REMUNERATION REMUNERATION REPORT 2018 REPORT 2 018 1 TABLE OF CONTENTS REMUNERATION REPORT 2018 — BOSKALIS REPORT 2018 REMUNERATION 2 3 INTRODUCTION 5 REMUNERATION POLICY FOR THE BOARD OF MANAGEMENT 7 APPLICATION OF REMUNERATION POLICY IN 2018 9 SUPERVISORY BOARD REMUNERATION POLICY REMUNERATION REPORT 2018 — BOSKALIS REPORT 2018 REMUNERATION 3 INTRODUCTION MEMBERS OF THE REMUNERATION COMMITTEE DUTIES AND RESPONSIBILITIES OF At the beginning of 2018 the Remuneration Committee THE REMUNERATION COMMITTEE consisted of two members, with Mr. Van Woudenberg as It is the role of the Remuneration Committee to advise chairman and Mr. Van der Veer as a member. After the the Supervisory Board on: meeting of the Remuneration Committee on 15 August 2018, the submission of a clear and understandable proposal Ms. Haaijer joined the Remuneration Committee as third concerning the remuneration policy to be pursued for member. members of the Board of Management with focus on long-term value creation for the company and the business The Remuneration Committee regularly avails itself of the connected with it and taking into account the internal pay services of an independent remuneration adviser and has ratios within the company. The Remuneration Committee ascertained that this remuneration adviser does not provide shall consider and include all matters required by law and advice to the members of the Board of Management. the Corporate Governance Code 2016 (the “Code”). The Supervisory Board shall present the policy to the REMUNERATION REPORT 2018 — BOSKALIS REPORT 2018 REMUNERATION General Meeting of Shareholders for adoption; 4 the submission of a proposal concerning the remuneration remuneration activities a labor market reference group, that of individual members of the Board of Management. is composed of a mix of fourteen Dutch (AEX and AMX-listed) The proposal shall be drawn up in accordance with the companies that are comparable in terms of size and business remuneration policy that has been established and will, in activities. The labor market reference group consists of BAM, any event, cover the remuneration structure, the amount of DSM, Fugro, SBM Offshore, Sligro, RELX Group, PostNL, the fixed and variable remuneration components, the Wolters Kluwer, Arcadis, Vopak, Aalberts Industries, OCI, performance criteria used, the scenario analyses that are KPN and TKH Group. carried out and the pay ratios with the company and its affiliated enterprise. When formulating the proposal for In 2017, the Remuneration Committee re-evaluated the remuneration of the Board of Management, the prevailing remuneration policy for the members of the Board Remuneration Committee shall take note of the views of of Management in light of the current market developments the individual members of the Board of Management with and circumstances. regard to the amount and structure of their remuneration; the preparation of the report on the remuneration policy The outcome of this remuneration survey showed that the implemented in the past financial year. The Remuneration members of the Board of Management receive an Committee shall consider and include all matters required appropriate basic salary, but that the overall direct by law and the Code. The Supervisory Board’s remuneration compensation package for all members of the Board of report shall be placed on the company’s website. Management are in comparison with the labor market reference group below or around the lowest quartile (P25). This as a result of a relatively low long-term variable element. ACTIVITIES DURING 2018 In addition, more and more (AEX and AMX-listed) companies The Remuneration Committee met three times during 2018, have a share-based long-term incentive scheme. with all members having attended each of the meetings. The Committee also held regular consultations outside these Based on this, it was announced in the Remuneration meetings. More than half of the members of the Remuneration Report 2017, that the Supervisory Board had decided to Committee is independent in accordance with the Corporate propose an adjustment in the remuneration policy for the Governance Code. Board of Management to the Annual General Meeting of Shareholders to be held on 9 May 2018, wherein the level Reports and findings of the meetings of the Remuneration of remuneration for the Board of Management would be Committee were presented to the entire Supervisory Board. brought more in line with the market and a share-based long-term incentive scheme would be introduced to be During the year under review the activities of the applicable from 1 January 2018. Remuneration Committee included: informing itself of developments surrounding remuneration In 2017 a remuneration survey was also performed to policy for senior management in the Dutch and calibrate the level of remuneration of members of the international market; Supervisory Board. The results of this survey showed that the staying abreast of the latest corporate governance remuneration of the Supervisory Board is relatively lower developments in the Netherlands and internationally; than the median of the labor market reference group. In the performing scenario analyses; Remuneration Report 2017 it was therefore also announced submitting a proposal concerning the remuneration of that the Supervisory Board would propose an adjustment in individual members of the Board of Management in the remuneration policy for the Supervisory Board to the accordance with the law and the Code, wherein among Annual General Meeting of Shareholders to bring the level others note has been taken of views of the individual of remuneration in line with market level. members of the Board of Management with regard to the amount and structure of their own remuneration in the However, in view of the prevailing business environment and framework of the Remuneration Policy; the general interest of the company, the Supervisory Board has discussing with the Board of Management the decided, in close consultation with the Board of Management, remuneration of the members of the Group Management, not to schedule the proposals to adjust the remuneration policy who are not members of the Board of Management; for the Board of Management and the Supervisory Board for preparing a proposal for a new share-based long-term the agenda of the Annual General Meeting of Shareholders in incentive scheme based on the outcome of a remuneration 2018. The chairman of the Remuneration Committee explained survey that was executed in 2017. the background of this decision at the Annual General Meeting of Shareholders on 9 May 2018. REVISION OF THE LABOR MARKET REFERENCE The Supervisory Board will schedule a new proposal for an GROUP AND REMUNERATION SURVEYS adjustment in the remuneration policy for the Board of In the year under review, the Remuneration Committee Management to the Annual General Meeting in 2020, commissioned an external remuneration advisor to assist in wherein the level of remuneration for the Board of the execution of its activities. Management will be brought more in line with the market and The Remuneration Committee applies for the execution of its a share-based long-term incentive scheme will be introduced. — BOSKALIS REPORT 2018 REMUNERATION 5 REMUNERATION POLICY FOR THE BOARD OF MANAGEMENT The current remuneration policy for the Board of A – BASIC SALARY Management was adopted by the General Meeting of The amount of the basic salary is determined based on the Shareholders on 21 January 2011. The remuneration policy labor market reference group in accordance with the is consistent with the strategy and core values of Boskalis, remuneration policy and checked periodically using data which are centered on long-term orientation and continuity obtained by an external advisor. and take into account the interests of Boskalis’ shareholders, clients, employees as well as the ‘wider environment’. The Remuneration Committee ascertained that in defining B – PENSION PLAN ANAGEMENT M and executing the remuneration policy the remuneration The members of the Board of Management participate in the OF ratios within the company were adhered to and that potential Boskalis pension scheme, which is administered by PGB outcomes of the variable remuneration elements (short and pension fund. Pension accrual is based on a conditionally OARD long term) for the remuneration of individual board members indexed non-contributory average earnings scheme with a B were analyzed and in part determined by performing fiscal cap of EUR 105,075. The retirement target age is 68. THE scenario analyses. Other factors taken into account in FOR determining the amount and structure of the remuneration included the development of results, the Boskalis share price C – SHORT-TERM VARIABLE ELEMENT performance and non-financial indicators with due The Supervisory Board sets targets for full-year net result and POLICY consideration of the risks to the company. individual performance, with payment of the short-term variable element subject to these being met. The full text of the remuneration policy can be found on the Boskalis website (www.boskalis.com). Individual targets are assessed in terms of quality and/or quantity (depending on the specific target), while the full-year emuneration R net result is determined solely in terms of quantity. The ELEMENTS OF REMUNERATION external auditor is involved in the final determination of the The table below provides an overview of the remuneration short-term variable element and is responsible