Remuneration of Executive Board members

The key objective of the NS remuneration policy is that it should enable the Supervisory Board to attract and retain well-qualified members for the Executive Board. The remuneration policy is aimed at supporting and furthering NS’s objectives and strategy. At the same time, the remuneration policy reflects NS’s public status.

Objectives and principles

• Given that the Dutch State is the sole shareholder, the remuneration policy is based on the principles for the remuneration policies of State participations.

• The determination of job grades is an important element in setting levels of remuneration.

• To determine remuneration levels for the Executive Board, a market comparison is used based on two reference markets: the public and semi-public sector (AMC, the Tax and Customs Administration, GVB, Havenbedrijf Rotterdam, the Ministry of Infrastructure and Water Management, ProRail and Vitens) and the Dutch private sector, using weights of 60% and 40% respectively.

• NS pays Executive Board members based on the market median salaries in the above reference markets.

• When determining the remuneration of the Executive Board members, the remuneration policy’s impact on long-term value creation was taken into account. For NS, this means that the remuneration is determined with due regard for NS’s position in society, its obligations by virtue of the franchise and the long-term challenges for mobility in the Netherlands.

• The NS remuneration policy satisfies the best-practice stipulations on remuneration set out in the Corporate Governance Code.

• 1 The reference group in the Dutch private sector includes over 600 Dutch businesses in a variety of industries.

Performance agreements for Executive Board members

All members of the Executive Board have entered into performance agreements laid down in target letters. The performance agreements comprise both joint and individual targets. The individual targets are related to the portfolio for which the Executive Board member concerned is responsible. The results do not give entitlement to any reward (see Variable remuneration). The joint targets for 2019 were as follows:

A KPI for seat availability during peak hours on the main rail network of 94.9% - this target was not met. All other targets mentioned above were met in 2019.

Although the various issues are covered by different members of the Executive Board, the board bears collective responsibility for achieving the joint targets mentioned above. As per their respective portfolios, the Executive Board members are also responsible for individual targets. For instance, Ms Rintel is responsible for operational targets, Mr Groenewegen for Abellio's financial targets (among others), Ms De Vries for the performance of the stations and Mr Smit for KPIs on passengers' individual travel experience.

Remuneration components

• Base salary

• Variable remuneration

• Pension

• Benefits

The financial statements contain a table in note 2 showing all the remuneration components.

As regards Ms De Vries (Member of the Board - Stations and Risk), all remuneration components are calculated with due regard for the fact that she joined the Executive Board on 15 October 2019. Ms Zijderveld, Chief Governance, Risk & Compliance Officer, stepped down on 1 May 2019.

Base salary

In 2019, the gross annual base salary including holiday allowance for the members of the Executive Board was as follows:

The Remunerations Committee uses the Hay method to assess the job grades of the members and the chair of Executive Board. A specific level of remuneration can then be attached to each job grade identified. Likewise, for other NS employees not covered by the collective labour agreement, the committee first determines the job grade based on the Hay method and then links a remuneration level to that grade. This method ensures that the levels of remuneration for Executive Board members are determined with due consideration of the internal pay ratios.

The difference between the annual base salary and the base salary received is due to the fact that the salaries were increased by 1.2% as of 1 October 2019 pursuant to the collective labour agreement. This is in line with the remuneration policy. All NS employees covered by the collective labour agreement received this pay rise. The overall income of the employee with the highest base salary, namely the Chair and CEO, is 9^[1] times the median value of the salaries of all NS staff in the Netherlands. The internal pay ratios did not significantly change relative to 2018.

• 1 Basic assumptions: All employees at NS and Abellio Nederland who were employed throughout the year are included in the calculation. The calculation is based on the following components: the base salary, variable remuneration and pension costs. The above components apply to both the employees and the Chair & CEO. Both full-time and part-time employees are included in the calculation.

Variable remuneration

In their employment contracts, all members of the Executive Board explicitly waived entitlement to variable remuneration. The Supervisory Board may consider reintroducing variable remuneration, which is capped at 20% of the relevant member's annual base salary, as described in the remuneration policy for the Executive Board.

Pension

All members of the Executive Board are also members of the NS pension plan. The employer’s share of the pension costs for the entire Executive Board was €68,228 in 2019 (2018: €73,385). The employer pays two thirds of the total pension costs.

As required by legislation, pension accrual is capped at a salary of €107,593. NS and the trade unions have agreed to pay out a gross contribution in addition to the salary as an alternative for the cap on pension accrual. NS is allocating a gross contribution of 12% of the part of the salary in excess of €107,593 to all current and new staff. A transitional scheme applies for members who were 46 or older on 1 January 2015. They receive a supplementary age-related contribution. The percentage in question is determined once only. In 2019, members of the Executive Board received a contribution on the same basis as in the above scheme for NS employees.

*) Ms Rintel receives a higher remuneration as she came under the transition scheme as per 1 January 2015 before joining the Executive Board.

Benefits

The benefits that apply to all other NS employees, including healthcare insurance schemes and transport facilities, also apply to the Executive Board members.
The benefits package for the Executive Board additionally includes an appropriate expense allowance, a lease car and the use of communication devices. The lease scheme includes the option of waiving the right to a lease car and being paid the gross mobility budget instead. Additionally, Executive Board members qualify for a directors' chauffeur-driven car to ensure they can carry out their individual tasks as effectively as possible. In principle, the directors’ car should only be used for business trips. NS takes this to include business trips not directly associated with the relevant member's appointment, but where private use is unavoidable given the combination with the obligations associated with the relevant member's position at NS. To account for the use of the directors' car that is not directly linked to the job, an addition to the taxable income is applied. As the addition to the taxable income is caused by private use that is unavoidable given the combination with the obligations associated with the relevant Executive Board member's position at NS, the Executive Board members receive an allowance for the tax owed on the addition to the taxable income. This allowance is designated as part of the work-related costs scheme and is therefore paid to the Executive Board members as a net amount. The company has not extended any loans, advances or guarantees to members of the Executive Board.

* Mr van Boxtel used the directors’ chauffeur-driven car in 2019 and this was compensated by waiving the gross payment of the mobility budget. Mr Groenewegen and Ms Zijderveld both opted for the payment of the mobility budget. Ms Rintel, Mr Smit and Ms De Vries had lease cars in 2019. Both Ms Rintel and Ms De Vries did not use the entire mobility budget and therefore received payment of a portion of that budget. Mr Smit did use the entire mobility budget and therefore did not receive any such payment.

Employment contracts

Members of the Executive Board are appointed for a period of four years at the most. Reappointments can be made for subsequent four-year periods.

All employment contracts with members of the Executive Board include a period of notice for the employer of four months. On termination of the employment contract at the initiative of NS, the severance payment cannot exceed one year’s base salary. No severance payment will be paid in the event of seriously culpable or negligent conduct on the part of the member concerned.