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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
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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
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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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© 2019 Deloitte The Netherlands
• 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
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© 2019 Deloitte The Netherlands
• 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?
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© 2019 Deloitte The Netherlands
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?
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© 2019 Deloitte The Netherlands
• 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?
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© 2019 Deloitte The Netherlands
Does it make sense to have a vesting period exceeding two years…?
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© 2019 Deloitte The Netherlands
.. If combined with other important elements within your company: YES!
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Summary – plan design
Allow choices
Qualitative KPIs
Grant vs invest
Increased loyalty
Reward is still key
Longer vesting period
Shorter vesting /
plan period
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
© 2019 Deloitte The Netherlands
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
© 2019 Deloitte The Netherlands
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
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© 2019 Deloitte The Netherlands
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.
© 2019 Deloitte The Netherlands
Charissa Schutte
Deloitte
+31 6 1099 9447
Any questions?
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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.
© 2019 Deloitte The Netherlands
WHAT IS THE PURPOSE OF A LONG-TERM INCENTIVE?
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Retention Long Term Value Creation
Sharing Successes Market Competitiveness
THE TRADITIONAL WAY OF INCENTIVE SETTING
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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”
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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
A DECLINE OF FIXED CONTRACTS
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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:
HOW DOES THIS AFFECT THE WAY WE LOOK AT LONG-TERM INCENTIVES?
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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?
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
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THIS IS WHERE A DIFFERENCE CAN BE MADE
HOW DOES THIS LINK BACK TO THE PURPOSE OF THE LTI?
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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
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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?
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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
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1
2
3
4
EMPLOYEE PERSPECTIVE – ONE SIZE DOES NOT FIT ALL
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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
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THE MARKET – A COMPETITIVE PACKAGE
Use benchmarking as a sanity check rather than a guiding principle, but be aware of …
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…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
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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 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 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
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
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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.