3.4.2Execution of the Management Board Remuneration Policy in 2022
The Management Board saw changes in 2022: Erik Lagendijk stepped down as member of the Management Board and CGCO at the 2022 AGM. Øivind Tangen, who joined SBM Offshore in 2002, was appointed as member of the Management Board and COO as per the 2022 AGM. Philippe Barril (member of the Management Board) who operated as COO for seven years and as Chief Transition Officer from April 2022, decided to leave the Company as per August 31, 2022.
The Supervisory Board is responsible for ensuring that the remuneration policy is appropriately applied and aligned with the Company’s objectives. The remuneration level is determined by the Supervisory Board using a comparison with Dutch and international peer companies, as well as internal pay ratios across the Company.
Reference Group
In order to determine a competitive Base Salary level and to monitor total remuneration levels of the Management Board, a reference group of relevant companies in the industry (the ‘Reference Group‘) has been defined. Pay levels of the Management Board members are benchmarked to the Reference Group. In the event a position cannot be benchmarked within the Reference Group, the Supervisory Board may benchmark a position to similar companies. For 2022, the Reference Group consisted of:1
In 2022, the benchmark focused on the CFO and newly appointed COO as the role of CGCO disappeared. The remuneration of the CEO remained stable.
Pay ratio
The pay ratio shows the developments in the annual total remuneration of the Management Board members and the average remuneration on a full-time-equivalent basis of employees of the company.2 The calculation of the internal pay ratio follows the 2021 guidelines of the Dutch Corporate Governance Code. The average total employee and contractor costs per FTE in 2022 was EUR125 thousand.
The pay-ratios of each of the Management Board members over 2022 and 2021 are displayed in the following graph.
Total Remuneration overview
The table below provides insight into the costs for SBM Offshore for Management Board reward in 2022 (based on RP 2022) and presents an overview of the remuneration of the Management Board members who were in office in 2022.
Remuneration of the Management Board
Bruno Chabas | Douglas Wood | Øivind Tangen1 | Erik Lagendijk2 | Philippe Barril3 | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
in thousands of EUR | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Base salary | 960 | 960 | 537 | 518 | 558 | - | 225 | 518 | 516 | 634 | 2,795 | 2,630 |
STI | 816 | 1,279 | 342 | 517 | 256 | - | 87 | 517 | 269 | 633 | 1,770 | 2,946 |
Value Creation Stake | 1,512 | 1,797 | 850 | 695 | 695 | - | 214 | 968 | 998 | 1,186 | 4,269 | 4,919 |
Pensions | 297 | 294 | 134 | 129 | 121 | - | 34 | 129 | 106 | 158 | 691 | 710 |
Other | 231 | 250 | 42 | 50 | 346 | - | 13 | 45 | 106 | 188 | 737 | 533 |
Total expense for remuneration | 3,815 | 4,580 | 1,906 | 2,182 | 1,975 | - | 572 | 2,177 | 1,995 | 2,799 | 10,263 | 11,738 |
in thousands of US$ | 4,018 | 5,416 | 2,007 | 2,581 | 2,080 | - | 603 | 2,575 | 2,101 | 3,310 | 10,808 | 13,883 |
- 1 Total remuneration over 2022, including COO position since April 6, 2022
- 2 Management Board member until April 6, 2022
- 3 Management Board member until August 31, 2022
1. Base Salary
The Supervisory Board decided to increase the Base Salary of Douglas Wood from EUR 518 thousand to EUR 544 thousand effective April 6, 2022. The 2022 and 2021 Base Salary levels of the Management Board members are shown both in the table at the beginning of section: Management Board Remuneration in 2022 and in the table Remuneration of the Management Board by member in section 3.4.3.
2. Short-Term Incentive
For 2022, the Supervisory Board set the following performance measures and corresponding weighting, which led to the following performance realization. For full details regarding the performance under the STI, please refer to the Performance STI 2022 table in section 3.4.3.
Profitability performance reached the target of 99% with an underlying directional EBITDA of US$1010 million against a target level of US$930 million, but Project performance was below target. Growth performance, measured as order intake FPSO and NES resulted in a performance of 75%, which is between threshold and target. Sustainability performance performed below target at 65%. The overall weighted performance of the CEO is 85% and for the other Management Board members the performance is 75% thereof (64%).
3. Value Creation Stake
The Supervisory Board decided to grant the Value Creation Stake for 2022 to the Management Board members in accordance with RP 2022. The underpin test as explained in section 3.4.1 was applied to this grant. As per RP 2022, the granted Value Creation Stake vests immediately. The gross annual value for each of the Management Board members is 175% of Base Salary. The number of shares was based on the four-year average share price (volume weighted) at the date of the respective grant. The cost of the granted Value Creation Stake is included in the table at the beginning of this section 3.4.2. The number of shares vested under the Value Creation Stake can be found in section 3.4.3 of this remuneration report under Conditions of and information regarding share plans.
The actual shareholdings of the Management Board members at the end of 2022, in which only conditional shares are taken into account, can be found at the end of the Overview Share-Based Incentives (section 3.4.3). This overview also includes the number of conditionally granted and/or vested shares in the last few years.
4. Shareholding requirement Management Board
The following table contains an overview of shares held in SBM Offshore N.V. by members of the Management Board at December 31, 2022.
Shares subject to conditional holding requirement | Other shares | Total shares at | Total shares at | |
|---|---|---|---|---|
Bruno Chabas | 344,526 | 910,338 | 1,254,864 | 1,191,070 |
Douglas Wood | 174,217 | 89,792 | 264,009 | 228,316 |
Øivind Tangen1 | 34,938 | 94,854 | 129,792 | 79,300 |
Philippe Barril2 | n/a | n/a | n/a | 317,962 |
Erik Lagendijk3 | n/a | n/a | n/a | 256,630 |
Total | 553,681 | 1,094,984 | 1,648,665 | 2,073,278 |
- 1 Management Board member since April 6, 2022
- 2 Management Board member until August 31, 2022
- 3 Management Board member until April 6, 2022
All Management Board members met the share ownership requirement, which is set at an equivalent of 350% of their Base Salary. Section 3.4.3 contains more information about the (historical) share plans for the Management Board.
5. Pensions and benefits
Management Board members received a pension allowance equal to 25% of their Base Salary. In case these payments are not made to a qualifying pension fund, Management Board members are individually responsible for the contribution received and SBM Offshore withholds wage tax on these amounts. For the CEO, two pension arrangements (defined contribution) are in place and its costs are included in the table at the beginning of this section 3.4.2.
The Management Board members received several allowances in 2022, including a car allowance, a housing allowance (Bruno Chabas, Philippe Barril and Øivind Tangen) as well as school fees and settling-in costs (Øivind Tangen). The value of these elements is included in the table at the beginning of this section 3.4.2 and in section 3.4.3.