Royal Heijmans N.V. 2024 Remuneration report

This report, which must be regarded as a report in the sense of Article 2:135b Dutch Civil Code and in the sense of principle 3.4 of the Dutch Corporate Governance Code, explains the implementation of the remuneration policy for the Executive Board and the remuneration policy for the Supervisory Board. The policy was adopted by the Annual General Meeting of Shareholders (hereinafter: the AGM) on 30 April 2024 and came into effect on 1 January 2024. The remuneration policy of both the Executive Board and the Supervisory Board is published on the company’s website and is briefly explained below.

The report is structured as follows:

1. The goal of the remuneration policy for the Executive Board and Supervisory Board

2. Main points of the remuneration policy for the Executive Board

3. Implementation of the remuneration policy for the Executive Board in 2024

4. Main points of the remuneration policy for the Supervisory Board

5. Implementation of the remuneration policy for the Supervisory Board in 2024

6. Evaluation of remuneration policy and intentions for 2025

7. Advisory vote Annual General Meeting of Shareholders

1. The goal of the remuneration policy for the Executive Board and Supervisory Board

The playing field in which Heijmans finds itself is marked by the divergent interests of stakeholders, strong competition and market conditions with considerable risks for companies active in the construction industry. This places high demands on both the supervisory board and the executive board.

Realising the ‘Together towards 2030’ strategy requires strong and skilful management. Directors with the necessary leadership qualities, knowledge, experience and vision are therefore an essential condition for the company’s success. The goal of the remuneration policy is to attract, retain and motivate these directors and thus contribute to the realisation of the business strategy and long-term targets. This creates long-term value for all stakeholders and, in the form of sustainable homes and sustainable construction processes, makes a significant contribution to employment and the economy, and for society as a whole.

The realisation of the strategy in the context outlined above places high demands on the quality of supervision. Recruiting and retaining Supervisory Board members who complement each other and who can support the executive board in word and deed is the key to sound supervision.

One of the principles of the remuneration policy of the Executive Board is that the policy should not create any unwanted incentives, such as behaviour that is focused on self-interest or taking risks that are not in line with the company's risk profile. In that light, part of the remuneration, namely the long-term variable remuneration and the Share Ownership Guideline (SOG), is aimed at creating long-term commitment. Heijmans endorses the principles and best practice provisions relating to the remuneration of directors and supervisory directors, as stated in the Corporate Governance Code, and follows them in both its policy and in this report.

The Supervisory Board performs an annual review of the remuneration policy to assess whether it needs to be adjusted.

For the Remuneration Policy of the Supervisory Board and Executive Board, also see: https://www.heijmans.nl/en/about-heijmans/corporate-governance/codes-and-regulations/

2. Main points of the remuneration policy for the Executive Board of Royal Heijmans N.V.

2.1 Remuneration level

One of the basic principles in the determination of the total remuneration (fixed agreed annual salary plus variable remuneration) is appropriate market positioning. This external perspective is the benchmark used to formulate the policy. For the fixed annual salary, the policy principle is a positioning that moves towards the median of the reference group, with the aim of arriving there within a reasonable period of time and based on the development measured in a benchmark in the reference group. The determination of the remuneration mix, i.e. the ratio between fixed and variable remuneration and the ratio between short-term and long-term variable remuneration, takes into account the desired risk profile and the desired relationship between short-term and long-term performance and remuneration, among other things.

The remuneration package must also be balanced and fair from an internal perspective. The internal reference point is determined by the remuneration level of, in particular, the layer below the Executive Board. The internal reference point is taken into account in the sense that a connection is made between the objectives for variable remuneration that apply to members of the Executive Board and members of the management layer below it. The remuneration of the management layer reporting to the Executive Board is determined on the basis of a benchmark that is also used to maintain a proper remuneration ratio between board members and management.

To remain in line with the principles of this policy, a market comparison is periodically carried out at least once every four years to test the remuneration levels of the members of the Executive Board for market conformity.

Scenario analyses were carried out and taken into account in formulation of the remuneration policy.

2.2 Remuneration package

• an agreed fixed annual salary;

• a contribution to the accrual of a pension provision;

• short-term variable remuneration that rewards predetermined performance objectives achieved on an annual basis;

• long-term variable remuneration that rewards predetermined performance objectives achieved over a three-year period;

• share ownership guidelines, to strengthen the long-term focus.

In addition, each member of the Executive Board receives an expense allowance and insurance contributions. They are also provided with a lease car.

2.3 Agreed fixed annual salary

The fixed annual salary agreed for the members of the Executive Board is based on 12 times the monthly salary plus holiday pay. The fixed annual salary is determined in accordance with the principles of this remuneration policy.

The Supervisory Board periodically reviews the level of the fixed annual salary and decides whether circumstances justify any adjustments. When considering possible adjustments to the fixed annual salary, important reference points include the development of structural collective labour agreement increases for Heijmans employees, market conditions and the general movement of salaries in the reference group.

2.4 Variable remuneration

Both the short-term and long-term variable remuneration is paid in cash. The Supervisory Board has the right to a final review of the reasonableness of each award of variable remuneration. In exceptional circumstances in particular, the outcomes may be unfair or unreasonable and the Supervisory Board may adjust the award.

The entire variable remuneration is subject to a clawback clause, which provides that all or part of the awarded variable remuneration can be reclaimed if it later emerges that it was awarded on the basis of incorrect data. In the remuneration report, the Supervisory Board explains whether, why and how it has exercised these powers.

2.4.1 Short-term variable remuneration (STI)

The short-term variable remuneration amounts to 60% of the fixed annual salary if the predetermined performance targets for the year in question are fully met. If the targets are exceeded, the bonus can amount to a maximum of 90%. If the targets are met at the minimum level, the bonus amounts to 45% of the fixed annual salary. If performance remains below a predetermined minimum level, the pay-out will be zero. Variable remuneration is awarded proportionally for a performance score between the minimum and maximum realisation levels.

2.4.2 Long-term variable remuneration (LTI)

Half of the LTI is paid out in depositary receipts for Heijmans shares and half is paid out in cash. The LTI amounts to 60% of the fixed annual salary if the target level is achieved (i.e. a 100% score on the predetermined performance targets over a performance period of three years). The maximum is set at 90% of the fixed annual salary. If the targets are achieved at the minimum level, the LTI will be 45% of the fixed annual salary. If performance remains below the predetermined minimum level, no award will be made. The LTI is awarded proportionally for a performance score between the minimum and maximum realisation levels.

The first three-year term based on this LTI covers the financial years 2024, 2025 and 2026. Therefore, the first payment based on this LTI will be made in 2027.

2.5 Share Ownership Guideline (SOG)

The SOG is part of the remuneration policy and is intended to further strengthen long-term focus and serve as a sign of the Executive Board’s confidence in the strategy and performance. The CEO is expected to hold 150% of his fixed annual salary in depositary receipts for Heijmans shares. The CFO is expected to hold 100% of his fixed annual salary in depositary receipts for Heijmans shares. The vesting period for achieving these percentages is set at five years, starting from 1 January 2024. The depositary receipts for shares that are conditionally awarded as payment of the LTI (50% of the payment) are included in the calculation of the percentage of depositary receipts held. As long as the relevant percentage has not been reached, the relevant member of the Executive Board may not sell shares, except if a member of the Executive Board makes use of the sell-to-cover clause included in the LTI scheme, in which case they may sell shares to meet applicable tax obligations.

3.  Implementation of the remuneration policy for the Executive Board in 2024

The Remuneration and Appointments committee consists of Ms Martika Jonk, Chair, and Ms Ans Knape-Vosmer. The Remuneration Committee held six meetings in 2024, at which the usual annual items such as remuLEAPneration for the Executive Board members, the targets in the context of the short-term and long-term variable remuneration and the variable remuneration itself. The committee also discussed the current (legal) developments in the field of remuneration in general.

The current remuneration policy was approved by the AGM on 30 April 2024 and came into effect on 1 January 2024. There was no reason to review the remuneration policy in 2024. At the end of 2024, a benchmark was set based on the reference group referred to in the remuneration policy to see if the remuneration was still in line with the principles of the policy.

In its application of the Executive Board remuneration policy in 2024, the Remuneration and Appointments Committee assessed how the Executive Board implemented the company’s strategic, financial and sustainability objectives. The assessment of the targets set takes into account not only general, economic circumstances, but also construction industry-specific circumstances, such as slow building permit procedures , which are outside the company’s sphere of influence.

On the advice of the Committee, the Supervisory Board decided to award both short-term and long-term variable remuneration to the members of the Executive Board. The calculation of the remuneration was evaluated by the internal audit department. This award is explained in more detail in section 3.3 of this chapter.

3.1 Table with an overview of remuneration by component

The gross fixed and variable remuneration paid in 2023 and 2024 and the amounts to be paid in 2025 to the members of the Executive Board are as follows:

The breakdown of the expenses per member of the Executive Board is as follows:

For a more detailed explanation of the above table, see note 6.29 of Heijmans’ 2024 Financial Statements.

3.2  Fixed salary

The agreed gross fixed agreed salary of the members of the Executive Board was adjusted on 1 January 2024. As of that date, the fixed annual salary of Ton Hillen is € 635,000 gross and that of Gavin van Boekel is € 460,000 gross.

The accrual of Ton Hillen’s old-age, survivor’s and orphan’s pension is in accordance with the conditionally indexed average salary sector pension fund scheme, in which pension is accrued on the gross fixed remuneration up to € 69,442 and payment starts at the age of 67. For the portion of the salary that exceeds this amount, up to € 137,800, this Executive Board member participates in a defined contribution scheme. Mr Hillen also receives compensation for the discontinuation of the early retirement top-up and the pension accrual on the salary part that exceeds € 137,800, as well as compensation of € 50,232 for the loss of indexation in the Delta Lloyd average pay scheme. In deviation from what is stated above, Gavin Van Boekel receives a fixed payment for the accrual of a self-managed pension scheme.

There are no early retirement pension schemes for the members of the Executive Board.

The expense allowance, including car costs, social contributions and the costs of the Share Matching Plan, are reported in the table in Section 3.1 of this chapter. For a more detailed explanation, please see the notes to the 2024 Financial Statements in the ‘Related parties’ section.

3.3 Variable remuneration

The variable remuneration recognises the achievement of the predetermined performance targets over the year to which the report relates or over a period of three years. The short-term remuneration is 50% or 60% dependent on financial targets and 50% or 40% dependent on qualitative targets. The 10% margin is intended to give the Supervisory Board the option, in exceptional cases, to assign a slightly higher weighting to the financial targets. For 2024, thew Supervisory Board chose to do this due to the acquisition of Van Wanrooij in 2023, which temporarily increased the focus on cash generation. In terms of the long-term variable remuneration, half of the award depends on quantitative financial objectives that are essential for the implementation of the strategy and half depends on the qualitative objectives that reflect progress in the implementation of the strategy.

At the start of each year, the Supervisory Board sets a minimum, target and maximum level for the various objectives. At the end of the year or at the end of the three-year period respectively, it is assessed to what extent these targets have been achieved and what amount is awarded on that basis.

On the recommendation of the Remuneration, Selection and Appointments Committee and in consultation with the Executive Board, each year the Supervisory Board selects a maximum of three financial criteria (weighing 50% or 60% of the total STI) and determines the relative weighting of the criteria, with possible differentiation based on the desired strategic focus in the year in question. In line with the strategic goals, performance measures are formulated that are typically related to profit, financing and revenue/operations/projects.

In addition, also on the recommendation of the Remuneration, Selection and Appointments Committee and in consultation with the Executive Board, the Supervisory Board selects a minimum of one and a maximum of eight non-financial criteria (weighting is 50% or 40% of the total STI) and determines the relative weighting, with possible differentiation based on the strategic focus in the year in question. In line with the strategic goals, performance measures are formulated that are typically related to the five pillars on which the ‘Together towards 2030’ strategy is based, namely: Well-being, Sustainability, Connection, Producibility and Team, and/or to performance criteria that improve the day-to-day operation of the business, such as safety, the company’s risk profile and staff-related KPIs.

The Supervisory Board assesses the extent to which the qualitative short-term and long-term targets have been achieved on the basis of a written substantiation for each objective submitted by the Executive Board. That substantiation can consist of a KPI, a bold statement, a description of the status of a particular target with illustrative examples or a combination of these. Because the information on certain targets qualifies as business-sensitive information, this report does not include a description and score for every qualitative target.

3.3.1 Short-term variable remuneration (annual remuneration)

In 2024, the Supervisory Board made use of the option offered by the remuneration policy for the Executive Board to apply a margin of 10% when determining the ratio between the weighting of the financial and qualitative targets. In 2024, the financial targets account for 60%, and the qualitative targets therefore account for 40% of the short-term variable remuneration.

For the year 2024, the Supervisory Board chose underlying EBITDA and average net debt as the most relevant short-term financial targets. The target levels are included in the accompanying table, which shows that the achievement of these targets was maximum, resulting on balance in a pay-out on the financial targets of 54% of the agreed fixed annual salary.

The qualitative short-term targets are focused on the realisation of strategic goals and pertain to safety (TRIR), the integration of Van Wanrooij, the reduction of scope 1 and 2 CO₂ emissions, the production of timber frame houses in the production facility and increasing the number of tenders that Infra wins on the basis of the best plan (most economically advantageous tender, EMVI).

The Supervisory Board has assessed the performance on the aforementioned qualitative targets based on KPIs, other numerical information and explanations provided by the Executive Board. The Supervisory Board has determined that, with the exception of two targets, safety and producibility, the scores were low. On the other hand, maximum scores were achieved for two targets, including the reduction of CO₂ emissions, and at target for another target. This means that on average, the score was at target.

The Supervisory Board is of the opinion that the Executive Board delivered an extraordinary performance with regard to both the integration of Van Wanrooij and the continuity of Van Wanrooij’s business operations, which make a major contribution to Heijmans’ results. For that reason and based on its discretionary powers, the Supervisory Board decided to increase the gross pay-out based on the short-term qualitative targets for both members of the Executive Board by € 44,000. This results in a pay-out on the total short-term remuneration of 87.3% of the agreed fixed annual salary for Mr Hillen and 89.9% for Mr Van Boekel.

If the score falls between the different levels, the remuneration is calculated on a straight-line basis. Underlying EBITDA includes IFRS 16. Net debt is the average over four measurement points at the end of each quarter.

3.3.2 Long-term variable remuneration (three-year remuneration)

Award 2022-2024

The targets for the long-term variable remuneration for the period 2022-2024 were assessed after this period.

For 2024, a single financial target applied in the above-mentioned three-year period:

A rolling average growth rate of 5% in the earnings per share over three years.

This target was achieved at a maximum target level, which on balance results in a pay-out of a total of 37.5% on the financial target.

Two qualitative target were set for the three-year period 2022-2024. These were the number of industrially produced houses delivered and a reduction in CO₂ emissions in 2024 compared with year-end 2021, measured in absolute emissions in 2024.

The Supervisory Board has determined on the basis of, among other things, KPIs, other numerical information and explanations by the Executive Board that the scores for these targets were on average between at target and maximum.

On balance, the above results in a pay-out on the qualitative targets of 31.3% of the agreed fixed annual salary.

The financial and qualitative performance achieved results in a total pay-out percentage of 68.8 % of the agreed fixed annual salary.

The following explanation applies to the above table. The Supervisory Board sets the on-target level for each target and the extent to which these targets were or were not met is determined at the discretion of the Supervisory Board. This methodology does not change the composition of the long-term variable remuneration: this can be a maximum of 90% of the agreed fixed salary and the financial and qualitative targets each still account for 50% of the overall target.

3.4 Share Ownership Guideline (SOG)

As of 1 January 2024, the members of the Executive Board are subject to a SOG based on the current remuneration policy. This SOG is intended to further strengthen long-term focus and serve as a sign of the Executive Board’s confidence in the strategy and performance. The CEO is expected to hold 150% of his fixed annual salary in depositary receipts for Heijmans shares, and the CFO is expected to hold 100%. As at 31 December 2024, the CEO held 398% of his fixed salary in depositary receipts for Heijmans shares. The CFO held 71% of his agreed fixed annual salary in depositary receipts for shares as of that date. The fact that the CFO has not yet achieved the required SOG percentage is due to the fact that it only applied as of 1 January 2024 and the relatively short term of the CFO’s appointment. No depositary receipts for Heijmans shares may be sold until the SOG percentage has been achieved.

3.5 Bonus Share Matching Plan

The Bonus Investment Share Matching Plan was in effect until 1 January 2024. Participation in the Plan was voluntary. Members of the Executive Board could invest 50% of (the net equivalent of) their short-term variable remuneration in Heijmans shares or depositary receipts for shares. The shares or depositary receipts for shares are frozen for three years after purchase. Provided that those who hold these depositary receipts for three years are still employed by the company at the end of that period, the company awards one bonus depositary receipt for each depositary receipt in which they have invested, a so-called matching share. The matching shares are frozen for two years after they have been awarded.

Ton Hillen has participated in the plan since taking office, Gavin van Boekel did so for the first time in 2022. Both members of the Executive Board purchased depositary receipts for shares in 2024 on the basis of the short-term variable remuneration for the 2023 financial year, a year in which the Bonus Share Matching Plan was still applicable.

Ton Hillen purchased 4,200 depositary receipts for shares in May 2024. These will be matched in May 2027, provided the conditions are met. Gavin van Boekel purchased 3,100 depositary receipts for shares in May 2024. These will be matched in May 2027, provided the conditions are met.

Ton Hillen was awarded 5,500 matching shares in April 2024 based on his purchase in April 2021. The lock-up period for these matching shares expires in April 2026.

3.6 Pay ratios and result development

The table below shows the data in accordance with Article 2:135b(3)(e) Dutch Civil Code.

Pay Ratio

The term pay ratios according to best practice 3.4.1 sub iv of the Dutch Corporate Governance Code is understood to mean the ratio between (i) the total annual remuneration of the CEO and (ii) the average annual remuneration of the company’s employees. The table below shows the remuneration ratios in accordance with the aforementioned best practice for the financial year 2024 and the four preceding financial years. The pay ratio for 2024 can be expressed as 1:20.6 (2023: 1:18.2).

Because the pay ratio on the basis of the current Dutch Corporate Governance Code was calculated for the first time in 2023, for comparison purposes the pay ratios for the financial years 2019 through 2022 have been recalculated on the basis of the calculation methodology of best practice 3.4.1 sub iv of the Dutch Corporate Governance Code.

The Remuneration, Selection and Appointments Committee takes the pay ratios into account in the proposals it puts to the Supervisory Board with regard to the individual renumeration packages for Executive Board members.

4. Main points of the remuneration policy for the Royal Heijmans N.V. Supervisory Board

The remuneration policy for the Supervisory Board as it applied in the 2024 financial year was adopted by the AGM on 30 April 2024. The aim of the policy is to enable the company to attract experienced and expert Supervisory Board members. That requires a remuneration package in line with then market. The desired market positioning is in line with the median of the reference group benchmark. In accordance with best practice 3.3.1 of the Dutch Corporate Governance Code, the remuneration of Supervisory Board members must also reflect the time commitment and responsibilities of their position. With the Supervisory Board members' independent position in mind, their remuneration does not depend on the company’s results and the internal pay ratio is less relevant.

In order to align the remuneration with the time commitment and responsibilities:

• the chair and vice-chair of the Supervisory Board receive a higher fixed base compensation than (ordinary) members;

• Supervisory Board members receive compensation for the work they do in committees on which they serve, in addition to the base compensation that all members receive;

• committee chairs receive higher committee compensation than ordinary committee members.

In accordance with the remuneration policy adopted on 30 April 2024, the following amounts applied in 2024:

The Supervisory Board periodically assesses the level of remuneration and decides whether circumstances justify any adjustments. In doing so, market conditions and the general movement of remuneration in the reference group, among other things, are consistently taken into account as key reference points.

For the Remuneration Policy of the Supervisory Board, see also: https://www.heijmans.nl/en/about-heijmans/corporate-governance/codes-and-regulations/

5. Implementation of the remuneration policy for the Supervisory Board in 2024

In the 2024 financial year, the Supervisory Board members received a fee in accordance with the policy set out in Section 4 of this report. The allocation of duties was as follows in 2024:

• Sjoerd Vollebregt, Chair of the Supervisory Board.

• Ms Martika Jonk, Vice-chair of the Supervisory Board and member of the Audit and Risk Committee. Chair of the Remuneration and Appointments Committee.

• Ms Ans Knape-Vosmer, member of the Supervisory Board and member of the Remuneration and Appointments Committee.

• Arnout Traas, member of the Supervisory Board and Chair of the Audit and Risk Committee as of 13 April 2022.

• Allard Castelein, member of the Supervisory Board and member of the Audit and Risk Committee.

• Marc van Gelder, Marc van Gelder, member of the Supervisory Board (as per 4 November 2024)

In the years 2020 through 2024, the members of the Supervisory Board were compensated as follows:  

6. Evaluation of the remuneration policy and intentions for 2025

The review of the remuneration policies for the Executive Board and the Supervisory Board referred to in the 2023 remuneration report resulted in the adoption of an amended policy for both the Executive Board and the Supervisory Board by the AGM held on 30 April 2024. Both the Supervisory Board and the Executive Board consider it important that the remuneration of both bodies is in line with social developments in the field of remuneration and, while the remuneration of the Executive Board should be in line with sustainable long-term value creation. The remuneration policies of both the Supervisory Board and the Executive Board must be submitted to the AGM every four years, in accordance with Article 2:135a of the Dutch Civil Code. As the current policy was adopted by the AGM in 2024, there is no reason to review the remuneration policy for 2025. The remuneration policies for the both the Executive Board and the Supervisory Board will be submitted to the AGM, either amended or not, no later than in 2028.

Intentions for 2025

Executive Board

Based on the option to do so in the remuneration policy for the Executive Board, the Supervisory Board decided to adjust the agreed fixed annual salary of the members of the Executive Board as of 1 January 2025 to € 710,000 gross for Mr Hillen and € 530,000 gross for Mr Van Boekel. The adjustment takes into account the general development of salaries in accordance with the benchmark in the reference group. This adjustment is in line with the current remuneration policy.

The Supervisory Board has set financial and qualitative targets for 2025 for the short-term and long-term variable remuneration of the Executive Board. Short-term financial targets include underlying EBITDA and average net debt. Short-term qualitative targets should help strengthen the company’s foundation or contribute to the implementation of the strategy, such as targets in the areas of sustainability, safety and digitalisation.

Long-term financial targets include earnings per share (EPS) and total shareholder return (TSR). As with short-term targets, long-term qualitative targets should help strengthen the company’s foundation or contribute to the execution of the strategy. These could include targets in the areas of producibility, sustainability and talent development. Targets are not disclosed in advance due to the sensitivity of the information involved. The remuneration report for the 2025 financial year will report on the extent to which the targets have been achieved.

Supervisory Board

Based on the results of the benchmark study conducted at the end of 2024, the Supervisory Board decided to adjust the remuneration to the median of the benchmark as of 1 January 2025. The benchmark is based on the existing peer group.

As of 1 January 2025, the members of the Supervisory Board will be reimbursed for expenses such as travel expenses and costs related to hotel accommodation in connection with a meeting.

Advisory vote Annual General Meeting of Shareholders on report for previous financial year

The 2023 remuneration report was presented to the AGM for an advisory vote on 30 April 2024, in accordance with the provisions of Article 2:135b of the Dutch Civil Code, with the proposal to adopt the 2023 remuneration report. The AGM subsequently adopted the 2023 remuneration report by a majority of 99.84% of the votes cast. In accordance with Article 135b(2) of the Dutch Civil Code, the company has taken this outcome into account in the preparation of the current remuneration report in the sense that it deduced from the outcome that the report was satisfactory. At the AGM held on 30 April 2024, several questions were asked about the 2023 remuneration report. These included questions about the link between the company’s performance and its objectives, about the extent to which the various long-term qualitative objectives are taken into account and how they are measured, and whether the Supervisory Board has considered applying a cut to the long-term variable remuneration based on its discretionary powers due to the suboptimal score on the safety target. These questions were answered satisfactorily during the AGM; please see the minutes of the AGM on the company website (Dutch only).

Rosmalen, 28 February 2025