Annual Report 2010 - SBM Offshore

Implementation of Remuneration Policy
2008 (RP 2008)
Base salary
The fixed part or base salary of the Managing Directors’
total remuneration relates to the activities of the
Company and the need to attract highly-qualified,
internationally-orientated management. The base salary
is reviewed on a regular basis, but at least annually to
ascertain that its level remains competitive.
Pension
Managing Directors participate in a defined benefits
Company pension plan which provides for retirement
at the age of 62 with a maximum pension equal to 70%
of final salary, earned at the rate of 2% for each year of
service within the SBM Offshore group of companies.
Premium is payable for 2/3 by the Company and for
1/3 by the Managing Director which amount is capped
at 20% of the base salary. This plan is reviewed on a
regular basis by the Supervisory Board who can make
adjustments when appropriate.
Variable Remuneration
The variable part of the Managing Directors’ remuneration
is linked to the achievement of predetermined,
measurable and influenceable targets, expressed
as target zones. It is designed to strengthen the
Managing Directors' commitment to the Company and
its objectives and to align their interests with those of
shareholders.
The variable remuneration consists of:
• a Short-Term Incentive: an annual bonus linked to
the Company’s performance (Economic Profit) over
the past financial year, payable partly in cash (80%)
and partly in shares (20%). “At-target" performance
will result in a bonus payment equal to 100% of
the annual base salary received by the Managing
Director in the performance year to which the
bonus relates. The target zone for the Short-Term
Incentive includes a threshold, i.e. bonus pay-out
level if the minimum performance level is realised
for any payment to occur (20% of annual base salary),
as well as a cap, i.e. maximum bonus pay-out
level (200% of annual base salary). To further align
the interests of the Managing Director with those
Report of Board of Management
of the shareholders, there is a matching share
arrangement aimed at strengthening the Managing
Directors’ longer-term commitment to the Company.
This matching share arrangement consists of the
conditional grant of a number of shares equal to the
number of shares granted as part payment of the
bonus. These shares become unconditional upon
completion of a three-year vesting period, subject to
the Managing Directors’ continued employment with
the Company until the vesting date. In case of retirement
during the vesting period, matching shares will
vest pro-rata. In case the Managing Director resigns
during his term as Managing Director, all unvested
matching shares lapse immediately.
• a Long-Term Incentive: an award of conditional
performance shares linked to the Company’s performance
(annual average normalised growth of
earnings per share) over three financial years, starting
with the year in which the conditional shares are
awarded. The number of conditional performance
shares at the award date is, in value, the equivalent
of 100% of the Managing Director’s base annual
salary of the year preceding the year in which
the conditional award is made. The target zone
for the Long-Term Incentive includes a threshold
below which no performance shares will vest. This
threshold is 50% of the targeted annual averaged
normalised EPS growth. At-target performance
means realising a challenging averaged normalised
EPS growth and results in a vesting of 100% of the
number of shares granted. The maximum earnings
possibility under the LTI plan is limited to 150% of
the number of shares granted. For the year 2010, the
target annual averaged normalised EPS growth was
set at 10% by the Supervisory Board, upon recommendation
of the Remuneration Committee. The
vesting period is three years. Vested performance
shares are to be retained on a blocked securities
account by the Managing Directors for a period of
two years from the vesting date.
•
New Remuneration Policy 2011 (RP2011)
Reasons for reviewing the existing RP 2008
It is part of the Company’s policy to review the
Remuneration Policy every three years. The RP 2008
SBM Offshore – Annual Report 2010 37