GEO Netherlands Chapter Meeting - Global Equity · Member Driven Not for Profit Organization An Unrivalled Events Program o Industry-leading educational & networking opportunities

GEO Netherlands Chapter Meeting

10 December 2019

Member Driven Not for Profit Organization

An Unrivalled Events Program

o Industry-leading educational & networking opportunities

o Attended by nearly 2,000 delegates in 21+ countries in 2018

A Thriving Membership Base

o A peer network with endless opportunities

o Global community of c. 5,000 individuals from 60+ countries

Resources that Work for You

o Articles, weekly newsletter, events, surveys, webcasts & private online community, GEOconnect

o The information you need, when you need it

EXCLUSIVE to GEO Members

2

Join GEO Today

Global share plan and executive compensation education

Plan strategy and design

Global & multi-national best practices & benchmarking

The latest trends, innovations, & recommendations

Strong global network of equity and executive compensation leaders, decision makers, innovators, academics, experts & professionals

3

Member Benefits you Can't do Without!

The GEO member-only, private and secure online community.

Interact with GEO members around the world wherever and whenever you need to:

and communicate with fellow members

in focused discussion groups

useful and informative document libraries

via a comprehensive member directory

to member blogs and create your own

files and post questions online

4

Participate to gain exclusive access to the 2020 Global

Equity Insights Survey (GEIS) Report- The survey investigates current market practice and trends in equity-based compensation

- You'll benefit from insightful analysis on global long-term incentive plans

- Only participants will receive a copy of the full survey report

- The survey closes for input on 10 January 2020

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Mark Your Calendar

• GEO’s 21st Annual Conference

Renaissance Nashville

21 - 23 April 2020, Nashville, TN

CONFERENCES

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- Submit for a 2020 GEO Award by 10 January.

• NorCal Forum

San Carlos, CA

11 June 2020

• GEO and CEPI East Coast Symposium

New York, NY

22 July 2020

• Australia Regional Events

Sydney and Melbourne

13 & 15 October 2020

• Pan European Regional Event

London, UK

19 November 2020

REGIONAL EVENTS

Mark Your Calendar

7

CHAPTER MEETINGS

8

Mark Your Calendar

• 26 February – Toronto

• 29 March – Israel

Mark Your Calendar

• To be announced

WEBCASTS

9

Issuer Pass Drawing

Be sure to leave your business card with a Chapter Coordinator for your chance to win a complimentary attendee pass to a GEO event of your choice in the coming year!

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www.globalequity.org

11

Charissa SchutteDecember 10, 2019

Equity based pay & Generation Y

© 2019 Deloitte The Netherlands

Millennials

Setting the scene

13GEO Dutch chapter meeting


• 1946 – 1964 Baby Boomers (age 55 – 73)

• 1965 – 1980 Gen X (age 39 – 54)

• 1981 – 1996 Gen Y (or Millennials) (age 23 – 38)

• 1997 – 2010 Gen Z (age 9 – 22)

• 2011 – present Alpha Generation (age birth to 8)

According to Pew Research Center

Understanding the generational labels



Why is it relevant?



A millennial’s thought



Millennials and economy



• Wealth (not necessarily money)

• Transparency and feedback

• Entrepreneurship (ownership with guidance)

• Expectations for advancement

• “Game-ification”

• Flexibility (and travel)

What do we value in the workplace?



Equity based pay



Millennials are really not that different as some tend to believe: remuneration is as important for your younger employees as it is for other age groups.

Is LTI still the way to go?



• Difference in the perception of granting free awards, or investing own funds with a risk:

o Millennials may be more cautious, but may be persuaded by tax benefits to achieve a better net outcome.

o Gen Z may think that all values will go up and are willing to invest with own money;

• Flexibility: partial payments during the cycle of the plan and options for what to receive (shares, cash, education, benefits, etc.)

• Qualitative factors in the plan formula: as Millennials are idealistic, the factors (hopefully in line with your company’s strategy) will be pursued.

Source business insider.com

What type of LTI plan works?



Does it make sense to have a vesting period exceeding two years…?



.. If combined with other important elements within your company: YES!


Summary – plan design

Allow choices

Qualitative KPIs

Grant vs invest

Increased loyalty

Reward is still key

Longer vesting period

Shorter vesting /

plan period


Administration & communication


Interacting with an administrator

28% of Millennials are smartphone-only

internet users

Millennial preferences

• Phone calls are a thing of the past

• Texting still holds the top spot

• Emails still have a place

Must have a robust mobile presence

• Online alone is not enough

• Data suggests laptop / tablet usage is declining amongst millennials


Millennial approach to transaction/account fees

Facts

• Millennials are suspicious about the financial industry

• Alternatives to commission based models are present

o These commission-free providers are offering incentives to switch

• Millennials are picky about where they spend their money

o Is there added value in what you’re providing?

• Millennials are willing to stay if their provider’s system is convenient, intuitive, efficient, and transparent


Suggestions

• Clearly state commission and account fees (if applicable)

o If practical, shift to a zero-commission model

• Providers need to point out the benefits of their platform upfront

o Personalized assistance, unique tools, education

• Be convenient!

Millennial approach to transaction/account fees



What you want to

say

What your audience needs to

hear

Communications bridge the gap

• Technical and often complex

• Not necessarily in the public eye

• Less glamorous than other competing topics

• It usually involves money – a sensitive topic

Communication

Communication - Top tips

• Live your brand - make sure you aren’t compromising on the experience that you offer your employees. Millennials have high standards and are your biggest brand ambassadors, so offer a good experience

• Use communications as a secret weapon - think of communications as a strategy that help you meet your goals and start there

• Spend the budget intelligently - it’s not about having the biggest budget, it’s about choosing a communication method that brings the biggest value for your audience

• Don’t be afraid to try something different - we want to see innovation and feel excited by ideas before we commit to them and keeping things fresh with communications plays a really key part in this.


Charissa Schutte

Deloitte

[email protected]

+31 6 1099 9447

Any questions?


mailto:[email protected]

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms and their related entities. DTTL (also referred to as "Deloitte Global") and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.nl/about to learn more.

Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services. Our network of member firms in more than 150 countries and territories serves four out of five Fortune Global 500® companies. Learn how Deloitte’s approximately 286,000 people make an impact that matters at www.deloitte.nl.

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms or their related entities (collectively, the “Deloitte network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.


c

HOW TO DEAL WITH EQUITY IN THE GIG ECONOMY

10 December 2019

Camiel Selker

WHAT IS THE PURPOSE OF A LONG-TERM INCENTIVE?

34

Retention Long Term Value Creation

Sharing Successes Market Competitiveness

THE TRADITIONAL WAY OF INCENTIVE SETTING

35

Principal Agent

Compensation as a hiring and control

mechanism

Hires

Performs

Goal alignmentLine of sight

Future value

builders

Current value

drivers

NOPAT

WACC

Invested Capital

New products

New markets

Workforce alignment

License to operate

Future invested capital

Shareholder value

Dividend

Market value of equity

Market value of

debt

Enterprise value

WE SEE AN INCREASING NUMBER OF “JOBHOPPERS”

36

2,5%

3,5%

4,5%

5,5%

6,5%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

% o

f w

ork

forc

e

% of workforce changing jobs in the Netherlands

source:

CBS

NEW SKILLS, UP- AND RE-SKILLING

37Source: Boston Consulting Group – Jaap Backx, Anita Coronel

A DECLINE OF FIXED CONTRACTS

38

0%

10%

20%

30%

40%

50%

60%

70%

80%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% o

f w

ork

forc

e

Type of employment contract

Fixed contract Flexible contract Self-employedsource:

NEW SKILLS, UP- AND RE-SKILLING

39

Source: Boston Consulting Group – Jaap Backx, Anita Coronel

AND AN INCREASE OF FLEXIBLE, TEMPORARY, AND FREELANCE JOBS

40

HOW DOES THIS AFFECT THE WAY WE LOOK AT LONG-TERM INCENTIVES?

41

Retention Long Term Value Creation & Alignment

Sharing Successes & Recognition

Market Competitiveness

Does an LTI plan lead toincreased retention?

Can we bind ‘jobhoppers’ to the Long-Term value?

Can we set relevant targets?

Is the effect different formillenials compared to

other generations?

Does the LTI provide a competitive edge in therecruitment process?

TO SOME EXTENT IT DOES

42

Start/ Scale-ups

Innovation

Corporate innovation

Business model

ALL CASES HAVE SOMETHING IN COMMON

A strong sense of purpose

A consistent story of long-term value

A focus on entrepreneurship

Difficulty to measure short- (and long) term success

The need to recognize responsibility and loyalty

43

THIS IS WHERE A DIFFERENCE CAN BE MADE

HOW DOES THIS LINK BACK TO THE PURPOSE OF THE LTI?

44

Retention Long Term Value Creation & Alignment

Sharing Successes & Recognition

Market Competitiveness

Retention oftenovervalued

Feeling ownership bymoving compensation

with the company value

Share successes toembed the employee in

the organization

Standing out by providingan LTI that fits the

organization

THE STORY COUNTS - A LEGISLATIVE PERSPECTIVE

how does the remuneration policy contribute to the strategy, long-term interests and sustainability?

how were the pay and employment conditions of employees of the company taken into account?

how does the policy take account of identity, mission and values of the company and public support and acceptance?

Shareholders Rights Directive II

45

THE STORY COUNTS - BUILT FROM FOUR PERSPECTIVES

EMPLOYER

What is the message

you want to convey to

current and new

employees using this

reward element?

FINANCIAL

What are the capital

restrictions and what

will be the costs to the

organization?

EMPLOYEE

What are the

preferences of your

current and new

employees?

46

MARKET

How does the

proposition stand out

from the market?

EMPLOYER PERSPECTIVE – THE PROPOSITION

Long-term company vision

The culture to set

Type of employee to attract

Employee proposition

47

1

2

3

4

EMPLOYEE PERSPECTIVE – ONE SIZE DOES NOT FIT ALL

48

Common pitfalls

1Value of package not

always driven by money

Different preferences

within the company (e.g.

IT vs accounting)2

THE FINANCIAL PERSPECTIVE – A CASE

Considerations

• Capital restrictions

• Many new hires

• Rapid growth in sales

• “Do or die”

Solutions?

• SARs

• Profit share

49

THE MARKET – A COMPETITIVE PACKAGE

Use benchmarking as a sanity check rather than a guiding principle, but be aware of …

50

…differences between

sectors….

e.g. Tech companies with

higher equity eligibility

compared to non-tech

… and

geographical

differences

E.g. USA more

equity oriented

compared to NL

CONTACT DETAILSPhone : +31 20 240 25 10

E-mail : [email protected]

Web : www.focusorange.com

OUR ADDRESSFocus Orange Advisory B.V.

James Wattstraat 77K, 8TH FLOOR

1097 DL Amsterdam

SOCIAL MEDIA

CONTACT

51

LONG-TERM INCENTIVES @TOMTOM

Mairéad MacLure & Rosemary van Giezen

Global Rewards

WHO WE ARE

Highly-accurate maps

Navigation software

Real-time traffic and services

Highly accurate maps

Navigation software

Real-time traffic and services

Shaping the future of mobility with three core technologies

Location technology expert for developers and businesses• Trillions of TomTom data points empower businesses and

developers to create groundbreaking location-aware technologies.

• Our customers are Microsoft, Uber, Pitney Bowes, SAP, Alteryx,

Trivago, Michelin, application developers, internet-of-things

companies, governments, logistics services and fleet management

experts, and cloud service providers.

• We understand one size doesn’t fit all and work with each

customer to provide custom solutions.

Enterprise

We remap Berlin every 20 minutes

WE ARE TOMTOM

Leading independent location technology

specialist, shaping the future of mobility with

highly accurate maps, navigation software, real-

time traffic information and many more services.

Founder led Dutch multinational

Evolved from startup to established company

Returned to our software development roots

Flat organization, team members have autonomy to

have a real impact

Future focused – future of driving – unknown

Our offices

Headquartered in Amsterdam,

with 44 offices in 37 countries and

more than 5,000 people worldwide.Confidential © 2019 TomTom

TomTom culture

We move fast

We build trust

We keep it simple

We have fun

We have a big

impact

We are entrepreneurial

OUR TALENT

Our people, shaping the future of mobility

• Highly skilled and in demand

• Key skill sets – software development, AI, machine

learning

• Competition from well known global brands,

established traditional companies & local startups

• Solving very complex technical challenges

• Highly engaged

Our talent

2,5%

75,6%

17,0%

5,0%

Generations

Gen Z

Millenials

Gen X

Boomers

28%

72%

Gender

Female

Male

Majority millennials, average age is 36

Very international

Strong social networks within & external to TomTom

Recognition, learning & growth is important

Impact & making a difference matters

Simplicity & transparency valued

OUR PROGRAMS

Key components of our rewards program

Highly competitive salary

Variable pay

Long term incentives

Flexibility & Time off

Recognition

Long-term incentives @TomTom• Provide recognition more than retention: making

the grant into a Moment that Matters

• Create future owners -> driving the success of

the future of mobility

• Reinforce an entrepreneurial mindset

• Be highly inclusive – eligibility starts at early

professional career levels

• Simple: expected to understand immediately

• Provide transparent value: no need for complex

calculations to understand the value

• Delivered in a sexy way

MAIN ISSUES NEW PLAN

Where did we come from?

OLD PLANS

• Stock Options for executives

• Stock Options in combination with

Phantom Shares for middle management

• Phantom Shares for lower grades

• Vesting after 3 years for both plans

• Complexity

• Volatility of stock price and the

(perceived) value of the LTI award

(especially stock options)

• No stimulation of ownership of the

company

• Phantom Shares viewed as a delayed cash

bonus

• RSUs for all

• Vesting after 3 years

• Higher perceived value

• More ownership

• Greater simplicity & transparency

New program – 2019 Simplicity – one program for all – one logo – one way of communicating

I look forward to continually innovating, disrupting mobility and together creating a safer, cleaner, congestion-free world.

Actual ownership upon vest (default vesting is sell to cover)

Perceived value of RSUs is higher

Greater engagement & enthusiasm with the grant

Special Recognition:

• “Moment that Matters” via special one-on-one with manager

• Significant emphasis on “you have been specifically selected to receive”

• Special communication from our CEO

• Link in the messaging to the future, our purpose & their role in it

Did it work? Feedback

72

I am personally aware that the company is recognizing that I am a valuable employee as these grants are not standard for my job grade

It feels good when you get awarded for the work you do. I appreciated the recognition. It was nice as I was not expecting the RSU grant. My manager explained it 1 on 1 and explained why, which was much appreciated.

Made me feel special and appreciated, not only by my manager but also by my PU and TomTom in general.

Really positive message, recognition, contribution being seen and recognized by management.

Unexpected, real compliment, made me feel proud of my work and appreciated for it. Still looking back at the moment with a positive, special feeling and it does influence my decision to stay with TomTom

Remaining challenges

• Competing with the big software companies and their budgets

• Dutch government legislation with regard to executive compensation

• Vesting period compared to competition from US companies

• Tax implications result in complexity at pay-out

• Ensure ALL managers make it a Moment that Matters

I can imagine at some point the grant could be perceived as golden handcuffs, something to consider, a vesting period of 3 years is quite far in the future.

I do wish that my manager did discuss this with me in more detail or took the time to reflect on it more. I just received the letter and that was it basically.

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GEO Netherlands Chapter Meeting - Global Equity · Member Driven Not for Profit Organization An Unrivalled Events Program o Industry-leading educational & networking opportunities