Ladies and gentlemen, a special welcome to Mr. Arnab Loudon. Nice to see you here again. We really appreciate it. I hereby open this Annual General Meeting of Shareholders.
Welcome at the new ExxonMobil Center. We no longer call this our head office. It's our center. Please take note. I hope you like it.
The environment reflects the company's modern way of work, efficient and sustainable. We have no separate offices anymore. That's a good thing. This afternoon, we'll be discussing the annual report, the auditors' report and the final dividend. On our agenda is also the reappointment of our CEO, Mr.
Ton Buchner and appointment and reappointment of 3 Supervisory Board members, Doctor. Kirby, Ms. Waldorf and Mr. Fervain. But first, our secretary will make some other remarks.
In the event of an evacuation, you'll hear the alarm. Please leave the room quietly via the doors to my right and to your left and follow the green exit signs. The elevators will not be functioning. Please use the stairs and follow the instructions of our security staff and emergency guides and assemble behind the building, so not at the main entrance, but behind the building. Thank you.
Before we continue, please switch off all your devices except for your hearing aid. You can leave your hearing aid on. Only shareholders and their proxies, ADR holders, trustees or pledges, members of the Board of Management and the Supervisory Board are entitled to address the general meeting today. Please address all your questions to me using one of the microphones in the aisles and state your name and place of residence. If you are unable to walk to a microphone, one of the hostesses will bring you one.
This meeting is in Dutch, but you can feel free to ask questions in English and some of us will be addressing you in English. If you want to listen to the meeting in English, we have headsets available.
Canal A is for Netherlands.
Channel 1 is Dutch. Please be brief and concise and ask all your questions about an agenda item in one go. Thank you. For questions on the audit report and the external audit process, our external auditor KPMG is present, represented by Messers from Leuven and Neimeier. Would they please rise?
They may take questions about these topics. Our new external auditors, PwC, represented by Mr. Deckers, are present as well. Mr. Deckers, welcome to your 1st shareholders meeting at this company.
Please rise as well. You think they're really with us. Before we start, I'd like to ask our Interim Company Secretary, Mr. Uglom Davey to address some procedural matters. Thank you, Mr.
Chairman. You have voting boxes, chip cards and voting ballots to vote. The voting card provides instructions for voting. If you have any questions, please raise your hand and one of our attendants will explain to you how to operate the voting box. Shareholders have been given the opportunity to vote by remote via the ABN AMRO website.
Mrs. March 23, 2016, has been set as the registration date for this meeting. That means that anyone owning shares on that date was entitled to register to attend vote and participate in today's meeting. The convening notice for this meeting describes how to register. The convening notice and agenda are posted on the AkzoNobel website and securities info website.
A copy of the advertisement and the complete agenda and notes to the agenda have also been placed at the information desk. That means that the meeting has been properly convened and is entitled to adopt legally valid resolutions. Thank you, Roland. Nobody may enter this room after 2:15 p. M.
That way, I'll be able to tell you later on what share of the capital is represented here and how many votes may be cast. The annual report for 2015, which was published on February 23, 26, has been made available to you to read and verify. I'm going to hand you over to our CEO, Mr. Tom Buchnerd, also Chairman of the Board of Management, to present the performance of the company for 2015. Tom, you have the floor.
It
would be like if wood was left to rot, metal rotted and the walls cracked. The world would become colorless, lifeless and devoid of inspiration. That's not how we imagine the world. We have to care for and protect the important things around us, the things you rely on so that you can get on with living your life. That's why Absa Noble is focused on life's to your life, whether you're conserving, treasuring the past or building the world of tomorrow.
To making the world more sustainable by creating more value from radically less resources, to build an inspiring world for a growing population, a world where cities are more human, have a stronger sense of community and are full of energy. We believe that's possible because at Azza Nobel, we create everyday essentials to make people's lives more livable and inspiring. Essential
Ladies and gentlemen, good afternoon. Welcome. As you noticed in the video we just saw, AkzoNobel produces essential ingredients that make daily life more enjoyable, more pleasant, livable and inspiring. We produce essential ingredients, as you see on the slide. Salt, for example, we provide essential protection, whether we're talking about Brazil or South Africa or the Netherlands, we protect a lot of stadiums, including the Chinese one for the Olympics that you've all seen on television.
And of course, essential colors, coatings to beautify your home. You see something wonderful here. This is an app for your iPad or telephone. When you're sitting in your living room, you can redecorate your entire living area. I highly recommend downloading this because all my friends who saw me use it did that and we've already got 10,000,000 downloads.
That's not my number of friends. It's how many people have already downloaded this wonderful product that ensures that in the comfort of your living room, you can try out an entire new interior decoration. These are essential things that AXA brings to people daily. I'll deliver a brief introduction of the highlights from the year under review. As you know, 2015 is the year when we presented that we presented targets for in 2013 and we achieved those targets.
Next, I'll consider 2015 in somewhat more detail and zoom in on the financials. Of course, I'll look ahead with you as well to the next stage in our strategy, where everything we do about sustainability, human cities and of course, wrap up with conclusions and a Q and A session. AkzoNobel, €14,900,000,000 revenue last year with gross earnings of €2,100,000,000 EBITDA about 46,000 employees operating in over 80 countries and many trend setting brands that excel in their markets such as Flexa, Cite De Beve in the Netherlands as well as Deluxe International ICA as important international brands. The revenues were nicely divided among our AkzoNobel's 3 industries: coatings, paints and chemicals. And you will also see the contribution that they provided to AkzoNobel's earnings last year.
We have a broad geographic distribution, which means that we have a keen sense of what's happening in the world and different regions can compensate for one another too. Now the highlights from the year reveal that the financial targets for 2015 that we communicated early in 2013 were not only met but also exceeded. And all we did built a foundation for our next strategy stage, which obviously will concern using the new structures we implemented to achieve growth, innovation and other factors for AXO's success. We introduced the new working methods at Akzo. I'll tell you more about that later on.
And we have an ongoing improvement process that's nicely described with the AkzoNobel leading performance system, which is a continuous improvement process introduced throughout the company. And we've altered their functions to reflect Global Business Services. So that's a different structure. We were also ranked 1st in the Downstream Sustainability Index for the 4th time in Materials, Chemicals and Mining, and we expanded our Human Cities initiatives. We're always interested in what's happening with our employees.
And we noted improved employee satisfaction and improved safety at AkzoNobel. So those were important steps, and our 46,000 employees were dedicated to achieve all of that. Last year October, at an Investor Day, we presented the next stage in our strategy as well. Now back to the targets that we presented in 2013. They included 9% profit margin and a 14% capital return.
And we hadn't achieved those figures in quite a while. What you see in 2015 is that we clearly exceeded these two targets, and that was extremely important. It was our commitment to you as our shareholders. That's why we're happy we delivered this thanks to a lot of hard work and even delivered a better performance. And as for the debt on our gross earnings figures, we said they would remain below 2, and they now stand at 0.6.
That's net debt to EBITDA. So this is excellent for improving AXO in the future. As for the right hand chart, the return on investment, financial value generation is essential and will start only once this figure exceeds 12%. So in the past, we were not actually generating financial value. But since 2015, we've clearly exceeded this threshold and that's a very favorable development for AkzoNobel.
That's if we compare our performance in 2015 to the targets that we set. But if we compare that to several years in the past, we'll note that many of our achievements during the year under review were record performance for AkzoNobel. The EBITDA never exceeded $2,000,000,000 previously. The cash flow did not exceed $1,000,000,000 previously either. Our operating profits did not exceed 1,500,000,000 dollars previously and the adjusted earnings per share never previously exceeded 4.
So these are fine results. And our employees found them highly motivating because they achieved something together that they didn't think would be feasible in 2012 and they're yearning for more. Now taking a closer look at 2015. It's always important to start with our markets. These are our 4 main markets where we supply our products and services.
Building and infrastructure market accounts for 44% of our revenue and is clearly the largest segment. Lots of paints and coatings and some of our chemicals are sold in this branch of industry, which had a variegated development pattern globally. We saw that building in China declined with respect to previous years. And countries such as Brazil and Russia were running into trouble, and that surfaced very quickly in new buildings constructed as well as new projects in renovation. And in Western Europe, we didn't see a lot of growth in 2015 either.
So that segment had difficulties. So that's why we knew at the start of that year that we would need to initiate all improvement, that we couldn't expect any support from markets where we operated. In transportation, it's still more variegated. This segment is clearly smaller, but airplane builders were active. And in automotive, it was one success after another with respect to a number of cars built in China, Europe and America.
And repairs were clearly thriving in 2015 as well. In shipping, we did see that the different costs, so rates that people pay for transport, have declined sharply. And this has made it difficult for the ship owners to earn money and shipyards are in trouble too. In the years ahead, we'll probably notice this in our revenue due to the shipping industry. But in 2015, it was still fairly robust.
As for consumer goods, they're progressing gradually apace. Together with the gross national product, we saw modest but nice growth. And in industrial, where a lot of our chemicals products go, we saw favorable trends in all markets that coincide with the paper industry. But in the oil and gas industry, we saw the opposite. There, we suffered from plummeting investments by our customers.
Our oil and gas customers were clearly tightening their purse strings, and we'll see more of that given the current oil prices. Now as for the financial performance, our revenue was up by 4%. Operating income was up by 59% and our net income was up by 80%. So profitability clearly improved, as you see from the return on sales and return on investment figures, clear improvement despite the difficulty in growing volumes in 2015. As for currencies, that was a favorable effect in 2015.
And those of you who looked at the Q1 results we disclosed yesterday will have noticed that those currencies are now heading in entirely opposite direction. So there are major currency fluctuations, and you'll continue to see those in 2016. Now if we 0 in on the highlights, you'll see once again 4%, revenue increased 59%, operating income increased, a clear increase in return on sales as well as the return on investment. These are fine results, huge increases that our 46,000 people have very hard to achieve. These are records and a fine cash flow that will clearly enable us more easily to deploy growth initiatives.
Now reviewing AkzoNobel's 3 pillars. 1st, decorative paints, over €4,000,000,000 in revenue. And this €4,000,000,000 in revenue is a 3% increase with respect to last year and is mainly attributable to favorable currency effects that we experienced last year. EBITDA rose to 495,000,000 and that's over 90,000,000 more than last year. Operating income increased to €345,000,000 which is a 14% increase compared to the year before our new organizational structure.
Lower costs and restructuring spending and positive currency effects, all helped improve profitability. The operating income as a percentage of revenue is up to 8.6% with respect to 2.2% in 2012. That's a massive increase. Operating income as a percentage of invested capital is up to 11.7% compared to 3% in 2012. And in Performance Coatings, we experienced clear improvements as well.
In Performance Coatings, in 2015, we achieved nearly €6,000,000,000 in revenue, which was 7% with up from last year and positive currency effects influence us. EBITDA increased to €938,000,000 compared with €687,000,000 in 2014. Operating income rose to 792,000,000 from 545,000,000 in 2014, which is an increase of 45%. Since last year, this business has had a new organizational structure that means that Performance Coatings is far more profitable than it was in previous years as well. Operating the return on sales was up to 13.3% compared with 9.4% in 2012, whereas return on investment was up to 29.4% compared with 21.7% in 2012.
So once again, quantum leap forward. As for Specialty Chemicals, Specialty Chemicals branch in 2015 achieved nearly €5,000,000,000 in revenue, which was 2% up with respect to last year. The sale of paper chemicals business to CHEMIRA impacted the revenue, whereas currency effects were positive. EBITDA rose to €898,000,000 compared with €815,000,000 in 2014. Operating income rose to €609,000,000 compared with €508,000,000 in 2014, which is a 20% increase.
The ongoing focus on internal improvement meant that Specialty Chemicals improved profitability with respect to previous years. The return on sales increased to 12 point 2% compared with 9% in 2012, while the return on investment increased to 17.2% compared with 13.6% in 2012. And now we'll watch a brief video. Nearly every day, you either hold or touch an AkzoNobel product, even though many few of us realize that we're doing it. Now the financials, cash management, that's very important for AkzoNobel.
We wanted to improve our cash flow. We do that on the one hand through improved results on the other hand by investing responsibly and keeping them at the right level and by carefully managing our working capital. And you see a sharp decrease in working capital in 2015. That's good. It means that we've improved our management of customer relations and inventory.
That 9.7% an absolute record. And compared with many of our competitors, this reflects a well managed inventory and customer relations. And we're very proud of continuously introducing this increased efficiency, including the respective quarters of 2015. As per capital expenditures, we said that we want those to account for about 4% of our revenue. That's a responsible share of investments so that we can invest in growth too.
And this shows the breakdown between AkzoNobel's different business areas, and we are indeed around that 4%. The last percentage for 2015 is 4.4 because we invested in countries where the value of the currency increased and that carries over throughout. As for dividends, what are we going to do with this cash? Of course, we'll pay part of it at dividends. And our dividend policy remains as is.
Each year, we pay a stable to rising dividend. The proposal for 2015 is to increase the dividend by 7% to €1.55 per share. Once again, you'll have the option of receiving your dividend in shares or in cash. Next, AkzoNobel's strategy that has brought about this huge improvement we just presented. The strategy has worked well for the organization.
It served us well. In the past 4 years, we scrutinized and changed all working methods throughout AkzoNobel. We have fewer tiers, fewer factories, different processes, faster responses, we're more flexible and our agility is greater and that took major change. We did this both in the divisions and in the functions. And that was basically a huge transformation over the past 4 years.
As said, fewer factories to avoid duplication. We simplified processes and we had incredible variety of applications that did the same thing in our IT systems. So we greatly simplified those and we also removed complexity from our product lines. We adjusted our portfolio slightly by selling strategic positions where we were less strong so that in our current portfolio, we can certainly say that we rank 1st, 2nd or 3rd globally, regionally or locally. We also worked very hard to manage our pension commitments, as many of you, especially in England, certain acquisitions came with huge pension liabilities and a lot of cash is invested annually there.
And we've managed that very carefully in the last 4 years so that the profile of the cash spending is declining. For the 4th time in a row in our industry globally, we ranked 1st on the Dow Jones Sustainability Index. So we are doing an excellent job integrating sustainability into our corporate strategy. And our core principles and values as well as the Human Cities initiative has clearly been highlighted in the past 4 years. For the next 4 years, we want to maintain the strategy.
People are very familiar with it and it's stood us in good stead in the past 4 years. So in the next stage this strategy, there are a few musts. One is that all the new working methods we introduced in the past 3 years need to be embedded in our D and A and need to become habits at AkzoNobel. We also need to retain the strength of the operational efficiency we achieved and need to implement productivity increases year after year with action plans that are known at the beginning. And in addition to that operational excellence, we want to introduce organic growth by growing in our core business as well as through innovations that AkzoNobel excels and wherever possible.
We certainly want to be on the team, especially given our improved cash flow. We want to participate in bolt on acquisitions, those small and medium acquisitions that are extremely compatible with individual components in our business. In addition to talking about bolt on acquisitions, you probably noticed in the Q1 that we signed a deal and announced the acquisition of BASF Industrial Coatings Business that BASF was selling. That acquisition costs about $300,000,000 and we hope to be able to close that deal in Q3. And of course, we have targets that we communicated in 2012 for 2015, and that's why we communicated targets for 2018.
And once again, that's the next step up when we're talking about our results. So if for 2015, we were talking about 9% 14% now, we're up to 11% and 16.5% at the top of the bracket, which is an obvious target for 2018. In addition, we intend to grow at a pace at least equal to the market, but in many of our segments, we believe that we can grow faster than the market does. OXO Nobel has always cared deeply about sustainability. Sustainability is important.
We report on this in the annual report, and we live and breathe it in our strategy development. If something has been totally integrated in the business, we presented targets. And we have dashboards that are internal. This is fully integrated in all our activities at AkzoNobel. And here you see four examples of things that clearly contribute.
At the upper left, this was about the fact that our very large plant in the Netherlands consumes an awful lot of energy. On the one hand, it's electricity that is already sustainable, at least most of it's sustainable. But we use a lot of steam there too. That steam is being converted into sustainable steam as well. And of course, many of you have heard of COP21 and have heard of the commitments by different countries to reduce certain carbon dioxide footprints.
And this will make the difference for the Netherlands, not only for OXXO, but for the Netherlands as a whole. So it's a wonderful initiative that is clearly making a difference at several levels. In the upper right, you see a ship painted in our ship coatings. And we always say that these ship coatings ensure that these sell far more efficiently and can save almost 9% in energy. And of course, for ship owners, heavy oil is one of the largest expenses in keeping the ship going.
And to prove this, we commissioned an independent institute to team up with this customer to look at before and after the coating application based on the energy savings introduced issues, carbon dioxide certificates to this customer. So on the one hand, this customer has a certain energy saving based on the coatings. In addition, the customer receives carbon dioxide certificates that can be sold proving that our products are far more sustainable than the other ones because nobody in the industry has this AkzoNobel is alone. At the bottom left, you see Dulux Weather Shield. We have this product in various parts of the country that are hot and sun filled.
You can use a special type of paint to reduce the heat within the building because the UV light reflects far more efficiently than normal paint. So that cuts the cost of air conditioning countries such as Saudi Arabia or Vietnam. We measured savings of 5% to 7%. So this product clearly benefits customer in terms of sustainability. And at the right, at the right, this concerned our Brazilian operations.
We're very close to the industry that uses eucalyptus trees to manufacture pulp and paper. And we have what we call a 4 dimensional profit and loss there. The first was exclusively for Brazil and we published that in the 2014 report. And now we've done the same for this business globally. So we're heading toward the 4 dimensional profit and loss that takes a lot of things besides money into account, environmental the human factor environmental factors.
And with this 4 dimensional profit and loss, we get a better picture of the impact of what we at Accsoon and Bell do for society. And we have a lot of Human Cities activities as well. This initiative encompasses everything with and for society, whether it's sponsoring our community programs. We do this worldwide. We support initiatives that enable people to have more pleasant, more fun and more enjoyable working and living environments all within the Human Cities initiative.
And that has a lot of appeal worldwide because people tend to think that cities are becoming increasingly inhuman. So that's why it's so nice that AkzoNobel can do a lot there and that's why we're going to show you a video about
Estimates suggest over 65% of the world's population will live in cities by 2,050. This will put huge pressure on essential resources and services such as housing, sanitation and education. It's up to all of us to meet these challenges. At axonobel, we're putting our products and expertise to work in the engine room of urban design. This includes schools, hospitals, roads and transport hubs.
We're also helping urban communities to grow and prosper through our Human Cities program. For example, we're revitalizing the Santa Marta favela in Brazil and are safeguarding the heritage of 1 of Singapore's most historically significant buildings. Our hope is that every city, no matter how large, will be a vibrant, inspiring and sustainable place to live.
An incredibly beautiful initiative that benefits a great many people. You are here in a CO2 neutral building, and we believe in a CO2 neutral future, especially for buildings. And wherever the interaction between human beings can be stimulated, we try to use our initiatives. All the financial targets for 2015 have not only been achieved, but they've also been exceeded. And we have shown a clearly visible improvement in terms of cash generation.
We've built a foundation for further continuous improvement of all our businesses. We propose an increase in the final dividend up to 7% to 1.25 per share and we keep focusing on sustainability. And we will try to hang on to we've been able to hang on to the number one position in the Dow Jones Sustainability Index in 2015. We've seen further evolutions in our Human Cities initiative. We've launched the next phase of our strategy.
And in the years ahead, we are aiming to build on the foundations we've created to realize our vision and to deliver a leading performance in the markets in which we operate. Thank you very much. Thank you, Tom. You see excellent results. You may have seen the 1st quarter results.
You see that we've managed to hang on to the trend. After the meeting, you will be able to get copies of Mr. Buchner's speech, and they're available from the information desk. The registration of shareholders was closed at 14:15 hours, and the attendance has been very tied. In euros, €338,780,980,000 is represented.
169,384,490 votes can be cast. The attendance thereby is 67.85%. Now any questions about the financial year 2015 and the financial statements can be asked now. I would again remind you to please ask all your questions relating to this item in one go. You may also ask any questions you have about the strategy or corporate governance of the company.
Questions on the remuneration policy should wait until Item 3A. And any audit related questions should wait until agenda item 3B. Who would like to start? Please proceed. Thank you, Chairman.
My name is Jorna, and I speak on behalf of the VEB, 86,000 shares that have given us the right to represent them here. The aim for the past period was improvement. We see the results now of the Q1. That's great. You really deserve a complement, all of AXA, all of its employees.
What we see is that in that period, Akzo has been had to be fairly calm in acquisition activities. And competitors, PPG and the acquisition of Sharon Williams taking over Folspar shows that big powers are entering this competition now. PPG was already acquiring lately. The question is, how are you going to defend your position? Because what we see is that you want to stay the market leader in your home market and in the growth markets that you want to aim for.
Now there, we hope in connection with the merger that you've just mentioned, a lot of competition in Asia. And apart from that, you've also indicated you've indicated there's no space for large or medium sized acquisitions. It will be difficult given the perspective of the markets you've given. So an acquisition could improve your position, but are small or medium sized acquisitions enough to retain the position that you have now achieved? In that sense, you now have 0.6 space to do so, financial elbow room.
And now if you look at the roof of 2 that you have mentioned, that is about €3,600,000,000 that you allegedly have in your portfolio for acquisitions that would keep you below €2,000,000,000 Well, you propagate the same or a higher dividend. Well, in view of your nice return on investment, the question is couldn't you hadn't you better invest that in your company or in an acquisition? Some names that are mentioned in the market, Evonik could be interested in your Chemicals division. Are you considering a sale of one of your pillars in order to get more money, especially to move better and to expand in the coatings market, which is fairly fragmented. About your strategy, you've defined your targets.
I think you've already exceeded your targets. I do think they are rather conservative. And I would like to see some more ambition in your presentation of that. If you continue as you are doing, they would be too easy to achieve. The peer group that you compare yourself to scores especially on the invested return on sale and does so quite better than You had a fraud case in Chicago.
What measures have you taken to enhance internal controls in order to prevent such matters for the future? Have you changed any audits there? Well, you integrated you introduced the GBS model. What exactly does it entail? Things need to be done in a more central way, I understand, especially in functions such as finance.
How if you are active in 80 countries, how are you going to centralize that, I wonder? And does it also strengthen your internal controls that way? IT systems, you've encrypted them or introduced them. You've abandoned legacy. How far are we with IT?
I suppose we're not finished with that yet. You also mentioned investments, which you now keep at around 4%. Looking at investments in innovations and discoveries you've made, they've been going down for 3 years from 3.73 to 3.63 and the last year to 3.47. Is there enough room for investments? Can you keep them at 4 or shouldn't you increase them?
Well, pensions, another item. Are you going to take any further action to derisk your pension activities? And is there an obligation to pay extra benefits into your fund of €880,000,000 to top up those benefits, yes. So would you top that up? Would that be enough if you do your calculations again?
If we are to believe pension funds here, the shortages are only increasing and the coverage ratios are going down. And that threatens to happen in England as well. In that comparison, what stands out is that in England, discount rate of 3.5 is used, whereas if we look at the coverage if we calculate the coverage ratio in the Netherlands, we unfortunately don't come out there because otherwise, our pension funds would be in a considerably better position. Chairman, your own committee, it strikes us that on Page 174, you indicate your remuneration. On that page, it says that the Vice Chairman gets €78,000 Now in the table below it, nobody receives €78,000 Is somebody being short paid?
Or didn't you have a Vice Chairman in the past period? That is you have asked 11 questions. I have to say, I've done this a number of years, these meetings, but 11 questions, Chairman. Well, all of them, I have to admit, are very good questions. Well, I represent quite a number of shareholders.
Well, I do have to compliment you on one thing, on complimenting us because that's how you started out, and we do appreciate that. Thank you very much. So we'll start. Most of your questions will be asked by Tom Buechner. Strong positions and more competition due to consolidation, how are we going to defend our positions, Tom?
From my side too, thanks for the question. Acquisitions, well, at AXA, we've made a lot of acquisitions in the years behind us. If you look at the ICI and Kurhaus, we're one of the consolidators in the paints and coatings markets. Also on the chemicals side, only we've only been less active for the past 3 years, but we have resumed our activity there. So we do play in the consolidation with the intended acquisition of BASF Industrial Coatings.
All right, I'll approach the microphone a bit more. Okay, that's clearer. So we were a participant. We took it a bit more easy in the past few years, we are back both on the chemical side and on the paints and coating side. There's a lot going on in today's market, also because money is rather cheap at present and people are looking for growth.
I think we've earned the right to be a player there, but we are very selective and we absolutely want every acquisition we do to generate value. We'll continue along that line. We've got we've signed one intended acquisition now, and that brings us back again. And only if we see correct opportunities for acquisitions will join in again. Well, we cannot comment on today's acquisitions being made in the industry, which confirm that these industries are making a consolidating activity in the various elements.
So we'll try to be active there. We've got strong position. Your question again was, how are we going to defend our position within the light of consolidations? Well, especially looking at consolidations now, that doesn't change our individual positions, neither in chemicals or in paints or coatings. They continue to be 1, 2 and 3 positions.
So this consolidation is not going to change anything there. So hence, on the basis of our strong market positions, with further operational excellence and organic growth and possibly through smaller acquisitions, we will clearly be able to defend these positions. And there was a question about the dividend. Hadn't it been invested in the company better? Well, we have a dividend policy of stable or increasing.
We kept things stable for a while. That's why we came up with a proposal for 2015 to increase it by 7%. That's a choice we made. It does not limit us in our growth or in our opportunities for acquisitions. Do you consider selling one of your pillars to enhance the growth of another pillar?
Our focus is to in terms of the operational performance and the growth of all three pillars to expand them, and that's the only focus we have. About the targets you published, are they ambitious enough because many of your targets have already been approached. So aren't we making life too easy for ourselves? That is clearly not the case. We presented these targets in October last year.
We clearly said we need to achieve things in 2015, and we'll move on from there in improving our performance, in improving our growth. And in our view, there is ambition in these targets. Well, it's also conspicuous that in the peer group, the return on sales is a bit low in comparison. Can you explain that? Well, of course, we started things in 2012.
We made tremendous improvements in comparison with certain peers. We're not there yet in terms of profitability. But if you look at the return on capital, then we have clearly reached a position on the high side. So in financial value generation, we're in the better corner of the companies. You can compare in this respect, but profitability can be improved.
And there was a question on the fraud case in Chicago. Do we have have we improved our internal controls? Well, we've done a lot there to see what controls and systems we have, and we've established that our controls and systems are good, but a training program that was implemented throughout the company, which has proved to be very effective. Well, GBS was introduced. So happened that this morning, we had a meeting of the Supervisory Board, and we evaluated that very carefully.
How are we going about this? Well, in the past, every individual AkzoNobel Business had its own management, its own HR and IT people. We've analyzed and standardized systems and processes. We've made smaller companies we've combined smaller companies, and to standardize processes. And this is still going on very effectively.
So there's room for moving ahead, which also answers the question about IT because it's lifting along in that program, yes. Well, about investments in innovation, is it going down? Well, they are around €365,000,000 to €375,000,000 There are fluctuations indeed as is this is to do with the timing of certain projects. But this is the size of magnitude we use for investments, A A question about the pensions. Is it sufficient?
What we've done in the English pensions, we've taken away lots of risks from these pensions by talking to insurance companies and making certain deals. Especially thanks to that, in the past 4 years, we've done a lot to try and buffer fluctuations that might be too strong, so that the predictability of these outflows has increased. It's less volatile, and it's clearly on the decrease for the next few years, so we see a positive development there as well. And finally, there was a question about the remuneration of the Vice Chairman of the Board of Management. It was not mentioned.
That is correct. There is no Vice President of the Board of Management. We also always used to have one. So on the basis of your question, we shall discuss that further internally. Well, this answers the series of questions you had for us, the lady at the front there.
Yes. Thank you, Mr. Chairman. My name is Carole van Lamoon. I work for Robeco.
But today, I'm not only speaking for Robeco, but also on behalf of PME, the pension fund for the metal and electrical engineering, PMT, for metal and technology, PGGM, Mensis and the Gautze. Wow, look there. I don't have 11 questions. And I, too, would like to compliment you, first of all, because we are very well, we'll write that down. We are very pleased with that.
The focus on efficient operations and profitability is, of course, something we applaud. You already mentioned that AkzoNobel is making small bolt on acquisitions, which we welcome as well, provided you comply with strategic and financial hurdles. But after the cost savings and the rearrangement of your balance sheet, we would say AkzoNobel is ready for that. We also find that dividend payments are now covered by your cash flow. That was an important target.
And we also assume that AXA Nobel will, from now on, allow the dividend to grow along with the cash flow. We also complement AXA Nobel on retaining that 1st ranking of sector leader in the Dow Jones Sustainability Index, which is a magnificent performance. Well, this brings me to the market in which AkzoNobel is operating. It is by no means still or quiet. The previous speaker already mentioned the acquisition of Sherr and Williams from Falspar.
And this means there's a bigger gap between Akzo and the numbers 12 in the market. You've just indicated that individual market positions remain the same, but the concentration in the top with number 12 is increasing. So I have a few questions there. This new combination has an overlap with the activities of ExxonMobil in Europe and Emerging Markets. Do you see the combination in these markets as a threat?
And the competition in the British Deco market also intensifying in the long term. How is actually we are dealing with that? It also implies that competitors are more paint companies. Does this have any implications for the strategy for the other businesses of AkzoNobel? I'd also like to dwell briefly on your tax policy.
The tax policy of companies is getting more interest. I understand that the that AkzoNobel is following the outcome of the OESO guidelines. It was indicated last year that AkzoNobel does not want to go for a country by country reporting, but we see DSM and Heineken and other companies making voluntary initial steps there. And from this place, we'd like to ask AkzoNobel to consider doing this, to follow those companies and to specify tax payments per region in the main markets. Your reaction to that request, please?
I also had a question about the fraud case, but that was already answered by your response to the previous speaker. Thank you. Thank you for your compliments as well. Much appreciated. Well, the consolidation, Sherwin Williams with Valspar, there is more overlap with AXA.
Is that a threat, Tom? Well, Valspar was the global competitor in terms of the coatings or lacquers. Sherman Williams was mostly a decorative paint company in Northern America because we were not there. We don't get to meet them a lot. But of course, what we keep seeing, the original competitors we always had with Valspar, look, there's a top 3 in the paints and coatings market, and then there's a certain distance to the next players.
Unfortunately, the top 3 continues to distance itself from the past, and that this movement doesn't change things. We always look at all our individual positions. We have strategies that are clearly effective, as we've shown. It's clear to us that our strategy is right, and that's why we want to continue it and to want to be successful with this strategy for the future. That also true for the British market.
Well, the British market, we are clearly the strongest brand there and the strongest player, and nothing will change there in the future. And implications for the strategy, for the concerned strategy as you just presented it, well, as stated, the strategy we live by today and which we want to uphold for the next phase will stay the same. Nothing will be changed there on the basis of this consolidation movement that we see today. Finally, taxes. The request is then to specify per region or per country.
Well, per region, we don't do that. So can we consider doing this, please?
Tax responsible payer and would be taxed in each of the country following the regulation. In term of the disclosure, we do disclose our tax principle and also under IFRS. And today, we're not disclosing country by country, but we are preparing, of course, towards the new regulation as of next year towards disclosing to the tax regulation country by country. For further disclosure, we are waiting to see what will be the position taken by the European on this issue before taking any further steps.
Okay. Right. Thank you. Who else would like to have the floor? Gentleman at the back.
My name is Van Kaltze. I represent today the VBDO, the Association for Investors in Sustainable Development. So there's a lot of thinking power of many investors and parties in sustainable developments. I don't have a lot of votes that I can contribute today, but our questions and comments are, of course, about sustainability. Firstly, as the previous speakers have done, we would like to complement AkzoNobel on its integration of sustainability in all aspects of its operations.
And we see very clear successes that are being achieved in certain areas, such as safety and also what has mentioned, the historic efficiency index the resource efficiency index. This has led to the remuneration and also to achieving that first ranking, the Dow Jones Sustainability Index, with tremendous performance. I have four questions for you. The 5th question I had was about tax reporting, but you've already answered that when responding to your previous speaker's question. The first one, eco premium.
Particularly the KPI for eco premium solutions, downstream benefits. The solutions, the products that are on the market for this are really anchoring points, you might say, for your sustainability strategy and performance. And they appreciated the contributions to the value chain, but it goes all the way from the supplier to the customer. We understand that it's a problem of a moving target, as you mentioned yourself, and that it will be difficult to attain the same score every year. On the other hand, we also think that most of your innovative efforts are aimed in that direction.
And the report indicates now that you have achieved 90% of sales and you are very clear, very near your target of 20% in 2020. Our question is then, shouldn't you aim for a higher ambition in this area? The second question is CO2 and energy. We see that you measure a lot of things under a kind of umbrella performance indicator that you call operational eco efficiency. Of course, in and of itself, you present an ambitious target for 2020.
But since energy and CO2 are very material to your company and also for us and for the rest of the world, mind you, I would like to understand better what is going on in this area. Wouldn't it be wise then to come up with specific high level targets for energy and CO2 and also with programs to attain those targets? And the same comment, really, that's Remark B within this question. Could it be relevant for other indicators or other areas of attention such as water consumption and water pollution? In any way, for the shareholders of our association, it would make your it would make it easier to follow your performance in this area.
The third question is about supplier sustainability. We find it very interesting that you see your suppliers as partners in sustainability programs. And we also see that it's sector based, so what you are doing together with other companies, this program really helps to assess your suppliers for their risks regarding sustainability. Based on the outcome of the program, our question is, is your own program, which you call SSV, is are you going to make an extra effort there, both in its breadth broad width and depth, sorry. So the EcoVardis program could, for instance, lead to the knowledge of 2nd tier suppliers, the next step in the supply chain.
It could lead to business ethics. So there are certain issues in the supplier chain. Are you going to address that increasingly? And the last point, as you mentioned in your introduction, we find it very interesting to look at your 4 dimensional profit and loss, and the approach is really appreciated, and we ask you to do more. You mentioned certain things, but our question specifically is, are you going to expand this approach to all your important businesses?
Thank you.
Thank you. Now eco premium, 19% of sales. KPI, shouldn't we step that up a bit? Thank you for your question. Eco premium solutions are defined in various ways.
Several companies, including Exxonobella, had roughly the same definition 4 years ago, But we decided to aim higher. Of course, 90% of our innovation pipeline is more sustainable than what's available today. But that makes things too easy. Of course, 45% 50% plus is the old style eco premium. But in many cases, customers love sustainability, but they won't pay a premium until they see a tangible benefit for themselves.
And they need to experience it and be able to quantify it. It's not enough just to tell them about it. So compared with our competitors, we need to demonstrate that tangible benefit to the customer, and that definition is a tougher standard to meet than the conventional eco premium solutions. 20% is quite considerable because you need to demonstrate the benefits. It's nearly 8 dimensions to the customer and for the customer.
You need to get the customer to agree with them. And it's also a moving target because as soon as we deliver a moving target, somebody else tries to copy it. So 20% was aiming high. That was already ambitious. And we're very close to that in our innovative strength.
But we're not ready to adjust these targets yet because we do need to compensate the ones that are discarded. But it's very important for ExxonMobil. This is a standard differentiation for us. And there's a question about energy and carbon dioxide. What's going on there?
And are you going to extend that to water and water pollution? You mentioned the Resource Efficiency Index. That's an invention by AkzoNobel. We devised this index, and it really is ours. It's a combination of financial and sustainable numerators and denominators.
For example, how much carbon dioxide would be emitted into the atmosphere for a zero margin. That integrates finance with sustainability. And we've disclosed some of the targets for carbon dioxide to the public. Of course, we use more of this in chemicals than in paints and coatings. Ordinarily, as AkzoNobel, we use far less compared with the others in our value chain.
And that's why the targets we set are from cradle to grave. In the last 3 or 4 years, we've consumed 20% less energy, and our carbon footprint is also down by 20%. But at the other end of the chain, our suppliers and customers are not entirely on board that way. So we're very actively working with our suppliers. And as far as product development, we tried to see how we can get our customers on board in reducing the cradle to grave carbon footprint.
We do a lot with water. In our case, 90% of the water we use is coolant waters. So we raise the temperature a little bit and then recycle it. It's not traditional wastewater. And in the wastewater, we publish what we do to keep improving that and to ensure that we discharge as little wastewater as possible.
We're very strong there. So in our operational eco efficiency, we have 7 dimensions that are all published in our annual report. And we have actions underway, and we see a clear positive trend. We continue to work on that. As for supply chain sustainability, you mentioned that, but are we talking are we going to extend that to 2nd tier suppliers?
As for our own supplier support functions, those matter most. Aside from that, we're in it together for sustainability initiatives so that not all companies do the same, with the supplier getting infinite audits from different companies. So that's an efficiency gain. And in some cases, we do this at Tier 2 as well. That's not generalized because then you have to approach the energy suppliers of a titanium dioxide supplier.
And we certainly don't always do that. But if we think it's important, we do. The final question was the 4Dimension P and L. AkzoNobel is at the vanguard here too, like with the Resource Efficiency Index, where initiators and co developers. This is fairly resource intensive.
It takes a lot of work, and it does burden the business to get all these answers and to generate this very broad four dimensional footprint. We started with 1 country and then extended that to 1 business unit. Now we're trying to see which business unit will benefit the most. So we are rolling it out, but not all at once throughout the company. We're going to see where it makes the most sense and take it one step at a time.
And thank you for the compliments. We really do appreciate them. Who else would like the floor? Nobody? Okay.
I'm going to wrap up this agenda item. Thank you. Now we're going to talk about implementation of the remuneration policy. Before I give you the floor for Q and A, I'm going to hand you over to the Chairperson, Ms. Saribaldov of the remuneration committee to tell you briefly about implementing remuneration policy in 2015 as described in the annual report.
Sari?
Very good afternoon from me to all of you. And hopefully, I will get a slide on there, which I will use to present the remuneration slide. But anyway, as
we
Up at the top, could you please project the slide?
And can you there we go. So I will briefly go through the remuneration of the Board of Management. And as you can see from the slide, it consists of the following components: annual base salary paid in 12 equal monthly installments, and this is something we review annually. Then short term incentive paid in cash, 1 year performance period. The criteria used for this, 70% are related to financial performance as defined in return on investment operating income and operating cash flow and then 30% related to personal performance.
Then we have long term incentives, which is based on conditional grant of performance shares. There's 3 year performance period and then 2 year holding period. And the measures that are being used there are total shareholder return, 35% return on investment, 35% way and then as we have been discussed already, this Dow Jones Sustainability Index with 30%. If I then get the 2nd page of this, the other elements there, the post contract benefits that relate to there are premiums paid over the base salary in order to enable build of old age benefits. So basically pension related matters.
Then shareholder requirements, we have 3 times gross base salary for the CEO and then one time for the CFO, which will be increased after the 1st full year term for the CEO to €150,000,000 And then as you have read in the remuneration policy, we have the share matching arrangement where up to onethree of the net short term incentive can be matched in shares after 3 years of sustained performance. And I'll just repeat here something that was
approved
at the AGM in 2012 When the initial contract with the CEO was approved in 2012, the CEO invested personal funds on AkzoNobel shares and then shareholders approved that the investment on shares would be matched by AkzoNobel after 4 years in case of sustained performance by the company and April 23, so very soon. And as stated in the annual report, Page 136, the share matching amounts to 11,582 AXA Nobel shares. So I'd just like to finish this off by saying that there's been no change to the remuneration policy since the previous AGM. And the Supervisory Board has ensured that in 2015, the remuneration policy and its implementation were in line with the objectives of the company. I'll be happy to answer any questions you may have.
Thank you.
Thank you,
Sarri. Are there any questions about this item? If not, then I'm going to move on to the financial statements. In his presentation Mr. Buchner, this would be Agenda Item 3B.
Mr. Bruchner presented the most important financials and results for 2015. Are there any additional questions about this agenda item? Yes, Mr. Jorna.
Thank you, Mr. Chairman. I'm not sure whether to ask Mr. Buchner or the auditor, but I may ask both of them. Well, no, you have to ask me.
You'll distribute them. That's it. Okay. On Page 107, there's a SunDry provision. And if I understand correctly, that's a provision for claims.
That's it's 458,000,000 and some claims are pending, including cartel forming. And to Mr. Bruckner, who will certainly confirm this, as well as a question to the auditor, is this enough? Is your provision high enough? So I'd like you to ask both of them.
You shouldn't ask me. I'll start by asking the CFO to answer this question, Melies. [SPEAKER UNIDENTIFIED COMPANY
REPRESENTATIVE:] Yes. We review very carefully, as you know, every year all the provision, which are related to either claim or any environmental matter, and we do believe that the current level of provision is appropriate.
Would you like to elaborate on this point after the CFO statement? Remark off mic, inaudible to interpreter. I'll give the floor to the gentleman from KPMG. Remarks are off mic. Interpreter apologizes.
Inaudible remarks
off mic.
Interpreter, apologize. Thank. Okay. They are based, among others, on estimates by the management, And we assess the estimates by management to see whether they're reasonable, and we're comfortable with the decisions and choices by the management in this context. Thank you very much, Mr.
Von Leeuwen. Are there any other questions? Question is being asked off mic. Yes. In the future, to follow-up on the answer from the auditor, I'd like to ask the auditor.
But obviously, via you, I would never dare ask him directly. But what I'd like to know from the auditor is whether he considers the estimates by the company as defensive or fairly aggressive? Or does he have no opinion about them? Mr. Von Neuven?
Well, perhaps I'll give you a more detailed answer on this subject. As you know, our audit of the financial statements is intended to determine with a reasonable measure of certainty that there are no material errors in the financial statements. And we had a risk based approach. We examined the risks in the firm and the internal audit measures taken. And we determine our approach in auditing the financial statements.
We discussed this at length with our team and with the Supervisory Board and the Board of Management. We have 6 meetings a year with the Supervisory Board's Audit Committee to discuss our approach as well as our findings in the course of the year. In the course of the year, we focused mainly on internal control measures taken by the company. And at year end, we examined the balance sheet and the financial statements. So we observed carefully during the course of the year.
And at the end of the year, in the auditor statement that you'll find on Page 186 of the annual report, you'll see that it's an unqualified auditor's opinion. As for the findings about the internal audit and the financial statements, we report in detail to the management and to the supervisory report in a management letter as well as in a detailed report about our findings concerning the financial statements. And as far as we're concerned, the choices by the management in drafting the financial statements. They have been very balanced in applying the estimates. So that answers your question.
We're comfortable with the estimates by the management. Their choices were very balanced. Any other questions about the financial statements? We're going to vote. I'll indicate clearly when I open the vote and I'll tell you when I close the vote.
After the vote, the results will be projected on the screen, reflecting both the number of votes and the percentage. After that, I'll announce whether a proposal has been accepted or rejected. After the meeting, the voting results will be posted on our website. Proxies with instructions to abstain or vote against explicitly may state that now. Please cast your vote.
5 seconds left. The vote is closed. And you'll see the results on the screen. And I see that the proposal has been accepted. And would the Secretary please record the result?
On to Agenda Item 3C, which is discussion of the dividend policy. Our CFO, Melissa Castello, will elaborate the dividend policy briefly. Please note that this is not a voting item. Dividend policy is not a voting item. Melise?
So our policy is to pay a stable to rising dividend, and the dividend is paid in cash unless the shareholder opt for a share dividend. As mentioned by Tom, for 2015, we are proposing a dividend at €1.55 per share, which means a 7% increase versus 2014, so in line with the policy of stable to rising.
Thank you very much, Melisse. Jan Uverde, now I will now move
on to Agenda Item 3d, the profit allocation and adoption of the dividend for 2015. As previously stated, for the financial year of 2015, the dividend proposed is €1.55 per nominal share of per nominal share of €2. In November 2015, an interim dividend of €0.35 was declared and paid. Upon adoption of the resolution, the remaining final dividend of €1.20 per share will be paid in cash on May 19 under the terms published by AkzoNobel, unless the shareholder opts instead for payment of the dividend in shares. The supervisory board recommends adopting this proposed final dividend for 2015.
Are there any questions about the dividend proposal? Another moment, please. The vote is closed. The result will now appear on the screen. And yes, the proposal has been accepted.
Would the secretary please record the result? Thank you. Agenda Item 4, which is discharge from liability. The discharge of the Board of Management members in office in 2015 for performing their duties in 2015. Are there any questions about this proposal?
Then we'll start voting. Please cast your vote. The vote is closed. The result appears on the overhead screen. The proposal has been accepted.
And once again, would the Secretary please record the result? Now agenda item 4B, discharge from liability of members of the supervisory board in office in 2015 for the performance of their duties in 2015. Are there any questions about this proposal? We'll vote. Please cast your Another moment.
Vote is closed. And you can see the proposal has been accepted. You see the results behind me on the overhead screen. Again, would the secretary please record the results? Now we're going to discuss the proposed reappointment of Mr.
Buchner. This is Agenda Item 5A. Tom's current term of office ends this year. He has confirmed that he is available to be reappointed for another 4 year term and the supervisory board is pleased. Tom joined the Board of Management as CEO in 2012.
A detailed CV appears on our website. In the past 4 years, Ton has delivered an essential contribution to AkzoNobel, heading up the Executive Committee and promoted furthering the company's strategy. The Supervisory Board would like to see this contribution continued and has therefore nominated him for reappointment as of 1 May 2016 for another 4 year term. I'm going to hand you over to Mrs. Boaldauf, who chairs the remuneration committee, to explain the remuneration components of the CEO briefly, sorry.
Very briefly,
the components of the CEO's remuneration remain unchanged. The CEO's base salary will be adjusted in order to in accordance with our policy to position this total direct compensation around the median of the peer group. And this is as per approved policy. And here, the components are the same that I explained a moment ago as part of the remuneration policy. Annual base salary value, €936,000 short term incentive paid in cash, targeted level 100 percent base salary.
Long term incentive, the conditional grant of performance shares, 3 year performance period, 3 performance measures, the same as I discussed earlier. Total shareholder return, return on investments and then some sustainability. And the value there, 150 percent of base salary. Then the pension or the premiums paid for old age benefits, 22.5 percent. And then the short term incentive can be matched in shares after 3 years of sustained performance.
And again, if you have questions, I'll be happy to answer. Thank you.
Yes. To Chien, and Raghun, here over.
Are there any questions about this? If not, please cast your vote. Yes. I asked whether anybody had any questions. About the remuneration policy of Mr.
Buechner. You were asking us to vote about the reappointment of Mr. Buchner. But I don't have any question about remuneration policy. I do have a question about reappointment of Mr.
Buchner. In the past 4 years, he has demonstrated an excellent assessment ability in 2012 when the company was not doing well to the amazement of the supervisory board. They had no idea that the situation was that dire. So he worked hard for 4 years and achieved a lot of operational excellence. The figures look wonderful now, but each stage needs its own captain.
And the question is whether you believe that Mr. Buchner can deliver the same performance in a growth focused OXO. My second question is that Mr. Buchner is also Supervisory Board Member at Novartis. And is that in Akzo's interest?
And is that compatible with his growth oriented performance now? So basically, what you're asking is Mr. Bruckner demonstrated his expertise in cost efficiency, but those are not necessarily the attributes necessary to grow a company that might require different skills. And that might be difficult. Of course, the Supervisory Board considered all aspects of Mr.
Buchner's reappointment. 1st, his review was excellent according to all members unanimously of the Supervisory Board. Of course, we discussed the topic, but we believe that Mr. Bouthner is more than capable of rising to this task. The entire strategy and cooperation with the Supervisory Board has been discussed.
And the initiative from Mr. Buchner and his executive Mr. Buchner came up with the idea of this executive committee after 2 years of thinking about it, he thought this was the right moment to announce it. So he's demonstrated that he can handle the integral issues relating to the company and growth is one component here. I agree with you that he will be calling more upon his creative growth skills in the future than in the past.
But nonetheless, we're confident that Mr. Bouthner can easily rise to this task. I can assure you that the governance procedure was extremely meticulous and the Supervisory Board considered all these aspects. Thank you for this most important question. Finally, his position at Novartis, He was indeed appointed very recently to the Supervisory Board.
And I believe that, that concerns Novartis in Switzerland. AXA's policy has always been for Board of Management members and Executive Committee members to be allowed to hold 1 supervisory Board membership. We believe it enhances the experience of the Board of Management members. And we believe that gaining insight into the operations of other companies and seeing the other side of things enhances the personal development of that member of the Board of Management. So we support it.
We do set a limit at 1. They're not allowed to be members of 2 or 3 or 4 supervisory boards. It ends there. I agreed that AXA needs to get its money's worth. But knowing Mr.
Brufner, we're getting well more than our money's worth. So don't worry about that. Are there any other questions about this topic? No? Please cast your vote.
Right. A few more moments before the voting will be closed. You will see the result shown on the screen. We see that this we see the result. Congratulations.
We are all looking forward. I also see our shareholders, we are all looking forward to a continued cooperation, which brings us to item number 6, the change in the short term incentive performance metrics. I now hand over to the Chairman of the Remuneration Committee, Sari Baldau, for a brief explanation of the proposed change. Msari Haugen?
Briefly. So we are requesting one change to the remuneration policy, and it has to do with the short term incentive performance metrics. In 2013, meeting amended remuneration policy was approved and authorizing the supervisory And what we would like to ask for now is And what we would like to ask for now is your approval to add 1 and which is revenue growth. And this is to ensure the continued alignment of the remuneration policy and the company's organic growth strategy. And as you will remember, when the CEO went through his strategy update, this was one of the things that he emphasized organic growth.
So we ask your approval to add revenue growth to the list of financial metrics and then your approval to authorize the Supervisory Board to select 3 to 4 metrics from the list of now then 7 financial metrics. And we will publish these chosen metrics with their weightings in the annual report. Thanks.
Thank you, Sari. Senjie Frau, over. Thank you, Sari. Questions about this, Mr. Jorna.
Thank you, Chairman. Chairman, we see that the strategy is to promote organic growth, as we've seen in we'd like to add that in the list of 6 or you've added that. Suppose you do so very well, this translates into the above position, the EBIT and EBITDA and what else? Well, it's not really clear to us why growth should be a separate element. And more so, as it says, below that, add revenue growth, not organic.
So we do find this an omission. You should select you should confine yourself to organic growth because we've seen it more, make a very big acquisition. That increases your revenue, and everybody is applauding that. But if you steer at pure revenue, well, that has come with accidents as well. What's your view on that?
Thank you for your question in this respect. It is clear, as Ms. Baldauff said, this is a there's a link between the amended strategy and the targets. Now revenue, of course, has 2 components. The first one can be acquisitions.
The other one is organic growth. Well, in the area of organic growth, Birchener has mentioned that in our strategy. So far, that was lacking a bit, but bolt on acquisitions are also important. So that's why it's been proposed and decided to go for revenue growth. But we do expect organic growth to be a clear component of that.
So it represents both elements, but we think it's a better reflection of the change strategy than purely focusing on organic growth. I wonder whether you have any other comments on that, Tom. No extra comment. Thank you. Sorry?
Thanks. Yes. In fact, I had a question on the same point. We just mentioned the difference between organic growth and revenue growth. How, as shareholders, can we be convinced that there are no value destructive acquisitions being made as a result of these targets?
Well, you're almost asking me for my conscience. If you see that the CEO has been reappointed by 99.9% for 4 years, well, surely, that expresses confidence in the executive management. If you're going to do the same thing for the Supervisory Board members, that also reflects confidence. If you ask us how can we have a guarantee that you won't do anything reckless or hazardous, well, that's a matter of confidence. I think this strategy was explained to you in a very logical way.
And of course, it should come with a bit of revenue growth, which may be via 2 routes: acquisitions organic growth, the latter one being more and more important as we go along and the volume growth we see in our business. But how have you how can you have the guarantee that nothing reckless or hazardous will be done? Well, you should have a certain degree of confidence in the management, Supervisory Board members you appoint. And if you have indications at a certain point that creates uncertainty. I can only advise you to recommend the replacement of such people to which you are authorized, of course, as a shareholder.
Well, there is definitely confidence in the company, that's clear at this moment. But still, the revenue growth is the odd men out here. And there's another question. We regret that AkzoNobel has not also indicated an adjustment in its remuneration policy for the system of performance shares to make it unconditional in case of performance under the median in comparison with the peer group. Last year at the AGM, this was also raised and you indicated then that it would be reviewed in the reviewing process.
And can you indicate why you can you say why you haven't decided to change that? So your question is really, if you are below the median payment is made, nevertheless, though heavily reduced, Why have you not reduced that to 0? That is what you're asking, in fact? Yes. Sari?
I don't I think actually our remuneration policy as it is being implemented follows what you are asking because if the targets are not being met, then the payments don't happen.
Well, my question is about the performance shares. I don't know whether you have understood the question. Can you please state the page on which you have based your question? What page of the remuner?
That you we don't have the kind of systems that you referred to the Performance Series. Is that your question, something that you raised last year? I didn't quite understand what your question was.
Well, in English, there is currently the system that performance shares also gain an outcome if you have performance below median.
And when you say performance below median?
Below the median of the peer group. At least that's how we understand the remuneration policy, but maybe this is the case.
No. Well, perhaps I can shed some light on that is that basically because the remuneration consists of both fixed and variable elements And sort of waiting between these different elements vary in different companies. Some companies like to pay higher fixed salaries and less on performance, and some companies emphasize performance more. And in the case of AkzoNobel, we have quite heavy emphasis on the variable part of that. So in that sense, our remuneration policy is very dependent or strongly linked with performance.
And when we talk about that our policy is to pay at median, when we look at the total compensation, we take into account these different elements. And then we compare data, there are companies that pay at lower quarter, companies that pay at medium, companies that pay at higher quartile. So our policy is to be on the median on the market when everything is taken into account. But if the performance is bad, the result will not be median level because then the variable parts will not pay out. So that's how it works.
So I think we have taken that performance element very strongly into account in our remuneration policy.
And in fact, what Saribaldorf was saying is supported by the fact that on this particular component, the last couple of years couple of the last 5, 6 years, I think, this component has scored 0, yes?
Okay. Well, at least we see that some other companies have different best practice on this. So maybe you could reconsider it again. But thanks for the explanation.
But I will be happy to talk with you offline also.
Right. On we go then to the vote on this policy. Okay. The voting has now been closed. You can see that the resolution has been passed, and I ask the secretary to record the result, which brings us to Agenda Item 7.
This is about the Supervisory Board, the appointment of Doctor. Pamela Kirby and the reappointments of Ms. Hari Baldau for Mr. Ben Froay as members of the Supervisory Board. Brief resumes of each, including relevant data such as occupation, the value of the shares which they hold in the company and an overview of other present positions can be found on our website.
For Sari and Ben, this information is also summarized in the annual report. I can confirm that the confirm that the priority shareholders have resolved to waive their option to make a binding recommendation for these positions. Therefore, the nominations are non binding and subject to regular voting today. So this brings me to the first of today's Supervisory Board nominations addressed under Item 7A, the appointed Doctor. Kirby.
She is Doctor. Kirby is a former CEO of Quintiles Transnational and Chairman of Skenexis Incorporated and has previously held senior positions at AB Astra and Arufmann La Roche and non executive positions at Informa Smith and Nephew and Novo Nordek. She's currently a Non Executive Director of Lekker Bekker Bekker, Hikma Pharmaceuticals, DCC and Polymer Solutions Company, Victrex Plc. Her expertise in both business to business as well as business to customer, strategic and commercial management, coupled with her remuneration, nomination and audit committee experience to date, promises to complement the current Supervisory Board's profile. Doctor.
Kirby, could I ask you to please stand up? Thank you. Are there any questions in relation to this A few more moments. The voting has now been closed. The result should now be shown on the screen.
I find that the resolution has been passed, and I ask the secretary to record the result. Congratulations, Pam. I'd like to turn to our 2nd nomination item under Item 7B, the reappointment of Ms. Baldauf. Ms.
Baldauf's first term of office ends this year, and she has confirmed that she's available to be reappointed for a second term of 4 years. Ms. Baldauf has been a member of the Supervisory Board since May 2012 and is Chairman of the Remuneration a member of the Nomination Committee. Ms. Baldaufs has a commercial background, including senior executive management with the Group Executive Board of Nokia and responsibility for the Nokia Networks Business Group.
The Supervisory Board evaluated the functioning of Ms. Baldauf and established that Ms. Baldauf continues to contribute greatly to the work of the Supervisory Board and its remuneration and nomination committees. If her appointment is improved, the Supervisory Board intends to maintain her expertise and experience as the Chairman of the Remuneration Committee and member of the Nomination Committee. Are there any questions in relation to this proposed appointment?
No? Then let's vote now. The voting is now open. The voting has now been closed. That's the result shown on the screen.
The resolution has been passed, and I ask the secretary to record the result. Congratulations, Sari. I'd like to turn to our 2nd nomination for reappointment under Item 7C, the reappointment of Mr. Ben Verwaian. As with Ms.
Baldauf, Mr. Verwaian has been a member of the Supervisory Board since May 2012, and his first term of office ends this year. He has confirmed the favorability to be reappointed for a second term of 4 years. Mr. Vohrain is a member of both the remuneration and the nomination committee.
His background is one of strategic and executive leadership in large listed companies. The functioning of Mr. Vorajen has also been evaluated, which has resulted in this proposal. The Supervisory Board would like to see Mr. Fravaya reappointed as member of the Supervisory Board and its remuneration nomination committees.
Are there any questions in relation to this proposed appointment? No? Then let's put this to the vote.
And the standing is Bernard Schlot.
And voting is almost closed. The result is closed now. That's the result on the screen. Resolution has been passed. I ask the secretary to record the result.
Congratulations to you too, Ben. Now I'd like to proceed to agenda item 8, the proposal to extend the authorization of the Board of Management to issue shares and to restrict or exclude the preemptive rights of shareholders. This agenda item is presented to shareholders especially every year. 2 other the at this agenda item, 2 resolutions have to be adopted. As for issuing shares, a simple majority of votes cast is required, whereas for the restriction or exclusion of preemptive rights of shareholders, a 2 thirds majority is required if less than half the share capital is represented.
The latter is not the case today. I informed you previously that in this meeting, a share capital of 67.85 percent of our capital is represented. It is proposed to extend the authorization of the Board of Management to issue and grant subscription rights to shares up to a maximum of 10% and in the event of a merger or an acquisition, to increase this authorization by a maximum of a further 10% of the total number of shares preferred shares at the Board of Management's discretion. The authorization is 18 months to starting today or if sooner until the day the authorization is renewed by the Annual General Meeting of Shareholders. Are there any questions in relation to this proposal?
No? Then let's vote. The The statement is slowed. The result is now on the screen. You see this resolution has also been passed.
Please record the results, Secretary. In addition, it may be in the interest of the company that when shares are issued or subscription rights granted, preemptive rights are restricted or excluded. Therefore, we also ask you to extend for a period of 18 months starting today, April 20, 2016 or sooner until the day the authorization is extended by the Annual General Meeting of Shareholders. The authorization of the Board of Management to restrict or exclude the preemptive rights of shareholders. Situations for which this authorization may be required include, for instance, the issue of shares in relation to acquisitions.
It should be noted, however, that the preemptive rights do not apply if shares are fully paid in kind. For example, in case of acquisitions, as stipulated by law, exclusion of preemptive rights may be required for acquisitions if the shares are fully paid up and if the cash money is used to pay the purchase price wholly or in part. Are there any questions in relation to this proposal? No? Let's vote.
Almost closed now. Now closed. There's the result on the screen. Right. You see that this resolution has also been passed.
These are never very popular proposals, but they're still a large majority. On we go to Item 9. This is the proposal to authorize the Board of the company on behalf of the company, starting for a period of 18 months, starting on April 26 or in case of a shorter period until the day the authorization is again extended by the general meeting of shareholders to acquire common shares in the company's share at any time during this period. The number of common shares to be acquired is limited to the maximum number of shares in the company's share capital as permitted by law in the articles of association that you may hold in its own share capital at any given moment. Common shares may be acquired through the stock market or otherwise at a price between par value and the Euronext Amsterdam NV price on the day of purchase, plus 10% on condition that the price is no higher than the opening price on the day of purchase.
The proposal to allow the company to acquire shares also at a price of 10% in excess of the opening price has been inspired by the desire to have greater flexibility in case price fluctuations occur during the day. The lower limit of the far value has been included in the proposal, as the law stipulates that besides an upper limit, there should also be a lower limit. Are there any questions about this proposal? No? Let's vote about this proposal.
The voting is open now. Voting has been closed. The result has appeared. This is far more popular, it appears. And I the resolution has been passed.
On we go to Agenda Item 10, any other business and closing. Does anybody have any other questions or comments? Gerdsson from Amsterdam. I take the liberty to remind you of a question which I asked you 3 years ago, if I'm not mistaken, to which your predecessor, Mr. Vuerstein, said he would consider it.
That was a question whether a shareholder visit to 1 of the plants could be organized. I remember that some 6, 7 years, we went to Dalsal or to and to Sossenheim, and I and many with me found that tremendously interesting, and I assume that the members of the Executive Committee would like to take up this invitation and grant us this opportunity to visit 1 of our plants. Maybe you're going to answer in the same vein as Mr. Feuerstein, but then I hope I'll be hearing more about it than from your predecessor. Well, I'll check with Mr.
Vuerstein what was the basis of his motivation when he said he would consider that seriously. But I'm definitely going to do so as well. Mr. Gerritsen, I will know how to fine you. I'll write you a letter about this before long.
This means that I am taking upon myself the obligation to discuss this with the management. Thank you. And the secretary will definitely help me help remind me to write you that letter. Any other questions? In a previous meeting, I said it is such an enrichment for meetings like this to hear the auditor speak.
Don't you think so, Mr. Jorna? Yes, yes. All right. I think with the tailwind of good results from 2015, we can close this meeting with a feeling of satisfaction.
Thank you for your presence and your cooperation.