TomTom 2007 Annual Report Download - page 35

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TOMTOM ANNUAL REPORT 2007
REMUNERATION REPORT
Application in 2007
On the basis of a benchmark of salaries carried out
by an independent consultancy, the Supervisory
Board agreed to continue the same policy as in
2006 with respect to the base salaries and bonuses
of Management Board members.
The Supervisory Board revised the Remuneration
Policy for the Management Board to include the
Company’s Share Based Incentive Plan (see below).
The revised Remuneration Policy was approved
at the Annual General Shareholders Meeting in
April 2007.
In 2007, the remuneration of the Management
Board consisted of (i) fixed remuneration, (ii)
variable remuneration and (iii) long-term incentives
(performance shares).
(i) Fixed remuneration
The fixed remuneration consists of a base
salary plus 8% holiday allowance where
applicable, which includes pension, life and
disability insurance, and health insurance.
Base salaries are subject to the usual statutory
deductions.
Membersof the Management Boardare eligible
to participate in the Company’s defined
contribution pension plan. The Company’s
contribution to the pension of each member
of the Management Boardis a maximum of 10%
of base salary.
(ii) Variableremuneration
In addition to their fixed remuneration,
membersof the Management Board are eligible
to participate in the management team bonus
scheme, which is subject to approval by the
Supervisory Boardand based on performance
criteria. For 2007, the bonus pool was
established at a percentage of profit before
tax and was consistent with the bonus pool
for 2006.
(ii) Long-term incentive
The membersof the Management Board are
eligible to participatein the Company’s2007
Share-Based Incentive Plan. Performance
criteria for vesting of performance shares were
established by the Supervisory Boardfor
performance shares granted to Management
Boardmembersduring the year 2007.
For details of the remuneration of the
Management Board, please refer to the notes to
the financial statements, which are included in
this annual report.
Share Based Incentive Plan 2007
At the Annual General Meeting of Shareholders
in April 2007, a share-based incentive plan was
adopted as a long-term incentive, replacing the
previous 2005 Share Option Plan. The replacement
was proposed at the shareholders meeting with a
view to TomTom’s continued growth and changes in
market practice. Options granted under the 2005
Share Option Plan will continue to be governed by
the rules of that plan.
The purpose of the introduction of the share-based
incentive plan is to offer a more stable long-term
incentive. The plan provides a direct link between
the long-term performance of the Company and the
individual’s reward, according to pre-determined
performance conditions. The performance
conditions apply to vesting, assuming a ratio
between total shareholder return, ranked against
the other AEX funds, and earnings per share
growth targets. In accordance with market practice,
the period of vesting and performance
measurement will be three years.
The share-based incentiveplan provides for awards
in performance shares; a performance share is a
right topayment in cash equal to value of the
TomTom share at vesting. The plan has been
benchmarked against the market and is in line
with market best practice. The size of awards for
the Management Board are at the median level
of the market.
Employment contracts
Membersof the Management Boardhave an
employment contract with the Company. The
contracts are entered into for an indefinite period
of time. However, the term of office of members of
the Management Board is four years, after which
the appointment can be renewed for another period
of not morethan four years at a time. In the event
that the employment of a member of the
Management Boardis terminated by or on the
initiative of TomTom, he or she shall be entitled
to a fixed amount of 50% of his or her annual base
salary, including holiday allowance, unless the
employment is terminated for causes within the
meaning of the articles 7:677 sub 1 and 7:678 of
the Dutch Civil Code, in which circumstances the
Management Boardmember is not entitled to any
severance. This amount will be due in addition to
the salary the Company has topay tomembers of
the Management Board during the agreed notice
period of 12 months. A member of the
Management Board will not be entitled to the
severanceif the employment is terminated by him
or her, or on his or her initiative.