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Remuneration report

1. Description of the procedure used in 2019 for (i) developing a remuneration policy for the non-executive Directors and Executive Management and (ii) setting the remuneration of the individual Directors and Executive Managers

The remuneration policy and the remuneration for the non-executive Directors is determined by the General Meeting of Shareholders on the motion of the Board of Directors, acting upon proposals from the Nomination and Remuneration Committee. The policy was approved by the Annual General Meeting of 10 May 2006 and amended by the Annual General Meetings of 11 May 2011 and of 14 May 2014.

The remuneration policy and the remuneration for the Chief Executive Officer is determined by the Board of Directors, acting upon proposals from the Nomination and Remuneration Committee. The Chief Executive Officer is absent from this process, and does not take part in the voting nor the deliberations in this regard. The Nomination and Remuneration Committee ensures that the Chief Executive Officer’s contract with the Company reflects the remuneration policy. A copy of the Chief Executive Officer’s contract is available to any Director upon request to the Chairman.
The remuneration policy and the remuneration for the members of the BGE other than the Chief Executive Officer is determined by the Board of Directors acting upon proposals from the Nomination and Remuneration Committee. The Chief Executive Officer has an advisory role in this process. The Committee ensures that the contract of each BGE member with the Company reflects the remuneration policy. A copy of each such contract is available to any Director upon request to the Chairman.

2. Statement of the remuneration policy used in 2019 for the non-executive Directors and Executive Management 

Non-executive Directors

The remuneration of the non-executive Directors is determined on the basis of six regular meetings of the full Board of Directors per year. A portion of the remuneration is paid on the basis of the number of regular meetings attended in person by the non-executive Director.

Non-executive Directors who are members of a Board Committee receive an additional attendance fee for each Committee meeting attended in person. As an executive Director, the Chief Executive Officer does not receive such attendance fee. 

If the Board of Directors requests the assistance of a Director in a specific matter on account of his or her independence and/or competence, such Director will be entitled, in respect of each session warranting specific travel and time, to a remuneration equal to the applicable amount payable in respect of the Board Committee meeting attended in person. The actual amount of the remuneration of the Directors is determined by the Annual General Meeting for the running financial year.

The remuneration of the Directors is regularly benchmarked with a selected panel of relevant publicly traded industrial Belgian and international references, in order to ensure that persons with competences matching the Group’s international ambitions can be attracted.

Non-executive Directors are not entitled to performance related remuneration such as bonuses, stock related long-term incentive schemes, fringe benefits or pension benefits, nor to any other type of variable remuneration.

Expenses that are reasonably incurred in the performance of their duties are reimbursed to Directors, upon submission of suitable justification. In making such expenses, the Directors should take into account the Board Member Expense Policy. 

The remuneration of the Chairman of the Board of Directors is determined at the beginning of his term of office, and is set for the duration of such term. On the motion of the Nomination and Remuneration Committee, it is determined by the Board of Directors subject to approval by the Annual General Meeting. In making its proposal, the Nomination and Remuneration Committee should consider a clear description of the duties of the Chairman, the professional profile that has been attracted, the time expected to be effectively available for the Group, and an adequate remuneration corresponding to the formulated expectations and regularly benchmarked with a selected panel of relevant publicly traded industrial Belgian and international references. The Chairman, when attending or chairing the meetings of the Board of Directors or any Board Committees, will not be entitled to any additional attendance fee or other remuneration as this is deemed to be included in his global remuneration package.

Executive Managers

Remuneration policy 

The main elements of the Group’s remuneration policy are a base remuneration, a short-term and a long-term variable remuneration, a pension contribution and various other components.

The Group offers competitive total remuneration packages with the objective to attract and retain the best executive and management talent in every part of the world in which the Group is operating. The remuneration of the Executive Management is regularly benchmarked with a selected panel of relevant publicly traded industrial Belgian and international references.

A performance driven culture is important for achieving the Group’s growth aspirations. The following performance processes underpin remuneration decisions:

  • Enterprise Performance Management (EPM), a process managing the Group’s business cycle, including the planning and monitoring of targets and resources, value creation and team accountabilities; and
  • People Performance Management (PPM), a process focusing on the clear alignment of team and individual targets with business priorities, including frequent performance steering and coaching.

The Group’s short-term variable remuneration program is designed to motivate Executive Managers to support and drive the Company’s short-term goals over a one-year performance horizon. Group performance, business unit performance and individual performance drive the ultimate payout. Business performance is measured and monitored by the EPM process, whilst individual performance is measured and monitored by the PPM process.

The Group’s long-term variable remuneration program rewards Executive Managers for their contribution to the achievement of the long-term materialization of the Company’s strategy. The long-term variable remuneration program is delivered by a performance share plan granting awards depending on the achievement of pre-agreed performance conditions set by the Board of Directors over a three-year performance horizon.

Executive Managers are required to build up a personal investment in Company shares and maintain it throughout their assignment as a member of the BGE (in compliance with principle 7.9 of the 2020 Belgian Code on Corporate Governance).

In order to facilitate such personal investment in Company shares, Executive Managers are eligible to participate in a voluntary share-matching plan. A personal investment in Company shares, up to 15% of the gross annual short term variable pay, in year x is matched by the Company with a direct grant of Company shares at the end of year x + 2 provided the Executive Manager holds on to the personal shares. 

Remuneration Chief Executive Officer 

The remuneration package of the Chief Executive Officer consists of a base remuneration, a short-term and a long-term variable remuneration, a pension contribution and various other components. The Chief Executive Officer is entitled to participate in the voluntary share-matching plan for building a personal investment in Company shares.
The remuneration package aims to be competitive and is aligned with the responsibilities of a Chief Executive Officer leading a globally operating industrial group with various business platforms.

The Nomination and Remuneration Committee recommends each year a set of objectives directly derived from the business plan and from any other priorities to be assigned to the Chief Executive Officer. These objectives include both Group and individual financial and non-financial targets and are measured over a predetermined time period (up to three years). Those objectives, and the year-end evaluation of the achievements, are documented and submitted by the Nomination and Remuneration Committee to the full Board of Directors. The final evaluation leads to an assessment, based on measured results, by the Board of Directors of all performance related elements of the remuneration package of the Chief Executive Officer.

The actual amount of the remuneration of the Chief Executive Officer in his capacity as Executive Manager is determined by the Board of Directors acting on a reasoned recommendation from the Nomination and Remuneration Committee.

Remuneration other members of the BGE 

The remuneration package of the BGE members other than the Chief Executive Officer consists of a base remuneration, a short-term and long-term variable remuneration, a pension contribution and various other components. The BGE members are entitled to participate in the voluntary share-matching plan for building a personal investment in Company shares.

The remuneration package aims to be competitive and is aligned with the role and responsibilities of each BGE member leading a globally operating industrial group with various business platforms.

The Chief Executive Officer evaluates the performance of each of the other BGE members and submits his assessment to the Nomination and Remuneration Committee. Objectives are directly derived from the business plan and take into account the specific responsibilities of each BGE member. The achievements measured against those objectives will determine all performance-related elements of the remuneration package. The objectives include Group, business unit and individual targets - both financial and non-financial - and are measured and monitored over a predetermined time period (up to three years) through the EPM and PPM performance processes.

The actual amount of the remuneration of BGE members other than the Chief Executive Officer is determined by the Board of Directors acting on a reasoned recommendation from the Nomination and Remuneration Committee.

Future changes to the remuneration policy

Remuneration policy

Contrary to provision 7.3 of the 2020 Belgian Code on Corporate Governance according to which the Board of Directors should submit the Company’s remuneration policy for non-executive Directors and Executive Management to the General Meeting of Shareholders, the Company will not submit its remuneration policy for approval to the Annual General Meeting of 13 May 2020.

In light of the upcoming implementation of the European Shareholder Rights Directive II  into Belgian law, the Board of Directors will submit the Company’s remuneration policy when the impact of this new Belgian law will be fully known.

Proposed changes in remuneration for non-executive Directors

The Board will submit a proposal to change the remuneration mechanism of non-executive Directors to the upcoming Annual General Meeting of 13 May 2020.

The changes include:

  • a proposal to remunerate non-executive Directors with a fixed annual fee, without additional attendance fees, for the performance of the duties as a member of the Board or as a member of a Board Committee; 
  • a proposal to offer non-Executive Directors, other than the Chairman, the option to receive part of their fixed annual fee in Company shares.

Contrary to provision 7.6 of the 2020 Belgian Code on Corporate Governance according to which non-executive Directors should receive part of their remuneration in the form of shares in the Company, non-executive Directors will be recommended (but not required) to hold the value of one fixed annual fee in Company shares. Despite the non-mandatary character of this share-holding principle, the Company believes that the long-term view of shareholders is fairly represented at the Board considering that:

  • the Chairman is partly remunerated in Company shares subject to a three year lock-up; and
  • seven of the twelve non-executive Directors are appointed upon nomination by the reference shareholder and already hold Company shares (or certificates relating thereto).

3. Remuneration of the Directors in respect of 2019

The amount of the remuneration and other benefits granted directly or indirectly to the Directors, by the Company or its subsidiaries, in respect of 2019 is set forth on an individual basis in the table below.

The remuneration of the Chairman for the performance of all his duties in the Company was set as follows:

  • a one-time welcome award of € 150 000;
  • a fixed amount of € 200 000 per year;
  • a fixed amount of € 300 000 per year converted into a number of Company shares by applying an average share price; the applied average share price will be the average of the last five closing prices preceding the date of the grant; the Company shares will be granted on the last trading day of May 2019, 2020, 2021 and 2022 and will be blocked for a period of three years as from the grant date.

(1)Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement.

 
The remuneration of each Director, except the Chairman, for the performance of the duties as a member of the Board was a set amount of € 42 000, and an amount of € 4 200 for each meeting of the Board attended in person (with a maximum of € 25 200 for six meetings per year).
 
The remuneration of the Chairman of the Audit and Finance Committee, in the capacity as Chairman and member of such a Committee, was an amount of € 4 000 for each Committee meeting attended in person.
 
The remuneration of each Director, except the Chairman and the Chief Executive Officer, for the performance of the duties as a member of a Board Committee (other than the BBRG Committee) was an amount of € 3 000 for each Committee meeting attended in person.
 
The remuneration of each Director, except the Chairman of the Board and the Chief Executive Officer, for the performance of the duties as Chairman or member of the BBRG Committee was an amount of € 3 000 for each BBRG Committee meeting held in person and € 1 500 for each BBRG Committee meeting held per conference call (with a maximum of € 21 000 per year).
 
In € Fixed amount Amount for
board attendance
Amount for
committee attendance
Total
Chairman
Bert De Graeve (until May 2019) 104 167     104 167
Jürgen Tinggren (as of June 2019)(1)(2)
566 666
    566 666
Chief Executive Officer
Matthew Taylor 42 000 25 200 0 67 200
Other Board members
Celia Baxter 42 000 25 200 12 000 79 200
Leon Bekaert
21 000 12 600 3 000 36 600
Gregory Dalle 42 000 25 200 21 000 88 200
Charles de Liedekerke 42 000 25 200 25 500 92 700
Christophe Jacobs van Merlen 42 000 25 200 15 000 82 200
Hubert Jacobs van Merlen 42 000 25 200 24 000 91 200
Maxime Jadot 21 000 12 600 3 000 36 600
Pamela Knapp 42 000 25 200 17 000 84 200
Martina Merz 21 000 12 600 15 000 48 600
Colin Smith 42 000 25 200 7 500 74 700
Caroline Storme
21 000 21 000 0 42 000
Emilie van de Walle de Ghelcke
42 000 25 200 0
67 200
Henri Jean Velge 42 000 25 200 12 000 79 200
Mei Ye 42 000 25 200 0 67 200
Total Directors’ Remuneration(2)       1 707 833

(1)Combination of a fixed fee, a one-time welcome award of € 150 000 and a share grant of € 300 000.
(2)Erratum: The fixed fee paid to Chairman Jürgen Tinggren in 2019 amounted to € 566 666 (instead of € 466 666 as mentioned in the originally published annual report). Consequently, the total remuneration paid to Directors in 2019 amounted to € 1 707 833 (instead of € 1 607 833 as mentioned in the originally published annual report).

4. Remuneration of the Chief Executive Officer in respect of 2019 in his capacity as a Director

In his capacity as a Director, the Chief Executive Officer is entitled to the same remuneration as the non-executive Directors, except the remuneration for attending Board Committee meetings for which he receives no compensation (cf. the table above). 

The remuneration received by the Chief Executive Officer as a Director is included in the base remuneration mentioned in the table in section 6 below.

5. Performance-related remuneration: criteria, term and method of performance evaluation

The remuneration package of the Chief Executive Officer and the other members of the BGE comprises the following performance related elements:

  • a short-term variable remuneration, with objectives related to the annual business plan. The objectives are set at the beginning of the year by the Nomination and Remuneration Committee and are approved by the Board of Directors. Those objectives include a weighted average of Group, business unit and individual targets, both financial and non-financial, which are relevant in evaluating the annual performance of the Group and progress achieved against the agreed strategic objectives; they are evaluated annually by the Board of Directors. One third of the annual short-term variable remuneration of the Chief Executive Officer is deferred over a period of twenty-four months; no deferral is applicable for the other members of the BGE.
  • a long-term variable remuneration in the form of a grant of performance share units which will vest following a vesting period of three years, conditional to the achievement of pre-set performance targets.

The set of 2019 performance criteria used to evaluate the short-term remuneration is a basket of financial targets (sales, underlying EBITDA, capital expenditure and working capital) and non-financial targets (such as safety, implementation of transformation programs, improvement on engaged and empowered teams), combined with specific individualized objectives.

The target value of the short-term variable remuneration of the Chief Executive Officer is 75% of fixed pay, and 60% of fixed pay for the other members of the BGE. The maximum opportunity is 200% of this target.

The performance criteria used to evaluate the long-term remuneration are specific company financials; more in particular an EBITDA growth target and a cumulative cash flow target.

The target value of the long-term variable remuneration of the Chief Executive Officer is 85% of fixed pay, and 65% of fixed pay for the other members of the BGE. The maximum vesting is 300% of the target.

At par level, the value of the variable remuneration elements of the Chief Executive Officer and the other members of the BGE exceeds 25% of their total remuneration. More than half of this variable remuneration is based on criteria over a period of minimum three years.

6. Remuneration of the Chief Executive Officer in respect of 2019

The amount of the remuneration and other benefits granted directly or indirectly to the Chief Executive Officer, by the Company or its subsidiaries, in respect of 2019 for his Chief Executive Officer role is set forth below.

Matthew Taylor Remuneration(1) Comments
Base remuneration € 822 265 Includes base remuneration as well as  foreign board fees(2)
Short-term variable remuneration € 623 102 Annual variable remuneration, based on 2019 performance

Long-term variable remuneration:

32 671 units

Number of performance share units granted (performance period 2019-2021)

Pension
€ 168 203 Defined Contribution Plan
Share-matching   4 581 units 2019 Company matching of 2017 personal investment in Company shares 
Other remuneration elements 52 880
Includes company car and risk insurances

(1)In respect of 2019, in €.
(2)The base remuneration includes the remuneration received by the Chief Executive Officer in his capacity as a Director.

7. Remuneration of the other Bekaert Group Executive members in respect of 2019

The amount of the remuneration and other benefits granted directly or indirectly to the BGE members other than the Chief Executive Officer, by the Company or its subsidiaries, in respect of 2019 is set forth below on a global basis.

  Remuneration(1) Comments
Base remuneration € 2 610 542 Includes base remuneration as well as foreign board fees
Short-term variable remuneration € 1 525 147 Annual variable remuneration, based on 2019 performance

Long-term variable remuneration:

104 935 units

Number of performance share units granted (performance period 2019-2021)

Pension
€ 392 043 Defined Contribution and Defined Benefit Plan
Share-matching   7 668 units 2019 Company matching of 2017 personal investment in Company shares
Other remuneration elements 377 273
Includes company car, risk insurances, school fees and housing allowance

(1)In respect of 2019, in €.

The above table includes pro rata remuneration reflecting changes in the composition of the BGE as described in an earlier section of this Corporate Governance Statement.

8. Share-based remuneration for Executive Management granted in 2019

As of 2018, the long-term incentives are delivered solely through performance share units granted under the 2018-2020 Performance Share Plan proposed by the Board of Directors and approved by the Annual General Meeting on 9 May 2018. 

Up to 2017 long-term incentives have been based on a combination of stock options (or, outside of Europe, stock appreciations rights) and performance share units.

The Chief Executive Officer and the other members of the BGE participate in a voluntary share-matching plan, whereby a personal investment in Company shares in year x is matched by the Company in year x+2 provided the Executive Manager holds on to the personal shares.

Performance Share Units 

The 2018-2020 Performance Share Plan offers rights with respect to Company shares to the members of the BGE, the senior management and a limited number of management staff members of the Company and a number of its subsidiaries (the rights, “performance share units” and the shares, “performance shares”).

Each performance share unit entitles the beneficiary to acquire one performance share for free subject to the conditions of the performance share plan. These performance share units will vest following a vesting period of three years, conditional to the achievement of pre-set performance targets.

The performance targets are set annually by the Board of Directors, in line with the Company strategy. Company financials retained as performance targets covering the 2019-2021 performance period are EBITDA growth and elements of cumulative cash flow.

The precise vesting level of the performance share units will depend upon the actual achievement level of the vesting criterion, with no vesting at all if the actual performance is below the defined minimum threshold. Upon achievement of said threshold, there will be a minimum vesting of 50% of the granted performance share units; full achievement of the agreed vesting criterion will lead to a par vesting of 100% of the granted performance share units, whereas there will be a maximum vesting of 300% of the granted performance share units if the actual performance is at or above an agreed ceiling level.

Upon vesting, the beneficiaries will also receive the value of the dividends relating to the previous three years with respect to such (amount of) performance shares to which the effectively vested performance share units relate.

The target value of the performance share units of the Chief Executive Officer is 85% of fixed pay, and 65% of fixed pay for the other members of the BGE. The performance share units are granted to the beneficiaries for free.

Performance share units related to the performance period 2019-2021 have been granted to the Chief Executive Officer and the other members of the BGE in February 2019. BGE members appointed during the year were granted performance share units during the mid-year grant in July 2019. 

The vesting criterion with regard to the performance share units issued in December 2016, in relation to the 2017-2019 performance horizon, did not meet the threshold level. Consequently, none of the performance share units granted in December 2016 vested. 

Name Number of performance share units granted in 2019
(performance period 2019-2021)
Number of performance share units vested in 2019 (performance period 2017-2019)
 
Matthew Taylor
32 671 -
Juan Carlos Alonso(1) 9 391 -
Taoufiq Boussaid(1) 10 478  -
Rajita D’Souza
11 897 -
Arnaud Lesschaeve
6 142 -
Jun Liao
12 663 -
Oswald Schmid - -
Curd Vandekerckhove
11 962 -
Stijn Vanneste 9 321 -
Lieven Larmuseau(2) 10 503
-
Piet Van Riet(2)
10 612
-
Frank Vromant(2)
11 966
-

(1)Grant in 2019 includes a one-time sign on award.
(2)The table includes Executive Managers who were a member of the BGE prior to year-end 2019. Changes in the composition of the BGE are disclosed in an earlier section of this Corporate Governance Statement.

Stock Options

Set out below are the number of stock options exercised or forfeited in 2019 in relation to the previous long-term incentive plans.

The options were offered to the beneficiaries free of charge. Each accepted option entitles the holder to acquire one existing share of the Company against payment of the exercise price, which is conclusively determined at the time of the offer and which is equal to the lower of: (i) the average closing price of the Company shares during the thirty days preceding the date of the offer, and (ii) the last closing price preceding the date of the offer.

Subject to the closed and prohibited trading periods and to the plan rules, the options can be exercised as from the beginning of the fourth calendar year following the date of their offer until the end of the tenth year following the date of their offer.

The stock options that were exercisable in 2019 are based on the grants of the Stock Option Plan 2015-2017 and on the predecessor plans to the Stock Option Plan 2015-2017.

The terms of the earlier plans are similar to those of the Stock Option Plan 2015-2017, but the options that were granted to employees under the predecessor plans to the Stock Option Plan 2010-2014 took the form of subscription rights entitling the holders to acquire newly issued Company shares, while self-employed beneficiaries were entitled to acquire existing shares.

Name Number of stock options exercised in 2019 Number of stock options forfeited in 2019
Matthew Taylor
- 0
Rajita D'Souza  - 0
Jun Liao(1) - 0
Curd Vandekerckhove
- 5 400
Stijn Vanneste
- 0
Lieven Larmuseau(2)
- 0
Piet Van Riet(2) - 0
Frank Vromant(2)
- 5 400

(1)Stock Appreciation Rights.
(2)The table includes Executive Managers who were a member of the BGE prior to year-end 2019. Changes in the composition of the BGE are disclosed in an earlier section of this Corporate Governance Statement.

Share-matching Plan

The Chief Executive Officer and the other members of the BGE are required to build and maintain a personal shareholding in Company shares.  In order to facilitate this, the Company offers a voluntary share-matching plan.

The share-matching plan matches a personal investment in Company shares in year x with a direct grant of Company shares at the end of year x + 2 provided the Executive Manager holds on to the personal shares.  

The table below sets forth the number of shares matched by the Company in December 2019 in relation to the personal investment in Company Shares in March 2017:

Name Number of matched shares
Matthew Taylor
4 581
Rajita D'Souza  1 254
Curd Vandekerckhove 1 421
Stijn Vanneste
1 043
Lieven Larmuseau(1)
1 266
Piet Van Riet(1)
1 383
Frank Vromant(1) 1 301

(1)The table includes Executive Managers who were a member of the BGE prior to year-end 2019. Changes in the composition of the BGE are disclosed in an earlier section of this Corporate Governance Statement.

9. Severance pay for Executive Management

All Executive Managers’ contractual arrangements provide for a notice period of twelve months except for the Divisional CEO Steel Wire Solutions and the Divisional CEO BBRG. These two Executive Managers entered into a labor contract before their appointment as Executive Manager and therefore existing labor law forms the basis for their severance arrangement.

10. Departure of Executive Managers

No member of the Executive Management has left the Company during 2019.

11. Company’s right of reclaim

The Board has discretion to adjust (malus) or reclaim (claw back) some or all of the value of awards of performance related payments to the Executive Management in the event of

  • significant downward restatement of the financial results of Bekaert,
  • material breach of Bekaert’s Code of Conduct or any other Bekaert compliance policies,
  • breach of restrictive covenants by which the individual has agreed to be bound,
  • gross misconduct or gross negligence by the individual, which results into significant losses or serious reputation damage to Bekaert.