The Supervisory Board is pleased to present the 2020 Royal HaskoningDHV Annual Report including the Financial Statements, as prepared by the Executive Board. The past year has been challenging due to the COVID-19 pandemic spreading through all the countries where the company is active. Fortunately, the impact on the financial results was limited. The impact on staff, however, was large. The Supervisory Board is very pleased with and proud of the way in which staff have dealt with the situation in both their work, as well as in their private lives.
Supervisory Board from left to right: Francine Roelofsen-van Dierendonck, Daan Sperling, Peter Blauwhoff – Chairman of the Supervisory Board, Tjalling Tiemstra, Angelique Paulussen-Hoogakker.
The flexibility demonstrated by staff and the swift, decisive steps taken by management to steer the company through the pandemic is very commendable.
The Financial Statements are prepared by the Executive Board, audited by the external auditor and signed following consultation with the Supervisory Board. Given the 2020 result, we support the proposal of the Executive Board to pay a dividend of €1.30 per share.
We recommend that the 2020 Financial Statements are adopted by the Annual General Meeting and the Executive Board is granted discharge with respect to its management and the Supervisory Board for its supervision during the financial year 2020.
The company has a two-tier Board structure. The Supervisory Board advises and supervises the Executive Board of the company in setting and achieving the objectives, strategy and policies. The members of the Supervisory Board are nominated by the shareholders. The Supervisory Board operates fully independently of the Executive Board, is guided by the interests of the company and shall take relevant interests of all company stakeholders into account. The Supervisory Board also has had continuous due regard for corporate social responsibility and culture issues that are relevant to the company.
The Supervisory Board has two committees, an Audit Committee and a Remuneration and Appointment Committee, that prepare the decision-making process for the full Supervisory Board.
Supervisory board meetings
Due to the pandemic, the full Supervisory Board only convened physically three times in 2020 in two office locations in the Netherlands. Three other meetings were held by means of video calls.
We are pleased to report that all members of the Supervisory Board attended all regular meetings.
In addition to the formal Supervisory Board meetings, various (informal) meetings between the (members of the) Supervisory Board and the Executive Board took place. Almost every month there have been bilateral meetings between the chairs of the Supervisory and Executive Boards. Furthermore, members of the Supervisory Board participated in meetings with the Dutch Works Council.
The Supervisory Board monitored and advised on developments in the company and its strategy. There was ample attention for the steps taken by the organisation to manage the impact of the pandemic. Physical and mental health of staff were discussed in every meeting. The organisation’s resilience and changed way of working, project results, utilisation rates, sales, working capital, profitability and, in particular, cash flow were discussed and monitored throughout the year. Other main items on the agenda included setting up of the Business Line Digital, compliance and integrity, acquisitions (ITP and Novius), remuneration policy, talent development, strategy & digitisation, financial results, claims and risks, incidents and accidents and the annual plan.
Throughout the year the Supervisory Board was informed about the financial and economic situation in South Africa, as well as the restructuring of our local operating company.
After the AGM in March 2020, Joop van Oosten left the Supervisory Board due to reaching the maximum statutory appointment period and was succeeded as chairman by Peter Blauwhoff. During said AGM, Francine Roelofsen-van Dierendonck was appointed as member of the Supervisory Board by the shareholders.
Due to the uncertainty of the impact of the pandemic, it was decided in March 2020 to postpone the adjustment of the remuneration of all staff, including the Executive Board, as well as the remuneration of the Supervisory Board. The adjustment of the staff remuneration was implemented in November 2020 once it was clear that the financial performance of the company was still adequate despite the pandemic.
Audit committee meetings
The Audit Committee is composed of two members, Tjalling Tiemstra (chairman) and Daan Sperling. They met on four occasions with management, the internal auditor and external auditors. The Audit Committee furthermore advised the Supervisory Board on the financing of the Mijnbouw building in Delft. The committee also met with the internal and external auditors without the presence of management.
Topics on the agenda were the Financial Statements, the annual plan, cash management and working capital, refinancing South Africa, compliance with bank covenants, tax policies, defined benefit pensions, risk management and developments in ICT and ICT security. In addition, the internal and external auditor’s audit plan and audit report and the external auditor’s management letter were discussed. The financial results and extended business analysis were on every meeting’s agenda.
Remuneration and appointment committee
Current members are Francine Roelofsen-van Dierendonck (chair), Peter Blauwhoff and Angelique Paulussen-Hoogakker. In 2020 the committee convened in scheduled meetings five times. Topics on the agenda were amongst others the remuneration of the Executive Board, also in relation to the development of the remuneration of the Extended Executive Council (which consists of the Business Line Directors and Corporate Directors).
During the year the Remuneration Committee met with several senior managers in the company. They concluded that succession planning was in place: sufficient and capable successors have been identified for the leadership levels in the organisation.
This year, the Supervisory Board performed its self-evaluation without the support of an external specialist. The topics discussed included the organisation, way of working and culture of the Supervisory Board. The effectiveness and focus of the Supervisory Board were investigated as well. Improvement actions and working arrangements for the Board were agreed upon. The main findings of the self-evaluation were discussed with the Executive Board. We further refer to the Remuneration Report in Notes to the Consolidated Financial Statements.
Profile and composition of the supervisory board
The Supervisory Board is properly constituted according to the Articles of Association and its members possess the desired competencies in accordance with the profile of the Board. The current Board consists of five members. A reappointment and resignation scheme has been agreed for the coming years. Background information on the Board is available on our website.
The Supervisory Board consists of two female and three male members, all of whom are of Dutch nationality. The Executive Board consisted of two male members, both of Dutch nationality. The Supervisory Board continues to strive and achieve a balanced composition of both the Executive and the Supervisory Board in terms of gender in the future. The Executive Council consists of 62.5% male and 37.5% female members.
The Royal HaskoningDHV Corporate Governance Report and further information concerning the remuneration policy, the Code of Conduct, the SpeakUp Line and regulations for the Executive Board, Supervisory Board, Audit Committee and Remuneration and Appointment Committee are in line with the Corporate Governance Code and can be found on the company's website. The remuneration of the Executive Board is included in this Report of the Supervisory Board. The remuneration of the Supervisory Board is reported in the Financial Statements, which forms part of this Annual Report.
Various delegations of the Supervisory Board met several times with the Dutch Works Council to discuss the general course of events and the developments within the company in an open and constructive dialogue. The quality and outcome of these meetings is highly appreciated by the Supervisory Board.
In 2020 the Executive Council consisted of the Executive Board, the Business Line Directors and the Corporate Director HRM. In 2020 no meetings of the Extended Executive Council, consisting of the EC and the Corporate Directors, were held. Individual Corporate Directors are also regularly invited to Executive Board and Executive Council meetings depending on the agenda items.
The Supervisory Board is, in general, positive about the future of Royal HaskoningDHV. We are grateful to clients for their continued trust in the company. The impact the pandemic may have in the year ahead is to be managed diligently.
We conclude by stating we highly appreciate the personal commitment of all staff and the resilience the company has shown in 2020. We are convinced these will lead the organisation through and out of the pandemic in the times to come.
Amersfoort, the Netherlands
March 8, 2021
J.A.P. (Joop) van Oosten (Chairman, until April 23, 2020)
P.M.M. (Peter) Blauwhoff (Chairman, as from April 23, 2020)
A.M. (Angelique) Paulussen-Hoogakker
F.C.M. (Francine) Roelofsen-van Dierendonck (as from April 23, 2020)
D.A. (Daan) Sperling
J.S.T. (Tjalling) Tiemstra
Adoption of Remuneration policy
The Supervisory Board has developed the remuneration policy for the Executive Board of Royal HaskoningDHV on the basis of a proposal of the Remuneration Committee. The remuneration policy was adopted by the General Meeting of Shareholders.
The current remuneration of the Executive Board is based on a comparative study done in 2016 by an independent firm of terms and conditions of employment in the executive remuneration market for peer companies, that is companies operating in a grossly comparable market with a roughly similar risk profile and size as Royal HaskoningDHV. The policy is designed to be able to attract, reward, incentivise and retain qualified and expert individuals that the company needs to achieve its strategic objectives.
The Supervisory Board started an evaluation of the remuneration package in December 2019 on the basis of information supplied by external remuneration experts, to verify that it is in line with the company’s objectives and the market. The implementation of the results of this evaluation is imminent.
The remuneration policy provides for a fixed component and a variable component (short-term incentive). The company does not operate a long-term incentive scheme, as it is not considered to be a way of incentivising suitable to Royal HaskoningDHV.
The variable component is based on the performance of the company, whereby this variable component is challenging, but not beyond reach. Furthermore, the ratio between the total remuneration of the Executive Board relative to the average remuneration in the company was taken into consideration.
Fixed remuneration component
The Supervisory Board of Royal HaskoningDHV aims to offer its Executive Board a fixed remuneration component targeted at approximately Q1 level of the general Dutch market and at the median of the direct (mostly Dutch and some EU) peer group.
Variable remuneration component
The Supervisory Board determines the variable remuneration component for the members of the Executive Board on the basis of their performance and the company’s results compared to the agreed performance criteria.
The variable remuneration for the Executive Board is intended to drive the pursuit of Royal HaskoningDHV’s short and long-term objectives and is appropriate in relation to both the fixed remuneration and the peer group. The maximum annual variable remuneration component amounts to 40% of the gross fixed remuneration.
The criteria for the variable remuneration for 2020 were agreed to be up to the Supervisory Board’s discretion, as the pandemic made it impossible to set and track clear and achievable goals.
The variable income is, in principle, payable in depositary receipts until the maximum holding (for all employees the same) is achieved.
The Supervisory Board has verified and is comfortable with the potential pay-out of the variable remuneration component for various scenarios as prescribed by the Netherlands Corporate Governance Code.
Pensions and risk premium
Pursuant to the policy applicable to all staff members in the Netherlands, the company contributes to the cost of their pension and the premium for partner pensions and disability. Equally, the members of the Executive Board are compensated for the reduction of the maximum pension accrual pursuant to the Reduction of Maximum Pension Accrual and Contribution Rates and Maximum Pensionable Income Act (Wet verlaging maximumopbouw- en premiepercentages pensioen en maximering pensioengevend inkomen) (Witteveen Framework 2015).
In the event of termination of the employment contract on Royal HaskoningDHV’s initiative, a member of the Executive Board is entitled to a severance payment of one year’s gross fixed annual remuneration. There is no right to the severance payment if the contract is being terminated due to urgent cause or serious culpability.
Royal HaskoningDHV offers the members of its Executive Board a package of secondary employment benefits in accordance with those offered to other staff. The benefit package includes disability insurance, a company car and a Director’s Liability insurance. The company does not issue loans, advance payments or guarantees to the members of its Executive Board.
No other exceptional remuneration was paid to the members of the Executive Board in 2020.
The ratio of the combined remuneration of the Executive Board relative to the average of Royal HaskoningDHV (Netherlands staff) for 2020 is 7.4 (2019: 7.1), with the CEO at 8.9 (2019: 8.3) and the CFO at 5.9 (2019: 5.9).
In line with the rest of the organisation, the Executive Board did not receive a rise in base salary in April 2020, but contrary to the rest of the organisation, this was not retroactively rectified in October 2020. The Executive Board did receive variable pay over 2020, as this year has asked a lot of flexibility, commitment, perseverance and leadership from the Executive Board, as well as many others.
The Remuneration Committee of the Supervisory Board has taken note of individual Executive Board members’ views with regard to the amount and structure of their respective remuneration packages. The Remuneration Committee has been informed about the remuneration packages for Business Line Directors and Corporate Directors and is confident that remuneration across the top management structure of the company is consistent.
Fixed income component
The Supervisory Board decided, within the remuneration policy adopted by the General Meeting of Shareholders, due to the uncertainties created by pandemic not to increase the fixed remuneration of the Executive Board members as from April 1, 2020.
Variable income component
The maximum variable income continues to amount to 40% of the fixed annual remuneration.
For further information regarding the remuneration we refer to the Notes to the Consolidated Financial Statements.