Remuneration report

General

Total remuneration for all staff members amounted to €15.8 million (92% fixed and 8% variable) in 2022, an increase compared to the previous year (€14.9 million). In 2022, we implemented a 4% salary indexation. In addition, we made a one-off payment of €500 per employee in January 2022 and a one-off payment of €750 per employee in December 2022, preceding the wage indexation of 2023.

The variable bonus scheme has a collective component that includes criteria such as the realised operational result, GRESB score, tenant satisfaction score and the number of installed solar panels. 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 2022, all four 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 8.9 in March 2022 (March 2021: 8.7).

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 that it takes 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 CIO and COO to 20% of base salary for ‘on-target’ performance, with a maximum of 30%;

• The HR Director to 8% of base salary for ‘on-target’ performance, with a maximum of 12%.

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 67% 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. In the event of a loss (negative result after tax, so including revaluation, excluding any derivative results), no variable remuneration will be paid.

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 on 360-degree interviews, self-assessments and observations of all Supervisory Committee members. Quantitative targets are calculated and verified by Vesteda’s business control department.

Remuneration of Management Board and other Identified Staff in 2022

The remuneration of the Management Board and other Identified Staff is divided into the following components: base salary, variable bonus, social security charges & pension contributions. In addition, for 2022, a compensation was paid for income tax on capital repayments in 2018 and 2019. The Compliance Officer and the Internal Audit Manager do not receive a variable remuneration.

Compensation for income tax capital repayments 2018 and 2019
In 2018 and in 2019, Vesteda redeemed and paid out to participants a total of €13.89 per participation right related to the proceeds of two residential portfolio sales (in total €425.5 million). Under the phantom share programme these capital repayments, reducing the net asset value of the phantom shares, were subject to income taxes. As the alignment of the interests of the Management Board and the Participants is an important objective of the Remuneration policy and the Phantom Share Plan, the Supervisory Committee is of the opinion that the income taxes paid by the Management Board related to the capital repayments were at odds with the interests of the Participants. The Supervisory Committee therefore determined in 2022 that the Management Board would be compensated for the income taxes paid on these two specific capital repayments, after careful review and extensive consultation with our tax advisors and the tax authorities. The taxation of the Phantom Shares of the Participants remained unchanged.

Variable remuneration charges
As determined by the Supervisory Committee, the Management Board and the Management Team members achieved on average a score of 70% of the ‘maximum’ targets in 2022 (2021: 71%). However, in accordance with Vesteda’s remuneration policy, the Management Board and the Management Team members are not entitled to receive any variable remuneration in case the net result of Vesteda is negative. As the result after tax of Vesteda in 2022 is negative (-€12 million), the Management Board and the Management Team members received no variable remuneration over 2022.

Remuneration of the Management Board and other Identified Staff

^{*Other Identified Staff as per year-end.}

Please see Note 29 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 €181 thousand in 2022 (2021: €186 thousand). The compensation for the chairman was €44 thousand and for the other members €31 thousand. In addition, each member received an expense allowance of €2,500.