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Annual Report 2015

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Report of the Supervisory Board

Aangepaste versie is in de maak door Carly Lemans.


Composition of the Supervisory Board

Michiel (M.A.M.) Boersma (1947)

At the Annual General Meeting of Shareholders of 23 April 2015, Mr Boersma (Dutch nationality) was reappointed for a second term (2015−2019). Between 2003 and 2009, Mr Boersma was Chairman of the Executive Board of Essent N.V.

Key supervisory board/ancillary positions: member of the Supervisory Board of PostNL, member of the Board of Electrica S.A., Romania, Non-executive Board member of NYNAS AB, Sweden, Chairman of the Advisory Committee of Limburgs Energie Fonds. In addition, Mr Boersma is professor by special appointment of Corporate Governance at Tias Business School in Tilburg, the Netherlands.

Mr Boersma is Chairman of the Selection and Appointment Committee and member of the Remuneration Committee.

Jan (J.J.) Nooitgedagt (1953), Vice-Chairman

Mr Nooitgedagt (Dutch nationality) was CFO and member of the Executive Board of Aegon N.V. from April 2009 to May 2013. Prior to this, he held various positions with Ernst & Young, including as Managing Partner for the Netherlands and Belgium.

First TMG term of appointment: 2013−2017.

Key supervisory board/ancillary positions: Chairman of the Supervisory Board of Vivat N.V., Chairman of the Board of VEUO, member of the Supervisory Board of BNG Bank N.V. and Robeco N.V., member of the Management Board of Kasbank Share Administration Trust, member of the AFM's Financial Reporting and Accountancy Committee and member of the Audit Committee of the Ministry of Security and Justice.

Mr Nooitgedagt is Chairman of the Audit Committee and of the Remuneration Committee and member of the Selection and Appointment Committee.

Guus (A.R.) van Puijenbroek (1975), Secretary

Mr Van Puijenbroek (Dutch nationality) is Director of VP Exploitatie N.V. and Bech N.V.

First TMG term of appointment: 2012−2016.

Key supervisory board/ancillary positions: member of the Supervisory Board of Batenburg Techniek N.V., member of the Supervisory Board of Billboard Technology Industries N.V. and member of the Supervisory Board of Koninklijke Van Puijenbroek Textiel.

Mr Van Puijenbroek is member of the Audit Committee, the Remuneration Committee and the Selection and Appointment Committee.

Annelies (A.G.) van den Belt (1965)

Ms Van den Belt (Dutch nationality) is CEO of Findmypast. Prior to this, she held positions with SUP Media (CEO), ITV Broadband (Director) and Media and Telegraph Group Limited (Director), and she was the publisher of Independent Press Moscow and Men’s Health and Playboy Russia.

First TMG term of appointment: 2014−2018.

Ms Van den Belt does not hold any other Supervisory Board/ancillary positions.

Ms Van den Belt is member of the Audit Committee.

Simone (S.G.) Brummelhuis (1965)

Ms Brummelhuis (Dutch nationality) is Director of TheNextWomen and TheNextWomen Crowd Fund. She held various positions, including with Europe Astia (Vice President), IENS (Director) and the law firm Loeff Claeys Verbeke.

First TMG term of appointment: 2014−2018.

Key supervisory board/ancillary positions: Member of the Advisory Board of various companies, such as Lendahand BV, Storecove BV, Neos Finance BV and ECE Ondernemerscentrum Erasmus Universiteit and Knowledge partner of innovation sessions at College & Chamber Hemingway Duisenberg Society.

Ms Brummelhuis is member of the Audit Committee, the Remuneration Committee and the Selection and Appointment Committee.


Report of the Supervisory Board

TMG's Supervisory Board supervises the policies of TMG's Executive Board, as well as the general course of affairs within the Company. In addition, the Supervisory Board assists the Executive Board with advice, both at the request of the Executive Board and on its own initiative.

Meetings of the Supervisory Board

During the past year, the Board met with the Executive Board during regularly planned meetings nine times, one of which was by phone. Besides the regular meetings, there were three extra meetings with the Executive Board, two of which were by phone. The full Supervisory Board was present at these meetings.

In addition, the Board met eight times without the presence of the Executive Board. These meetings mostly took place before or after the regular meetings of the Supervisory Board. In these meetings, the topi of discussion was mostly the agenda of the regular meeting and the most important focus areas. Furthermore, attention was devoted to the composition and functioning of the Executive Board and of the Supervisory Board, as well as the adjustment of the strategy and its progress.

Focus areas of the Supervisory Board in 2015

During the past year, the Supervisory Board, together with the Executive Board, paid much attention to TMG's strategic focus. A strong 24/7 digital offer on the basis of strong key brands is the only way to maintain and enhance long-term relationships with consumers. A focus on the key brands offers TMG more opportunities to capitalise on the existing value and competencies within the company. In consultation with the Supervisory Board, the Executive Board formulated three main strategic objectives:

  • To strengthen our key brands and create enhanced domain positions
  • To increase consumer reach
  • To generate sustainable returns.

In June 2015, the Supervisory Board held a separate strategy session with the Executive Board (besides the ample attention paid to this topic during the regular meetings of the Supervisory Board).

Regular discussions were held on the financial state of affairs within Telegraaf Media Groep and its operating companies. For a long time, the market has been changing and declining; revenues from advertising and circulations are going down. Cost reductions and reorganisations are necessary. In this regard, more than ever before, TMG's liquidity position has been the focus of attention.

2015 was a year of reorganisations: Holland Media Combinatie, Dichtbij.nl, TMG Landelijke Media, the editorial team of De Telegraaf (including the appointment of a new editor-in-chief) and the partial closure of the printing plants (Alkmaar). These reorganisations led to many job losses. Obviously, the Supervisory Board spent a lot of time on this.

One of the other main themes for the Supervisory Board in 2015 was culture and leadership change within TMG. Within TMG, an extensive culture and leadership programme was set up that will be continued in 2016 by means of, among other things, a leadership programme for TMG's top 50 leaders, developed in collaboration with Nyenrode. In addition, at the initiative of the Supervisory Board, a talent management and succession planning programme was developed.

Topics such as potential partnerships, risk management and the status of the IT environment were also prominently on the agenda.

Committee Meetings

Audit Committee

The Audit Committee is a permanent and preparatory Committee of the Supervisory Board. The Audit Committee consists of Messrs Jan Nooitgedagt (Chairman) and Guus van Puijenbroek, Ms Annelies van den Belt and Ms Simone Brummelhuis. The Audit Committee held seven regular meetings with the Executive Board, the external auditor Deloitte and TMG's staff heads of Internal Audit and Corporate Finance and Administration. One of these meetings was conducted by phone. After the regular meetings, the Audit Committee also met five times without the Executive Board. Attendance at these meetings was 100%. Topics discussed included TMG's annual, semi-annual and quarterly figures, the press releases, the 2016 budget, the internal risk management and control system and its actual implementation, the status of operational and strategic risk management, the audit findings and the follow-up on prior audits, the management letter and improving the tone at the top by means of workshops. In addition, the lack of sufficient automated controls and the in-control statement were discussed. Specific topics also discussed during these meetings were, among other things, the cash flow forecast, the tax position, the covenants with the banks and potential impairments of goodwill, intangible assets and printing presses.

Remuneration Committee

The Remuneration Committee is a permanent and preparatory Committee of the Supervisory Board. The Remuneration Committee consists of Messrs Jan Nooitgedagt (Chairman), Michiel Boersma and Guus van Puijenbroek and Ms Simone Brummelhuis. The Remuneration Committee met six times in 2015. Attendance at these meetings was 100%. The non-exclusive list of topics discussed during the meetings included the remuneration of the Executive Board for 2015, the remuneration of Supervisory Board members, the Executive Board’s remuneration policy, the Long-term Incentive Plan for the Executive Board, and the joint and individual objectives of the members of the Executive Board for 2015.

Selection and Apointment Committee

The Selection and Appointment Committee is a permanent and preparatory Committee of the Supervisory Board. The Selection and Appointment Committee consists of Messrs Michiel Boersma (Chairman), Jan Nooitgedagt and Guus van Puijenbroek and Ms Simone Brummelhuis. The Committee met three times in 2015. Attendance at these meetings was 100%. The non-exclusive list of agenda items discussed during these meetings included the composition of the Supervisory Board, the composition of the Executive Board, the appointment of new management team members, the culture and leadership programme and succession planning of the senior management.

Evaluations

In January 2015, a meeting took place between the Executive Board and the Chairman and Vice-Chairman of the Supervisory Board during which the functioning of the Executive Board was evaluated. The functioning of the Executive Board was also evaluated in 2015. Finally, an end-of-year evaluation took place, an important component of which was a 360-degree review with an external advisor. The Chairman and Vice-Chairman gave an oral report of this evaluation in the meeting of the Supervisory Board.

In June 2015, the Supervisory Board met to evaluate the functioning of the Supervisory Board with the help of an external consultant. The external consultant spoke with all members of the Supervisory Board and the Executive Board beforehand to collect input. On this basis, the external consultant formulated a supervisory vision for the Supervisory Board. This vision was discussed at the meeting in June 2015. On the basis of the supervisory vision and the aforementioned meeting, various recommendations were formulated, such as improving the quality and timeliness of information provision to the Supervisory Board and the provision of more strategic options or alternatives by the Executive Board in the event that approval is requested by the Executive Board for a certain decision. Where possible, these recommendations were followed up during 2015.

The Executive Board makes various reports available to the Supervisoy Board through a new management information system, including the monthly business and financial reports and Internal Audit reports.

With regard to information provision, it is worth mentioning that, as of 2015, the Executive Board is making management information available to the Supervisory Board through the secured ‘Directors Desk’ system, which includes the monthly business and financial reports and Internal Audit reports.

Interactions with the rest of the company

In 2015, four of the Supervisory Board members met with the Central Works Council (CWC) in two meetings, and also joined two consultation meetings between the Executive Board and the executive committee of the CWC. Topics of discussion included the figures and the current and expected reorganisations.

In the year under review, several informal consultations took place between the Supervisory Board and the CWC and between the Supervisory Board and the executive committee of the CWC.

At the request of the Supervisory Board, for each meeting of the Supervisory Board, the Executive Board invites the management of one of the business units, who give a presentation on their business unit and are then available for discussion and questions.

In addition, the Chairman and Vice-Chairman of the Supervisory Board (Messrs Boersma and Nooitgedagt) hold regular informal consultations with the CEO and CFO, as well as with certain staff heads, such as the head of Internal Audit, the head of Legal Affairs and the head of IT.

Permanent education of the Supervisory Board

New members of the Supervisory Board follow an induction programme set up by TMG. In addition, in 2015, members of the Supervisory Board followed a workshop on internal audit and risk management. In addition, the Supervisory Board is proactively kept informed of the latest developments in the media world (particularly in the digital domain), and the Board itself also brings up topics for discussion in these fields and provide their knowledge and expertise.

In the past year, the members of the Supervisory Board also followed several courses or conducted activities in the field of Corporate Governance and remuneration policy. The Chairman of the Supervisory Board, Mr Boersma, became professor by special appointment of Corporate Governance at the TIAS Business School in Tilburg. In this context, he gave an inaugural lecture on Corporate Governance. In addition, all members of the Supervisory Board followed multi-day executive board academies and programmes, such as the postgraduate Chamber programme of the Hemingway Duisenberg Society and the executive programme of the Singularity University (Silicon Valley, VS).

Composition of the Executive Board and the Supervisory Board

The composition of the Supervisory Board meets the requirement that at least 30% of the members must be male and at least 30% of the members must be female. With respect to the appointments of Mr Van der Snoek and Mr Epskamp in 2014, their knowledge of and experience in the media sector, their leadership experience and their experience with change and restructuring projects was decisive. An active search for female candidates was conducted, but no qualified female candidates made themselves available. In making new appointments to the Executive Board, a balanced and appropriated composition will be strived for. In this process, all relevant criteria will be taken into account. TMG aims to appoint women to higher management positions who in the future will be able to advance to the Executive Board. An active HR policy is being developed for this purpose, in which succession planning will play an important part.

In the Annual General Meeting of 23 April 2015, Michiel Boersma, Chairman of the Supervisory Board, was reappointed for a second term. In 2016, Guus van Puijenbroek's term will terminate. Mr Van Puijenbroek is available for reappointment.

The Supervisory Board complies with the independence criteria of Best-practice Provision lll 2.1 of the Corporate Governance Code. In accordance with the aforementioned criteria, Mr Guus van Puijenbroek is considered an independent supervisory director.

Word of thanks and presentation of the Annual Report

2015 was again a year with challenging market conditions and with many organisational changes designed to better prepare TMG for the future. This has required a big effort and commitment from many. We would like to thank TMG's Executive Board and employees for the way in which they performed their duties in 2015.

We hereby present the report, the balance sheet as at 31 December and the income statement for 2015, with explanatory notes as compiled by the Executive Board. The financial statements have been audited and approved by Deloitte Accountants B.V. in Amsterdam, as stated in the auditor's report included in this annual report.

We discussed the financial statements at the annual meeting with the auditor, after which we signed the financial statements to comply with our legal obligation pursuant to Article 2:101 paragraph 2 of the Dutch Civil Code.

We recommend that:

  1. The 2015 financial statements be approved as set out in the documents presented.
  2. The Executive Board be granted discharge for the policies pursued in 2015.
  3. The Supervisory Board be granted discharge for the supervision conducted in 2015.
  4. A dividend of € 0.16 per ordinary share be paid.

Amsterdam, 8 March 2016

On behalf of the Supervisory Board,

Michiel Boersma, Chairman


Remuneration Policy for Executive Board and Supervisory Board members

Remuneration of the Executive Board

The remuneration policy can be viewed on our corporate website. In a general sense, the following stipulations apply:

  1. The objective is to be able to attract and retain top executives for TMG’s Executive Board.
  2. The remuneration policy for the members of TMG’s Executive Board is adopted by the General Meeting of Shareholders (AGM) on the recommendation of the Supervisory Board.
  3. The remuneration of the individual members of the Executive Board is set by the Supervisory Board within the boundaries of the remuneration policy adopted by the AGM.

Remuneration structure

The remuneration structure of the members of the Executive Board consists of a fixed component and a variable component. The remuneration structure was established at the Shareholders' Meeting of April 2014, and was changed with regard to the flexible long-term component at the Shareholders' Meeting of 23 April 2015.

Each year, the Supervisory Board decides on any adjustment and/or indexation of the fixed remuneration component. With regard to the variable component, the Executive Board each year formulates draft objectives for the next financial year and submits these to the Supervisory Board. These are in part focused on the long-term objectives of TMG and its affiliated companies, and are in accordance with the company's risk profile.

Fixed component

The fixed component ('basic salary') consists of the annual salary and the vacation allowance paid in 12 equal instalments.

Variable short-term component

The variable short-term component consists of a maximum of 50% of the basic salary, 60% of which is determined on the basis of the degree to which the collective objectives of the Executive Board are realised and 40% on the basis of the degree to which the individual objectives of the relevant member of the Executive Board are realised. The 2015 objectives of Mr Van der Snoek consisted of strategic, financial, HR, communication-related and operational objectives. Mr Epskamp's objectives were primarily financial in nature. In the opinion of the Supervisory Board, Mr Van der Snoek and Mr Epskamp achieved ninety (90) percent of their 2015 objectives. This results in a variable short-term remuneration relating to 2015 of € 202,500 for Mr Van der Snoek and € 168,750 for Mr Epskamp.

In addition, the Supervisory Board may decide to award an additional bonus and shall render account of any such award at the Annual General Meeting of Shareholders. The variable remuneration as described in this paragraph is paid in cash. In setting the remuneration of the individual members of the Executive Board, the Supervisory Board takes various factors into account within the framework of the general remuneration policy, such as the required competencies, skills and responsibilities of the director. In addition, the potential impact on the pay ratios within the company are taken into account.

Variable long-term component

The main characteristics of the variable long-term component are as follows. The variable long-term component is awarded conditionally in advance for the entire four-year performance period. The performance period runs from 1 January 2015 through to 1 January 2019. The long-term remuneration component will be awarded in the form of monetary units that reflect the value of the TMG share (‘Phantom Shares’). A Phantom Share is in fact a monetary unit that reflects the value of the TMG share. Settlement is in cash, and holders of Phantom Shares do not have any voting rights or meeting rights, nor are they entitled to receive any dividend. The number of conditionally to be awarded Phantom Shares at the start of the performance period is calculated as follows: four times 25% of the basic salary at the start of the performance period divided by the average TMG share price in the last quarter of 2014. The final award of the number of Phantom Shares takes place at the end of the performance period. Award takes place on the basis of performance criteria as agreed at the start of the performance period. The following performance criteria have been established:

  • Performance of the TMG share in relation to the shares in a benchmark (30% weighting).
  • EBITDA margin achieved in the last year of the performance period (25% weighting).
  • Revenue achieved in the last year of the performance period (15% weighting).
  • TMG’s performance with regard to ESG criteria (CO2 reduction and implementation of the Talent Management Programme) (30% weighting).

The long-term variable component amounts to an annual maximum of 25% of the annual basic salary, which is only paid out after four years.

For more information, see note 8 to the consolidated financial statements.

Severance payment

In the contract for services of the members of the Executive Board, a provision has been included with regard to a severance payment in the event of premature termination of the contract by TMG. For the first two years of the contract for services, this severance payment is calculated by assuming a compensation equal to 1.5 times the fixed monthly fee for each year, while for the years thereafter, the compensation will be twice the fixed monthly fee for each year, with a maximum of one times the fixed fee on an annual basis. Such compensation is not payable if the premature termination is due to attributable acts or omissions on the part of the member of the Executive Board.

Pension scheme

The pensionable age of new members of the Executive Board is the State Pension (AOW) age and members of the Executive Board are entitled to participate in the Stichting-Telegraafpensioenfonds 1959 (Telegraaf Pension Fund Foundation). This pension scheme is an average salary pension scheme with a surviving dependants’ pension on an accrual basis.

Loans

TMG does not provide any personal loans, guarantees and the like to members of the Executive Board unless this forms part of the company’s normal conduct of business and then subject to the same conditions that apply to the entire personnel complement and after approval by the Supervisory Board.

Remuneration of the Supervisory Board

in €

2015

2014

Supervisory Board

Chairman

45,450

45,000

Members

35,350

35,000

Audit Committee

Chairman

6,565

6,500

Members

5,555

5,500

Remuneration Committee

Chairman

6,060

6,000

Members

5,050

5,000

Selection and Appointment Committee

Chairman

6,060

6,000

Members

5,050

5,000

The amounts approved by the Shareholders' Meeting in April 2014 were raised by 1% in 2015. (This percentage is based on the CPI index figure.)