Report of the Supervisory Board
The Supervisory Board is pleased to present the 2021 Royal HaskoningDHV Annual Report, including the Financial Statements, as prepared by the Executive Board. The past year continued to present challenges due to Covid-19 restrictions worldwide. Nevertheless, the overall results are good, which we are very pleased about. The Supervisory Board compliments employees and management for the flexibility and determination they have demonstrated in the pandemic so far to deliver responsible and sustainable solutions for clients and drive the company’s strategy.
The Supervisory Board is delighted that the high quality of consultation that takes place between the Works Council, the Supervisory Board and management has been recognised with an award. In November 2021, Royal HaskoningDHV was awarded the Triangle 3D Trophy by the Dutch Alliance for Participation and Governance. The award recognises the effectiveness and robust nature of structural and informal consultation within the triangle covering employee participation, management and supervision. This is an important success factor for decision making within Royal HaskoningDHV. The Supervisory Board is proud of this award which reflects the mutual respect and will to carefully listen to each other. Read more about this award on our Dutch website.
The Financial Statements are prepared by the Executive Board, audited by the independent auditor and signed following consultation with the Supervisory Board. Given the 2021 result, we support the proposal of the Executive Board to pay a dividend of €1.49 per share.
We recommend that the 2021 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 2021.
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 continuously due regard for corporate social responsibility and culture matters 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 convened physically only three times in 2021 in two office locations in the Netherlands, complying with the specific Covid-19 regulations that were valid at the time of those meetings. 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.
There was continued attention on steps taken by the organisation to manage the impact of the pandemic and on the well-being and engagement of staff, particularly the work-life balance.
Main items on the agenda included, QHSE, compliance and integrity, investments (Mijnbouw building Delft, increase shareholdings Hydroinformatics Institute Ltd. (H2i) from 25% to 67%, insourcing of part of ABN AMRO Asset Management team), remuneration policy, succession planning, talent development, strategy, digitisation, performance of the company, financial results, claims and risks, and the annual plan.
Furthermore, the Supervisory Board monitored and advised on developments in the company and its strategy. In its meetings, the Supervisory Board was regularly informed about the execution of Strong22 and was involved in the creation of its successor, Stronger25. Two additional meetings of the Supervisory Board and Executive Board were spent on the development of the strategy and on the principal risks associated with the strategy. In one of those meetings, the Executive Council participated. The execution plan of Stronger25, including financial parameters and operational milestones, will be closely monitored in the 2022 Supervisory Board meetings.
During its meetings the Supervisory Board discussed the importance of sustainability. The Supervisory Board expects Royal HaskoningDHV to challenge and assist its clients to implement sustainable solutions where also the society at large should benefit from. In the context of ‘Enhancing Society Together’ close attention was paid to themes like climate change and the energy transition, biodiversity and natural systems, resources and circularity, social value and equality, and safety and well-being.
In addition to the formal Supervisory Board meetings, 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 Chairmen of the Supervisory and Executive Boards. Furthermore, members of the Supervisory Board participated in meetings with the Dutch Works Council and with the Boards of Stichting HaskoningDHV and Stichting Administratiekantoor HaskoningDHV.
Audit Committee meetings
The Audit Committee is composed of two members, Tjalling Tiemstra (Chairman) and Daan Sperling. It met on four occasions with management, the internal auditor and independent auditors. The committee also met with the internal and independent auditors without the presence of management.
Topics on the agenda were the financial statements, the annual plan, cash management and working capital, refinancing, compliance with bank covenants, tax policies, pensions, risk management and developments in ICT and ICT security. In addition, the internal and independent auditor’s audit plan and audit report and the independent auditor’s management letter were discussed. Furthermore, the evaluation of the external auditor was discussed, including the auditor independence. The financial results and extended business analysis were on every meeting’s agenda.
Remuneration and Appointment Committee meetings
Current members are Francine Roelofsen-van Dierendonck (Chairwoman), Peter Blauwhoff and Angelique Paulussen-Hoogakker. In 2021 the committee convened in scheduled meetings four times. Topics on the agenda were amongst others succession management and remuneration of the Executive Board. In addition, the Remuneration and Appointment Committee met with several senior leaders in the company and, furthermore, completed the process for the succession of Tjalling Tiemstra who will leave the Supervisory Board at the end of his second term at the Annual General Meeting in 2022.
This year, the Supervisory Board performed its self-evaluation with the support of an external consultant, the Governance University. Interviews were held with the individual Supervisory Board and Executive Board members. The outcome of these interviews was the basis for a plenary session of the Supervisory Board in which topics discussed included its organisation, way of working and culture of the Supervisory Board and its committees. The effectiveness and focus of the Supervisory Board were discussed as well. The Board concluded that in general it functioned well and some improvement actions and adapted working arrangements for the Board were agreed upon. The main findings of the self-evaluation will be 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 and are independent in the performance of their duties and responsibilities. The current Board consists of five members. A reappointment and resignation scheme has been agreed for the coming years. In 2022 Tjalling Tiemstra’s second term as Supervisory Board member will end, and a successor has been identified. Background information on the Board is available on our website.
Diversity
The Supervisory Board consists of two female and three male members, all of whom are of Dutch nationality. The Executive Board consists of two male members, both of Dutch nationality. The Executive Council (excluding Executive Board) consists of 60% female and 40% male members. 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.
Corporate governance
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 the Remuneration report below. The remuneration of the Supervisory Board and the Executive Board is reported in the Financial Statements, which forms part of this Annual Report.
Works Council
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, content and outcome of these meetings is highly appreciated by the Supervisory Board.
In closing
The Supervisory Board is, in general, very positive about the future of Royal HaskoningDHV. We thank our clients for their continued trust in the company, and appreciate the achievements made in 2021 in a challenging environment. We conclude by recognising the personal commitment and loyalty of all staff which has played such a significant role in the resilience shown by the company in 2021. We are convinced that the dedication of the entire team, in combination with the revised strategic focus, will see positive impact in the years ahead.
Amersfoort, the Netherlands
March 18, 2022
Supervisory Board
P.M.M. (Peter) Blauwhoff (Chairman)
A.M. (Angelique) Paulussen-Hoogakker
F.C.M. (Francine) Roelofsen-van Dierendonck
D.A. (Daan) Sperling
J.S.T. (Tjalling) Tiemstra
Remuneration report
Adoption of remuneration policy
The Supervisory Board approved the remuneration policy for the Executive Board of Royal HaskoningDHV on the basis of a proposal of the Remuneration and Appointment Committee. 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 remuneration policy provides for a fixed component and a variable component (short-term incentive). The company does not operate a long-term incentive scheme. The remuneration policy was adopted by the General Meeting of Shareholders in 2020.
Remuneration principles
The current remuneration of the Executive Board is based on a comparative study done in 2019 by an independent firm specialising in executive remuneration, on the basis of remuneration in peer companies, that is companies operating in a comparable market with a roughly similar risk profile and size as Royal HaskoningDHV. The Supervisory Board evaluated the remuneration package of the Executive Board. Compensation is benchmarked by using the median of the relevant reference market for Royal HaskoningDHV. The elements of compensation that are taken into account include base salary and the short-term incentive. Furthermore, the ratio between the total remuneration of the Executive Board relative to the average remuneration in the company, is 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 median level of the relevant reference market for Royal HaskoningDHV.
Variable remuneration component
The Supervisory Board determines the variable remuneration component for the members of the Executive Board. The variable component is based on the overall performance of the company, whereby this variable component is challenging, but not beyond reach. The performance criteria for the variable pay of the Executive Board members are aligned with the strategic objectives of the company and include both financial (new business revenue, EBITA, overhead costs) as non-financial metrics (portfolio composition, culture and digital maturity).
The variable remuneration for the Executive Board is intended to drive the pursuit of Royal HaskoningDHV’s objectives. The maximum annual variable remuneration component amounts to 40% of the gross fixed remuneration.
The variable income is, as a standard, payable in depositary receipts until the maximum holding (which is the same for all employees) 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).
Severance pay
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.
Sundry
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.
Remuneration 2021
Fixed income component
The Supervisory Board decided, within the remuneration policy adopted by the General Meeting of Shareholders in 2020, to increase the fixed renumeration of the Executive Board members. Due to the Covid-19 situation, the increase of the fixed remuneration of the Executive Board members, was only implemented in 2021.
Variable income component
According to the remuneration policy adopted by the General Meeting of Shareholders, the maximum variable income amounts to a maximum of 40% of the fixed annual remuneration. No other exceptional remuneration was paid to the members of the Executive Board in 2021.
The ratio of the combined remuneration of the Executive Board relative to the average of Royal HaskoningDHV (Netherlands staff) for 2021 is 7.1 (2020: 7.4), with the CEO at 8.3 (2020: 8.9) and the CFO at 6.0 (2020: 5.9).
The Remuneration and Appointment Committee has been informed about the remuneration packages for Global Directors and Corporate Directors and is confident that remuneration across the top management structure of the company is consistent.
For further information regarding the remuneration, we refer to the Notes to the Consolidated Financial Statements.