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Remuneration report

General

Total remuneration for all staff members amounted to €14.9 million (94% fixed and 6% variable) in 2021, an increase on the previous year (€14.3 million), driven by a higher average number of FTEs. Due to the COVID-19 pandemic, the Management Board decided not to index the salaries of all employees in 2021.

The variable bonus scheme has a collective component that includes criteria such as the realised operational result, GRESB score, tenant satisfaction score and increase in gross rental income. It also includes an individual component and in some cases a team component. Variable remuneration is only paid, in full or in part, if the targets are met. In 2021, 3 out of 4 targets were met.

The average ratio of the annual total compensation for the highest compensated individual to the median annual total compensation for all employees (excluding the highest-compensated individual) was 8.7 in March 2021 (March 2020: 9.0).

Remuneration of Management Board and other Identified Staff

Vesteda adheres to the Alternative Investment Fund Managers Directive (AIFMD) and the Dutch Financial Supervision Act, pursuant to which Vesteda has implemented a balanced remuneration policy in relation to the remuneration of Identified Staff. The Management Board together with the Management Team members are considered Identified Staff, as well as the Compliance Officer and the Internal Audit Manager.

Vesteda’s remuneration policy is clear and transparent and aims to be closely aligned with its strategy, business targets and the overall interests of Vesteda. It is also aligned with and a contributing factor to adequate and effective risk management. It aims to prevent management from taking risks that are not compatible with Vesteda’s risk profile. In addition, the remuneration policy is constructed in such a way that it avoids financial incentives that may encourage irresponsible risk taking in Vesteda’s operational and financial policies.

The remuneration policy aims to contribute to the integrity and solidity of the company and to the long-term objectives of the company and the interests of Vesteda’s stakeholders. In this light, it is deemed essential that Management is focused on achieving concrete and ambitious targets and take into account sustainability risks in the day-to-day operations. The remuneration of the Identified Staff is aimed at preventing the taking of irresponsible risks for personal gain.

The total remuneration comprises a fixed and a variable component. The variable component consists of 60% direct and unconditional and 40% indirect and conditional remuneration. The variable component is paid 50% in cash and 50% in phantom shares. The phantom shares are subject to a retention period of one year after the unconditional granting. Vesteda does not grant guaranteed variable remuneration.

The indirect component can be subject to a correction by the Supervisory Committee for three years. After this period, the indirect component is converted into an unconditional granting. The purpose of this retention period is to ensure that the focus of Management is directed towards Vesteda’s business continuity and long-term objectives, which include sustainability objectives. If the Supervisory Committee believes that Vesteda faces undesirable results due to, for example, irresponsible risk taking on the part of the grantee, it could decide to apply a significant downwards adjustment of the indirect component.

The aforementioned variable remuneration entitles:

  • The CEO to 26.6% of base salary for ‘on-target’ performance, with a maximum of 40%.

  • The CFO to 20% of base salary for ‘on-target’ performance, with a maximum of 30%.

  • The Management Team to 20% of base salary for ‘on-target’ performance, with a maximum of 30%.

The overall remuneration of Identified Staff is not disproportionately dependent on achieving certain individual targets, which mitigates the risk that unsound business decisions are taken to the detriment of (sustainability) targets in the interest of personal gain.

The variable part of the remuneration depends on whether set targets are met.

The following principles are applied:

  • The targets should reflect a fair balance between:

    • Long-term and short-term goals.

    • Company goals and individual goals.

    • The interests of the various stakeholders of Vesteda.

    • Financial and non-financial criteria.

    • Qualitative and quantitative criteria.

  • Individual targets should have limited impact on the total remuneration.

  • A material qualitative part of the variable component is at the discretion of the Supervisory Committee.

  • Part of the variable remuneration will be invested in Vesteda and has a lock-up period of three years.

The targets that are related to the overall performance of the company should represent 70% of the target setting. The targets should be ambitious and promote outperformance. Underperformance on a specific target means no allocation of that variable remuneration component will take place.

The targets are closely linked to the goals that are set in Vesteda’s current Business Plan and are reviewed on a quarterly basis by the Nomination and Remuneration Committee. The Supervisory Committee shall make the final assessment on whether the set targets have been achieved or not. Qualitative target achievements are based upon 360 degree interviews, self assessments and observations of all supervisory committee members. Quantitative targets are calculated and verified by Vesteda’s business control department.

The table below provides an overview of the total remuneration of the Management Board and other Identified Staff. The remuneration is divided into three components: base salary, variable bonus and social security charges & pension contributions. The Compliance Officer and the Internal Audit Manager do not receive a variable remuneration.

Remuneration of the Management Board and other Identified Staff

(€ thousand)

2021

2020

 

Management Board

Other Identified Staff*

Management Board

Other Identified Staff*

Base salary

710

572

708

661

Variable remuneration charges 2021 (for future cash or shares)

170

76

170

86

Social security charges & pension contributions

81

126

78

144

Subtotal

961

774

956

891

Release of variable remuneration provided for in 2019

-

-

(186)

-

Total

961

774

770

891

*Other Identified Staff as per year-end.

Please refer to Note 28 of the consolidated financial statements for more information about the remuneration of the Management Board and other Identified Staff.

Remuneration of the Supervisory Committee

The total remuneration for the five Supervisory Committee members was €186 thousand in 2021 (2020: €218 thousand). The compensation of the Supervisory Committee members remained unchanged, being €44 thousand for the chairman and €31 thousand for the other members. In addition, each member received an expense allowance of €2,500. The total charges were lower in 2021 when compared with the previous year due to the implementation of the VAT opting-in scheme for Supervisory Committee remuneration, which started in the course of 2021.