The Company endorses the Corporate Governance Code's principles as applicable to the Company in 2008 and applies virtually all best practice provisions as included in the Dutch Corporate Governance Code applicable to the Company in 2008. Deviations from the best practice provisions involve the remuneration policies of the Company. In particular these deviations stem from the specialized nature of the Company's business, a reflection of local market practice in which executives may be employed and the recognition of pre-existing contractual agreements.
AMG was formed in March 2007 through the merger of eight operating companies. The members of the Management Board had pre-existing contracts as executives of certain of the operating companies that formed AMG. These contracts reflect local market conditions and customary provisions in the countries in which the executives may have been employed. They have provisions that do not fully comply with the Corporate Governance Code's best practices. In view of the specialized nature of AMG's business and the qualifications and expertise of the present members of the Management Board, AMG intends to honor its existing contractual commitments to those members of the Management Board, in order to retain their services and to maintain their commitment to the Company.
The Remuneration Committee of the Supervisory Board has developed in 2008 an appropriate remuneration policy for the present members of the Management Board and any future members of the Management Board in the light of the Company's existing contractual commitments to the present members of the Management Board. In doing so, the Remuneration Committee has sought advice from compensation and benefit consultants on remuneration packages offered by companies similar to the Company in terms of size and complexity. The (revised) remuneration policy for members of the Management Board as proposed by the Supervisory Board will be submitted for adoption by the General Meeting of Shareholders in its Annual Meeting held in May 2009.
The Supervisory Board and the Management Board, which are responsible for the corporate governance structure of the Company, hold the view that the vast majority of principles set forth in the Dutch Corporate Governance Code as applicable during 2008 (i.e. the Dutch Corporate Governance Code as issued on December 9th, 2003) is being applied, while certain deviations are being discussed and explained hereafter. The Company will include in its 2009 annual report, a special chapter on its corporate governance structure and its compliance with the revised Dutch Corporate Governance Code as issued on December 10th 2008.
Below are the best practice provisions included in the Dutch Corporate Governance Code applicable to the Company in 2008, not (fully) applied.
II.2.1
Options to acquire shares are a conditional remuneration component, and become unconditional only when the management board members have fulfilled predetermined performance criteria after a period of at least three years from the grant date.
The members of the Management Board have been granted unconditional options.
II.2.2
If the company, notwithstanding best practice provision II.2.1, grants unconditional options to management board members, it shall apply performance criteria when doing so and the options should, in any event, not be exercised in the first three years after they have been granted.
The members of the Management Board have been granted unconditional options that do not have any performance criteria required to be met. Additionally, the options have a vesting schedule which permits a majority of the options to be exercised within the first three years after having been granted.
II.2.7
The maximum remuneration in the event of dismissal is one year's salary (the 'fixed' remuneration component). If the maximum of one year's salary would be manifestly unreasonable for a management board member who is dismissed during his first term of office, such board member shall be eligible for a severance pay not exceeding twice the annual salary.
Each member of the Management Board has a contract of employment with AMG. That contract provides for a term of two years with severance of two years' compensation payable in the event of termination by the Company without cause. Each member also has a contract entered into by the member with a now-constituent entity of AMG prior to the formation of AMG. With respect to each member, other than Dr. Walter, the contracts generally provide for a comparable term and severance. In the case of Dr. Walter, his original contract, dated October 1, 2006, specified a term of five years; no reference is made to payments of severance in the event of termination.
III.7.1
A supervisory board member shall not be granted any shares and/or rights to shares by way of remuneration.
Shareholders at the General Meeting of Shareholders approved granting shares to members of the Supervisory Board as part of their remuneration.
III.7.2
Any shares held by a Supervisory Board member in the company on whose board he sits are long-term investments.
The undertaking by members of the Supervisory Board not to transfer or otherwise dispose of shares in AMG's share capital until the earlier of the third anniversary of the date of the grant and the first anniversary of the date on which such member ceases to be a member of the Supervisory Board is limited to shares granted as part of their annual remuneration and does not extend to any other shares in the Company held by such member.
