuneration benchmark) is carried out once every two years by an external consultancy firm.
The performance of each EB member is reviewed annually, based on a set of financial and non-financial targets approved by the SB. The targets for 2021 can be summarised as follows:
Shareholder: realisation of the external financial targets and the financial KPIs in the multi-year budget within the established risk appetite. In addition, a visible focus on sustainable and long-term value creation.
Customer: targets to improve the service of a.s.r. and retain its customers over a long(er) period. This target is measured on the development of both the NPS and the scores of the yearly reputation survey. Also the expansion with additional services (for instance a.s.r. Vitality) and further digitisation in the interest of the customer.
Employee: an improvement in the annual Denison scan score compared with 2020, with a specific improvement in diversity and inclusion.
Society: further expansion of the positioning of a.s.r. as a long-term value-creating insurer and socially aware financial institution. This is measured by different ratings and benchmarks.
These targets are complemented by specific strategic priorities for each board member, such as the preparations for the implementation of IFRS 17 and IFRS 9, and the details of the digitisation roadmap. The targets are periodically discussed during the various evaluation meetings between the SB and (the members of) the EB. After assessing the financial and non-financial targets of a.s.r. and the performance of the EB, all in light of the perspectives of the remuneration policy, the SB has the scope to adjust the growth path of the EB members within their salary scale. Each year, the SB determines a growth rate of between 0% and 6%. The SB accounts for this in the annual remuneration report.
Contractual aspects
The members of the EB work on the basis of a contract for services for an indefinite period of time. These contracts legally expire as soon as the parties cease to be members of the EB. The contracts can also be terminated (prematurely). In such cases, a.s.r. will observe a notice period of six months. A notice period of three months applies to the members of the EB. The contracts for services also contain a provision for dismissal due to a change of control.
The following conditions apply to severance pay for policymakers (including members of the EB):
The maximum severance pay is 100% of the fixed annual remuneration.
Severance pay is not awarded in the event of failure on the part of the company.
Severance pay that can be classified as variable is not awarded to a.s.r.’s policymakers or to banks or insurers that are part of the Group. Neither fixed nor variable severance pay may be awarded in the following cases:
If an employment relationship is terminated early at the employee’s own initiative, except where this is due to serious culpable conduct or neglect on the part of the company.
In the event of serious culpable conduct or gross negligence on the part of the employee in the performance of his or her role.
Pay ratio
a.s.r. is transparent concerning the remuneration of the EB. Not only in terms of actual amounts, but also in accordance with Dutch law and the Dutch Corporate Governance Code as compared with the average of the remuneration of all employees of a.s.r. As laid down in the remuneration policy of a.s.r., the ratio between the remuneration of the CEO and the average of the remuneration of the employees at a.s.r. will at all times be less than 20. The current pay-ratio is 11.03. The SB feels that this pay ratio is reasonable. When the actual remuneration of the EB is compared to the remuneration of other executive directors of comparable companies it is among the lowest.
Pay ratio| | 2021 | 2020 | 2020 (reported) | 2019 |
|---|
| Annual total compensation for the highest-paid individual (€) | 1,108,000 | 1,420,000 | 824,000 | 1,145,000 |
Average annual total compensation for all
employees (€) | 100,000 | 102,000 | 62,000 | 98,000 |
| Pay ratio (%) | 11.03 | 13.85 | 13.29 | 11.70 |
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