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Alignment with DSM’s corporate values and strategy

Remuneration Policy and Triple Bottom line (CSR). Ben W. van Dijk September 3rd, 2010. Alignment with DSM’s corporate values and strategy. DSM: A Century of Transformation. Bioterials Biologics. Evolution. Life Science Products. Performance Materials. Petro-chemicals. Customer intimacy.

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Alignment with DSM’s corporate values and strategy

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  1. Remuneration Policy and Triple Bottom line (CSR) Ben W. van Dijk September 3rd, 2010 Alignment with DSM’s corporate values and strategy

  2. DSM: A Century of Transformation BioterialsBiologics Evolution Life Science Products PerformanceMaterials Petro-chemicals Customer intimacy Fertilizers Coal 1902 1930 1950 1970 1990 2000 2010 Competences mechanical engineering chemistry chemical engineering polymer technology material science adv. organic chemistry biotechnology

  3. Life Sciences Materials Sciences DSM’s Strategy Vision 2010 Climate and Energy Health and Wellness Functionality andPerformance EmergingEconomies EBAs Nutrition Pharma PerformanceMaterials PolymerIntermediates Exploiting strong market positions and technology platforms

  4. Leader 2009 / 2010 DSM’s Triple Bottom Line • Social: People • Sustainability embedded in our company • More diverse workforce • Responsible partner in society Triple Bottom Line • Economic: Profit • Sustainable value creation for our shareholders and customers • CFROI > 8.5% • Environmental: Planet • Improve eco-footprint throughout the value chain • Leader in white biotechnology Simultaneously creating value along three dimensions

  5. We can’t be successful in a world that fails People Planet Profit World Food Programme Climate Change Nr. 1

  6. New MB Remuneration policy DSM • Design of new MB Remuneration policy started two years ago. • Anchor points new policy have been defined, based on consultation of Stakeholders (e.g. Shareholders, Labor Unions, Works council) and external Sustainability/Compensation experts. • Crisis has confirmed the direction of the redesign Remuneration policy. • Remuneration Policy approved by the AGM on March 31, 2010 (99,9 % in favor). Alignment with DSM’s corporate values and strategy

  7. Main Characteristics of new Remuneration policy • Balanced reflection of DSM’s Strategic direction, Corporate Values and the interests of Stakeholders • Sustainability fully embedded in the Remuneration policy • Focus on short-term and long-term value creation • Acceptable remuneration levels, stimulating the right management behavior • Improved transparency and simplicity • Full compliance with Corporate Governance requirements Alignment with DSM’s corporate values and strategy

  8. Key Elements of New Remuneration Policy • Equal distribution of fixed and variable income • Equal distribution of short-term and long-term variable income. • Sustainability targets nearly 50% of performance measures for short and long term variable income. • Variable income linked to measurable performance criteria, predominantly of a long term nature • External remuneration benchmarking only every 3 years • Stock options abolished, performance shares only • Total Direct compensation (base salary plus variable income) approaching the median of the market • Competitive position in the labor market secured Alignment with DSM’s corporate values and strategy

  9. Main elements revised remuneration policy Alignment with DSM’s corporate values and strategy

  10. STI – Performance Measures • DSM has defined value creating performance measures in the area of sustainability • For 2010/2011 ‘first tier’ targets have been defined (see below). Further refinements/improvements of targets and weighting will follow at a later point in time (‘second tier’) based on proper evaluation • The following shared target areas linked to sustainability have been defined for the STI: • ECO+ products – Profitable ECO+ product development, consisting of: • Percentage phase transitions ‘Feasibility’ (phase 2) to ‘Development’ (phase 3) that meet ECO+ criteria • Percentage of Product Launches that meet ECO+ criteria • Energy Consumption Reduction – linked to triple P target of 20% less energy consumption in 2020 compared to 2008 • Engagement Index – Related to the High Performance (HP) Industry norm Alignment with DSM’s corporate values and strategy

  11. LTI – Performance Measures • Managing Board Members will be eligible to performance shares only as part of the Long Term Incentive scheme. Stock options will be abolished • Vesting of performance shares (3 years after granting) will be based on: • Comparable TSR versus a peer group (50%) • Greenhouse Gas Emissions (GHGE) reduction over volume related revenue (50%) Alignment with DSM’s corporate values and strategy

  12. Unlimited.

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