1 DRAFT MINUTES of the Annual General Meeting ... - SBM Offshore

taken in the remuneration policy and she complimented the board for doing so. The positive elements in the
proposed policy are (i) the shift from short- to long-term remuneration elements, (ii) the changes in the peer
group, (iii) the integration of CSR factors in the performance criteria within the remuneration policy and (iv)
the incorporation of a claw-back and the power of the Supervisory Board to amend employment contracts.
She noted that no extra performance criteria were attached to the share matching element. Several
companies had included a share matching element in their remuneration policy, but this extra assignment of
shares was linked to performance criteria. She expressed the hope that SBM would in the future consider
introducing this element (first remark). Her second remark referred to the performance shares that may be
assigned if SBM performs under the median of the peer group. Proper Corporate Governance implies that
shares should only be assigned if SBM performs above the median. She noted that she had stated before
that the implementation of CSR factors in the remuneration policy was the right choice, but there was still
great uncertainty about how and what targets were involved (third remark). She hoped that this would
become clearer in the future. The Chairman thanked Ms Lindeman and noted that these were three points
that would be answered in more detail. He gave the floor to Mr Gugen. Mr Gugen replied, in terms of the
share matching element on the STI, that it's helpful to step back and think about how the STI works. The
STI is primarily a cash tool and it is a reward for the performance in the previous year. Quite a lot of thought
was given to the question that was raised by Mrs Lindeman, but what has been done with the STI is that
SBM could and probably, arguably, should pay all of that in cash. Because there was the intention to move
and to keep the onus wherever possible on shares as opposed to cash, we have chosen to take an element
of that reward for that performance in the previous year, put it into shares, hold it back and then release it
later. The performance criteria for that is in fact the previous year’s performance against which it is
measured. It would be strange to introduce a second performance and different element in relation to
something which is geared very specifically to a reward for the previous element. The future element is
rewarded by the LTI in a very deliberate form. The Chairman added that staff retention is also an element.
Mr Gugen indicated that by having a share-based element and by holding that share-based element back,
there is an incentive that the good people have to stay with the Company rather than to be stolen away. In
this industry the competition for people is not going down. It became quite fierce. In relation to performance
under the median of the peer group (second remark), this is something which was given some thoughts and
one of the key reasons that we ended up where we are is that remuneration is targeted by reference to the
median, not the upper quartile. Particularly for the TSR it seemed a little anomalous to have a threshold that
was already at median and above and to reward on median overall as well. He indicated that the Committee
will continue to study, because the TSR is only introduced. He indicated that the Committee wants to see
how it works and wants to make sure that it does what it should do, which is to align the managers with the
shareholders and that they are only getting rewarded in fact if the shareholders would get rewarded. In
terms of CSR and lack of clarity (third remark) he indicated that it’s deliberately lack of clarity, because the
Committee is trying to learn and will get into more detail going forwards. He stated that he will see how CSR
could migrate further through the remuneration mechanisms going forwards.
Mr Heineman noted (first remark) that the Company would like to look more closely at other countries in
terms of remuneration, principally the United States. In addition (second remark), it was much easier to
dismiss employees in the United States than in the Netherlands. He therefore questioned this point. He also
noted (third remark) that he believed that remuneration in shares would induce managers to take high-risk
decisions whose effect may not transpire until years later. Decisions that may at first have advantages may
ultimately prove catastrophic. Mr Gugen answered that Mr Heineman asked about looking abroad and if
looking abroad meant looking to the United States of America (first remark). Inevitably most of SBM's
competitors are in the United States of America, but looking at the 18 companies that make up the peer
group, which is in the documentation, one can see that only roughly half are American. SBM deliberately
worked at that to not make it a completely US-centric approach, but one shouldn’t lose sight of the fact that
the principle competition for a lot of the top quality people that SBM has is inevitably coming from the United
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