Corio AnnuAl report 2012
57 €
vAriAble remunerAtion
All members of the Management Board are eligible for variable remuneration if they achieve certain pre-agreed performance criteria that support Corio’s short and long-term objectives.
The variable remuneration components are linked to both short-term and long-term objectives of Corio. The annual short-term variable remuneration for on-target performance is 40% of base salary and has a maximum of 60% of base salary in case of excellent performance. The long-term variable remuneration consists of an annual award of performance phantom shares of 60% of base salary. The actual number of shares that will vest, after three years, depends on the total shareholders return, and can range from 0 to 1.5 times the number of shares initially awarded.
Variable remuneration is aligned with Corio objectives of delivering both annual operational results and long-term shareholders return. By structuring the long-term incentives to track long-term performance indicators, and deriving short-term incentives from a multi-faceted mix of financial and non-financial objectives, the Supervisory Board kept in mind the risk profile attached to both performance objectives.
The Supervisory Board has the discretionary authority to adjust any annual variable remuneration of the Management Board. The Supervisory Board has the right to reduce, cancel or claw back bonuses, either in full or in part, that have already been awarded if subsequently it is discovered that they had been wrongly awarded (on the basis of incorrect financial data or otherwise).
A. short term inCentive sCheme
The short-term incentive scheme relates to the operational results of the company and includes financial and non-financial indicators that are relevant to the company’s value creation. Two-thirds of the short-term incentive performance criteria consist of the metric ‘controlled growth in the company’s Operating Result’; one-third relates to measurable individual qualitative targets. The controlled growth of Operating Result consists of targets related to ‘direct result’, ‘managing the profitability of the pipeline in line with secured funding’, administration expenses and a disposal program. Individual qualitative targets are related to hR, CSR, innovation and improving asset performance.
The targets on direct result and direct result per share were not achieved. The target on profitability of the pipeline was outperformed.
The target on secured funding was achieved.
The results on administration expenses as a percentage of GTRI and the disposal program were below target.
The individual qualitative targets were partly achieved.
After assessment and discussion with the Remuneration Committee and approval of the Supervisory Board, Mr. Groener’s annual bonus was set at 19.4% and Mr. Van der klift’s was set at 19.2% of the annual base salary. Mr. Fontaine’s annual bonus was for 50% determined by the achieved targets as Management Board member and was set at 14.6% of the annual base salary. Mr. Fontaine will receive a separate annual bonus as CEO of Corio France, also pro rata for 50%.
b. long term inCentive sCheme
Under the ‘Performance Phantom Share Plan’, conditional share units are awarded annually.
Three years after the award date, vested units are paid out in cash. The number of units that vest depends on the ‘total shareholder return’
generated by Corio during the three-year vesting period, compared to the total shareholder returns generated by companies included in a pre-defined peer group, in that same period. The amount payable in respect of the vested units is the value of the units as at the payment date.
Unvested units forfeit.
The units represent the average value of Corio shares over a three month period, starting January 1st. This three-month average aims to minimize the influence of short-term share price volatility. The three-month average also applies when calculating the relative total shareholders return of Corio and of the companies included in the performance reference group. The rules of the plan contain a provision to ensure that movements in the share price related to exceptional transactions do not affect the value of the units; e.g., in case of a take-over, the unit value is ‘frozen’ by limiting the value to the amount measured over the three-month period preceding the month before the notice of a change in control is made public.
The annual award value of units does not exceed 60% of annual base salary as determined after 1 May of the award year. The applied percentage is determined by the Supervisory Board and is put down in the individual employment contract.
The percentage amounted in 2012 to 60% for Mr. Groener, 60% for Mr. Van der klift, 60% for Mrs. Zijlstra and 20% for Mr. Fontaine.
Corio AnnuAl report 2012
58 €
The following scale applies to determine the number of units that vest, depending on the relative total shareholders return generated.
The percentage of the units vesting ranges from 0% for below median performance, to 150% of the awarded number of units if Corio ranks first in the performance reference group. The scale used to determine the number of units to be paid out is as follows:
position perCentAge pAy-out*
* This percentage applies to the number of units that have been awarded (conditionally) three years before the vesting date.
The performance reference group consists of Corio and eight other listed property companies that primarily focus on retail. The performance reference group used for awards in 2012 consisted of Corio and the following companies.
Deutsche Euroshop
The Supervisory Board reviews the performance reference group periodically and adjusts it if necessary.
In 2012, conditional units were awarded under the plan rules to Mr. Groener, Mr. Van der klift, Mrs. Zijlstra and Mr. Fontaine for the year 2012.
The awarded shares for the year 2009, based on ranking in the performance reference group, did not result in a pay-out for Mr. Groener and Mr. Fontaine.
In 2012 the Supervisory Board conducted the scenario analyses in order to assess whether the maximum cash value of the Phantom Performance shares is still reasonable. The Supervisory Board concluded that the outcome of the scenario analyses is in line with the principles of the Performance Phantom Share Plan.
Financial information with an overview of total cost to the company in 2012 can be found on page 98 of this annual report. Financial information on the long-term incentive awards can be found on page 99 of this report.
At the end of 2012, there were no other outstanding unvested shares or share options than the rights detailed in the scheme above.
pensions
Corio pays an annual contribution to each member of the Management Board. It is assumed that members of the Management Board retire at the age of 65 and therefore there are no agreed arrangements for the early retirement of Management Board members.
The company contribution to the CEO, CFO and COO for personal pension plan financing has been set at 20% of base annual salary.
This percentage is generally in line with Dutch market practice of average cost levels for pension schemes.
Further information about the costs of the pension contributions by the company can be found on page 98 of this annual report.
other fringe benefits
Corio provides a package of fringe benefits for its Management Board, in line with those applicable to other employees. These include items such as accident insurance, disability insurance arrangements, a lease car and directors’ and officers’ liability insurance. Corio does not provide any loans to the members of the Management Board.
employment ContrACt And severAnCe terms The full terms and conditions of employment of the members of the Management Board are recorded in individual employment contracts. Members of the Management Board are appointed for periods of four years.
If this is considered reasonable, the relevant director may be eligible for severance pay up to a maximum of one, or in special cases a maximum of two years annual salary.
ChAnges in Composition of the mAnAgement boArd
In 2012 Mr. Groener and Mr. Fontaine were reappointed by the Supervisory Board, after hearing the General Meeting on 19 April 2012, for another period of 4 years. In 2012 it was decided that Mr Fontaine will assume full membership of the Management Board as CDO as of 2013 and will no longer combine this with a country responsibility which he had up till then for Corio France. Mrs. Zijlstra’s employment with Corio ended per 1 December 2012. In line with the Corporate Governance Code she received a severance payment of 1 year annual salary and a pro rata short term bonus for 2012 of
€ 48,000.
remunerAtion poliCy And implementAtion in future yeArs
In 2012 we have reviewed the consistency and soundness of other remuneration levels within Corio against the remuneration policy of the Management Board and concluded to be fully in line and consistent with this policy.
supervisory boArd remunerAtion On 21 April 2011 the AGM approved an adjustment in the remuneration of the
Supervisory Board. This means that as of 1 May 2011, the annual remuneration comprises of
€ 45,000 for the chairman, € 40,000 for the vice-chairman and € 35,000 each for other members. Supervisory Board members also receive the following annual fixed payment for the Supervisory Board committees of which they are a member:
Selection and Appointment Committee Chairman € 7,500
Members € 5,000
The remuneration is not related to the results.
Supervisory Board members are not eligible to receive company shares as part of their remuneration. Financial information on the remuneration level in 2012 can be found on page 100 of this annual report. Corio will review the remuneration of the Supervisory Board in 2013.
On behalf of the remuneration Committee Gobert Beijer, Chairman
Corio AnnuAl report 2012
CORIO IS MANAGED By A MANAGEMENT BOARD, WhICh IS SUPERVISED By A SUPERVISORy BOARD.
BOTh BOARDS ARE
RESPONSIBLE FOR PROPER CORPORATE GOVERNANCE WIThIN CORIO AND ARE ACCOUNTABLE TO ThE GENERAL MEETING OF ShAREhOLDERS.
introduCtion
Corio strives to maintain a corporate governance structure that best serves the interests of all stakeholders and that complies with the recommendations of the Dutch Corporate Governance Code (the ‘Code’). The company has complied with the applicable principles and best practice provisions and will continue to do so in 2013. A checklist specifying the extent to which Corio currently complies with the principles and best practice provisions and an overview of the company’s corporate governance structure can be found on the website www.corio-eu.com.
mAnAgement boArd
The Management Board is responsible for setting the broad management parameters.
It is responsible for setting the corporate strategy and policies, and for achieving the corporate objectives. The Management Board is accountable to the Supervisory Board, and both are in turn accountable to the General Meeting. The Management Board must consist of at least two members, who are appointed by the Supervisory Board provided that advice has been received from the Works Council and the General Meeting has been notified. Please refer to the paragraph Proposed Changes in Corporate Governance in this regard. The Supervisory Board is at liberty to also appoint one of the members as chairman of the Management Board, which is the case with Corio. The Supervisory Board determines the number of members. Members of the Management Board are appointed for
a maximum period of four years, their term of office expiring on the day of the General Meeting four years after the year in which they were appointed, unless they step down earlier. Since 20 September 2012 Corio’s Management Board consists of three members, namely Mr. Gerard Groener (CEO), Mr. Ben van der klift (CFO) and Mr. Frédéric Fontaine (CDO).
The company has a remuneration policy for its Management Board, which was adopted by the General Meeting held on 29 April 2008 at the proposal of the Supervisory Board. For further information, please refer to the remuneration report on 2012 elsewhere in this annual report.
Corio strives to ensure that every type of actual or perceived conflict of interest between the company and members of the Management Board is avoided. No such conflicts arose during 2012.
supervisory boArd
The role of the Supervisory Board is to oversee the Management Board’s functioning and general developments within the company and its associated business, and to support the Management Board by advising. The Supervisory Board is responsible for the quality of its own performance. It should consist of at least three members. The members of the Supervisory Board are (re-) appointed by the General Meeting following their nomination by the Supervisory Board. The General Meeting and the Works Council may recommend persons to the Supervisory Board for nomination. Members of the Supervisory Board must step down no later than the date of the first General Meeting
held four years after the date of their (re-) appointment. A member of the Supervisory Board can be a member for a maximum of twelve years. The level of remuneration received by members of the Supervisory Board is determined by the General Meeting.
The Supervisory Board has appointed an Audit Committee, a Remuneration Committee and a Selection Committee from among its members. The task of these committees is to do preparatory work in support of the Supervisory Board’s decision-making process. Rules have been drawn up for each committee and can be found on the Corio website www.corio-eu.com.
For more information on the composition of the Supervisory Board and the committees please refer to the Report of the Supervisory Board elsewhere in this Annual Report.
At the 2013 Annual General Meeting the Supervisory Board will propose the reappointment of two members of the Supervisory Board: Mr. Doijer and Mr. Beijer.
Corio strives to ensure that every type of actual or perceived conflict of interest between the company and members of the Supervisory Board is avoided. One such perceived conflict arose during 2012. The Supervisory Board meeting regarded the agreement on the final completion of the 2010 transaction with Multi Corporation. In 2010 Mr. Carrafiell was partly involved as an advisor of the main shareholder of Multi Corporation in the transaction between Corio and Multi Corporation. Therefore, in accordance with article 11 of the Supervisory Board rules he took no part in the discussion