REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS
The annual general meeting of shareholders determines the remuneration of the Members of the Board of Directors for attending Board and committee meetings. In 2018, the shareholders decided to maintain the fees paid to the directors at the previous year’s level with a majority of 99.106%. Directors each receive a fixed fee of EUR 40,000 per year, whereas the Vice Chairmen each receive an annual fixed fee of EUR 48,000 and the Chairman receives a fee of EUR 100,000 per year.
A director who chairs one of the committees set up by the Board, if not the Chairman of the Board of Directors, receives an additional remuneration of EUR 8,000 per year. A director who chairs the Audit and Risk Committee, if not the Chairman of the Board of Directors, receives an additional remuneration of EUR 9,600 per year.
The shareholders also maintained the fees at EUR 1,600 for each Board meeting or Board committee meeting they attended, except for the meetings of the Audit and Risk Committee for which directors receive EUR 1,920 per meeting. A director participating in more than one committee meeting on the same day will receive the attendance fee for one meeting only. Half of the attendance fee is paid if the director participates in the meeting via telephone or videoconference.
The fees paid to the Board have not been increased since 2008, except for an increase paid to the members of the Audit and Risk Committee approved by the shareholders in 2015.
All these fees are net of any Luxembourg withholding taxes. The total net remuneration fees paid for the year 2017 to the members of the Board of Directors (net of the Luxembourg withholding tax) amounted to EUR 1,063,520 of which EUR 321,920 was paid as variable fees, with the remaining EUR 741,600 representing the fixed part of the Board fees. The gross overall figure for the year 2018 was EUR 1,329,400.
COMPANY STOCK OWNED BY MEMBERS OF THE BOARD OF DIRECTORS
On 31 December 2018, the members of the Board of Directors and their closely associated family members owned a combined total of 765,332 shares and FDRs (representing 0.13% of the company’s share capital).
Transactions made by Members of the Board of Directors are published on the company’s website under Management Disclosures. In accordance with the company’s dealing code, directors require prior permission before dealing in SES shares or FDRs.
REMUNERATION OF THE MEMBERS OF THE EXECUTIVE COMMITTEE
The remuneration of the members of the Executive Committee is determined by the Remuneration Committee. The total gross remuneration paid to the eight members of the Executive Committee as of 31 December 2018 amounted to EUR 6,263,464.75. It is comprised of a fixed part and a variable part. The fixed part (EUR 4,020,931.41) is composed of the base salaries (EUR 3,082,300.16) as well as the company’s social security contributions, the company’s pension contributions, life and disability insurance, company car and other benefits (EUR 938,631.25).The variable part (EUR 2,242,533.34) is composed of the bonuses (EUR 818,446.64), the 2018 exercised Performance and Restricted shares granted in 2015 (EUR 430,193.52), stock options that were exercised in 2018 (EUR 613,000.00) and other benefits (EUR 380,893.18). The total gross remuneration paid to the two departing Executive Committee members amounted to EUR 4,397,571.27, comprising a fixed part of EUR 467,228.11 and a variable part of EUR 3,930,343.16.
The annual bonus is composed of three elements: (i) the financial performance of the company; (ii) the individual business objectives of the Executive Committee members; and (iii) a discretionary element determined by the Remuneration Committee after reviewing the company’s achievements. These three elements are weighted in the following proportions: 50%; 25%; and 25%, respectively.
The financial performance measures both the actual (current year) vs. actual (previous year) performance and the actual (current year) vs. budget (current year) performance. The metric used for the actual vs. actual performance is the reported Group EBITDA at a constant exchange rate. This metric measures the profitable growth of the business and is also reported to investors. The actual vs. budget performance takes into account four financial metrics: revenues, operating expenses, group profit and net operating cash-flow. The targets for those measures are set during the annual budget process and approved by the Board of Directors.
The individual business objectives are set at the beginning of the year by the Remuneration Committee. At year-end, the Remuneration Committee assesses in detail the performance of the Executive Committee to determine the target achievement.
During 2018, the members of the Executive Committee were awarded a combined total of 1,870,242 options to acquire company FDRs at an exercise price of EUR 12.67, the price being based on the average of the closing price on Euronext Paris of the first 15 trading days following the Remuneration Committee meeting at which the options were authorised. A quarter of 995,242 options vested on 1 January 2019, and the remaining quarters will vest on 1 January 2020, 2021 and 2022, respectively. One fifth of 875,000 options vested on 1 June 2018, and the remining four fifths will vest on 1 June 2019, 2020, 2021 and 2022, respectively. In 2018, members of the Executive Committee were granted 40,826 restricted shares as part of the company’s long-term incentive plan, as well as 122,478 performance shares. These shares will vest on 1 June 2021.
The executive long-term equity plans permit the grant of three equity types: (i) stock options; (ii) restricted shares; and (iii) performance shares. The total grant value is divided into one-third of stock options, one-sixth of restricted shares, and one half of performance shares.
The stock option is a standard call option with a maturity of 10 years. The final strike price is determined as the fair market value with an average of 15 days closing prices at the Paris stock exchange after the numbers of options have been determined by the Remuneration Committee. The vesting period is over four years with a yearly vesting of 25% on 1 January of each year following the grant.
The Restricted Shares are FDRs granted to the executives with the sole condition that, at vesting, the executive must be employed by SES. The Restricted Shares vest on 1 June of the third year following the year of their grant. Performance Shares are FDRs granted to the executives with two additional vesting conditions. Those conditions reflect two performance criteria, that must be fulfilled:
1. The compounded three years adjusted Economic Value Add (adjusted EVA) must be positive; and
2. Over the three-year vesting period, the personal objectives must be met and can only be one year slightly below expectations.
The adjusted EVA used for remuneration purposes has the Invested Capital reduced for the assets under construction to ensure focus of management on long-term investments.
When exercising their vested stock options and their vested shares, the executives must do this in accordance with the SES Dealing Code (including requiring the prior authorisation from the Corporate Secretary and/or Chief Financial Officer, and provide selling orders outside of a closed period). As for the members of the Board, exercises by members of the Executive Committee are reported on the SES website: https://www.ses.com/investors/shareholder-information/shares/management-disclosures.
During 2018, Mr Martin Halliwell, Mr Ferdinand Kayser and Mr Christophe De Hauwer sold some or all of the restricted and performance shares that vested on 1 June 2018. During 2018, Mr Steve Collar exercised stock options from the 2018 stock option grant to acquire A-shares. Each member of the Executive Committee is entitled to two years of base salary in case his or her contract is terminated without cause. A member of the Executive Committee who resigns is not entitled to any compensation.
COMPANY STOCK OWNED BY MEMBERS OF THE EXECUTIVE COMMITTEE
On 31 December 2018, the eight members of the Executive Committee owned a combined total of 213,794 shares and FDRs (representing 0.04% of the company’s share capital), 306,020 unvested restricted and performance shares and 3,408,569 options. Transactions made by members of the Executive Committee are published on the company’s website under Management Disclosures. Members of the Executive Committee are required to comply with the company’s dealing code.