Ladies and gentlemen, a special welcome to Mr. Arnault Lodon. Nice to see you here again. We really appreciate it. I hereby open this annual general meeting of shareholders. Welcome at the new Akzo Nobel 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 auditor's report, and the final dividend. On our agenda is also the reappointment of our CEO, Mr. Ton Büchner, and appointment and reappointment of three supervisory board members, Dr. Kirby, Ms. Baldauf, and Mr. Verwaayen. 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. 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 pledgees, 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, you can feel free to ask questions in English, some of us will be addressing you in English. If you want to listen to the meeting in English, we have headsets available.
Kanal A is for Nederlands.
Channel one 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 Messrs. Van Leeuwen and Nijmeijer. Would they please rise? They may take questions about these topics. Our new external auditors, PwC, represented by Mr. Dekkers, are present as well. Mr. Dekkers, welcome to your first shareholders' meeting at this company. Please rise as well. You see, they're really with us. Before we start, I'd like to ask our interim company secretary, Mr. Roeland de Wit, 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. Verkerk, a civil law notary of Arnhem, will cast the votes of the proxy and independent third party for the participating shareholders. Wednesday, March 23rd, 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 Akzo Nobel 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, Roeland. 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 23rd, 2016, has been made available to you to read and verify. I'm going to hand you over to our CEO, Mr. Ton Büchner, also Chairman of the Board of Management, to present the performance of the company for 2015. Ton, you have the floor.
Be like if wood was left to rot, metal rusted, 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 that you rely on, so that you can get on with living your life. AkzoNobel is focused on life's essentials, protecting buildings, roads, and transport, developing ingredients for the products you use every day, and bringing color to your life. Whether you're conserving, treasuring the past, or building the world of tomorrow. The only way to be successful in the future is to care about the future. We're dedicated 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 is possible because at AkzoNobel, we create everyday essentials to make people's lives more livable and inspiring. Essential ingredients, essential protection, essential color.
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 are talking about Brazil or South Africa or the Netherlands. We protect a lot of stadiums, including the Chinese one for the Olympics that you have 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 are 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 have already got 10 million downloads. That is not my number of friends.
It is 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 Akzo brings to people daily. I will deliver a brief introduction of the highlights from the year under review. As you know, 2015 is the year that we presented targets for in 2013, and we achieved those targets. Next, I will consider 2015 in somewhat more detail and zoom in on the financials. Of course, I will look ahead with you as well to the next stage in our strategy, where everything we do about sustainability, Human Cities, and of course, we will wrap up with conclusions and a Q&A session. AkzoNobel, EUR 14.9 billion revenue last year with gross earnings of EUR 2.1 billion EBITDA.
About 46,000 employees operating in over 80 countries and many trendsetting brands that excel in their markets such as Flexa, Sikkens in the Netherlands, as well as Dulux International, Inca as important international brands. The revenues were nicely divided among AkzoNobel's three 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 is 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. 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 Akzo's success.
We introduced the new working methods at Akzo. I'll tell you more about that later on. 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. We've altered their functions to reflect global business services. That's a different structure. We were also ranked first in the Dow Jones Sustainability Index for the fourth 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 Akzo Nobel. 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. Back to the targets that we presented in 2013.
They included a 9% profit margin and a 14% capital return. We hadn't achieved those figures in quite a while. What you see in 2015 is that we clearly exceeded these two targets. 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, even delivered a better performance. As for the debt on our gross earnings figures, we said they would remain below two, and they now stand at 0.6. That's net debt to EBITDA. This is excellent for improving Akzo 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%. In the past, we were not actually generating financial value.
Since 2015, we've clearly exceeded this threshold, and that's a very favorable development for Akzo Nobel. That's if we compare our performance in 2015 to the targets that we set. 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 Akzo Nobel. The EBITDA never exceeded EUR 2 billion previously. The cash flow did not exceed EUR 1 billion previously either. Our operating profits did not exceed EUR 1.5 billion previously, and the adjusted earnings per share never previously exceeded four. 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. Taking a closer look at 2015, it's always important to start with our markets.
These are our four main markets where we supply our products and services. The 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. 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. In Western Europe, we didn't see a lot of growth in 2015 either. That segment had difficulties. 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 the markets where we operated. In transportation, it's still more variegated.
The segment is clearly smaller, but airplane builders were active. In automotive, it was one success after another with respect to a number of cars built in China, Europe, and America. 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. In 2015, it was still fairly robust. As for consumer goods, they're progressing gradually, at pace, together with the gross national product. We saw modest but nice growth. In industrial, where a lot of our chemicals products go, we saw favorable trends in all markets that coincide with the paper industry.
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. 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. A 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 directions. So there are major currency fluctuations, and you'll continue to see those in 2016.
If we zero in on the highlights, you'll see once again, 4% revenue increase, 59% operating income increase, 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 worked very hard to achieve. These are records and a fine cash flow that will clearly enable us more easily to deploy growth initiatives. Reviewing AkzoNobel's three pillars. First, Decorative Paints, over EUR 4 billion in revenue, and this EUR 4 billion in revenue is a 3% increase with respect to last year and is mainly attributable to favorable currency effects that we experienced last year. EBIT rose to EUR 495 million, and that's over EUR 90 million more than last year. Operating income increased to EUR 345 million, 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. In Performance Coatings, we experienced clear improvements as well. In Performance Coatings in 2015, we achieved nearly EUR 6 billion in revenue, which was 7% up from last year, and positive currency effects influenced us. EBITDA increased to EUR 938 million compared with EUR 687 million in 2014. Operating income rose to EUR 792 million from EUR 545 million 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.
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. Once again, a quantum leap forward. As for Specialty Chemicals, our Specialty Chemicals branch in 2015 achieved nearly EUR 5 billion in revenue, which was 2% up with respect to last year. The sale of the Paper Chemicals business to Kemira impacted the revenue, whereas currency effects were positive. EBITDA rose to EUR 898 million compared with EUR 815 million in 2014. Operating income rose to EUR 609 million compared with EUR 508 million 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 12.2% compared with 9% in 2012, while the return on investment increased to 17.2% compared with 13.6% in 2012.
Now we'll watch a brief video. A little bit easier, a little bit more fun, and a little bit more pleasant. Nearly every day, you either hold or touch an AkzoNobel product, even though 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. 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% is an absolute record, and compared with many of our competitors, this reflects a well-managed inventory and customer relations.
We're very proud of continuously introducing this increased efficiency, including the respective quarters of 2015. As for capital expenditures, we said that we want those to account for about 4% of our revenue. That's a responsible share of investment so that we can invest in growth, too. 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 out in 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, Akzo Nobel'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 four years, we scrutinized and changed all working methods throughout Akzo Nobel. 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. That was basically a huge transformation over the past four 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. 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, that in our current portfolio, we can certainly say that we rank first, second, or third globally, regionally, or locally. We also work very hard to manage our pension commitments, as many of you, especially in England. Certain acquisitions came with huge pension liabilities, a lot of cash is invested annually there, we've managed that very carefully in the last four years that the profile of the cash spending is declining. For the fourth time in a row in our industry globally, we ranked first on the Dow Jones Sustainability Index. We're 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 four years.
For the next four years, we want to maintain the strategy. People are very familiar with it stood us in good stead in the past four years. In the next stage of this strategy, there are a few musts. One is that all the new working methods we introduced in the past three years need to be embedded in our DNA and need to become habits at Akzo Nobel. 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. In addition to that operational excellence, we want to introduce organic growth by growing in our core business as well as through innovations that Akzo Nobel excels in. 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 first quarter that we signed a deal and announced the acquisition of the BASF Industrial Coatings business that BASF was selling. That acquisition cost about EUR 300 million, we hope to be able to close that deal in Q3. Of course, we have targets that we communicated in 2012 through 2015, that's why we communicated targets for 2018. Once again, that's the next step up when we're talking about our results. If for 2015, we were talking about 9% and 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. Akzo Nobel has always cared deeply about sustainability. Sustainability is important. We report on this in the annual report, we live and breathe it in our strategy development. If something has been totally integrated in the business, we presented targets, we have dashboards that are internal. This is fully integrated in all our activities at Akzo Nobel. 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. We use a lot of steam there, too.
That steam is being converted into sustainable steam as well. Of course, many of you have heard about COP 21 and have heard of the commitments by different countries to reduce certain carbon dioxide footprints. This will make the difference for the Netherlands, not only for Akzo, but for the Netherlands as a whole. It's a wonderful initiative that is clearly making a difference at several levels. Left it. In the upper right, you see a ship painted in our ship coatings, and we always say that these ship coatings ensure that these ships sail far more efficiently and can save almost 9% in energy. Of course, for ship owners, heavy oil is one of the largest expenses in keeping the ship going.
To prove this, we commissioned an independent institute to team up with this customer to look at before and after the coating application, and based on the energy savings introduced issues carbon dioxide certificates to this customer. 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. Akzo Nobel is alone. At the bottom left, you see Dulux Weathershield. 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 a building because the UV light reflects far more efficiently than normal paint.
That cuts the cost of air conditioning in countries such as Saudi Arabia or Vietnam. We measured savings of 5%-7%. This product clearly benefits the customer in terms of sustainability. At the right, this concerned our Brazilian operations, where we're very close to the industry that uses eucalyptus trees to manufacture pulp and paper. We have what we call a four-dimensional profit and loss there. The first was exclusively for Brazil, and we published that in the 2014 report. Now we've done the same for this business globally. We're heading toward the four-dimensional profit and loss that takes a lot of things besides money into account, environmental, the human factor, environmental factors. With this four-dimensional profit and loss, we get a better picture of the impact of what we at Akzo Nobel do for society.
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. That has a lot of appeal worldwide because people tend to think that cities are becoming increasingly inhuman. That's why it's so nice that Akzo Nobel can do a lot there, and that's why we're going to show you a video about it.
Estimates suggest over 65% of the world's population will live in cities by 2050. 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 Akzo Nobel, 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 one 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, we believe in a CO2 neutral future, especially for buildings. 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, 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 EUR 1.55 per share, we keep focusing on sustainability. 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, in the years ahead, we aim 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, Ton. You see excellent results. You may have seen the first 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. Büchner's speech. They're available from the information desk. The registration of shareholders was closed at 14:15 hours, the attendance list has been very tied. EUR 338,768,980 is represented, so 169,384,490 votes can be cast. The attendance thereby is 67.85%. Okay. 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 of your questions relating to this item in one go. You may also ask any questions you have about the strategy or the 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 first quarter. That's great. You really deserve a compliment, all of Akzo, all of its employees. What we see is that in that period, Akzo had to be fairly calm in acquisition activities, and competitors, PPG and the acquisition of Sherwin-Williams taking over Valspar, 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?
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 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 EUR 3.6 billion that you allegedly have in your portfolio for acquisitions. That would keep you below 2.
Well, you propagate the same or a higher dividend. Well, in view of your nice return on investment, the question is, 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 Akzo is doing today. Can you indicate the reason for that? About the internal audit, that aspect in 2014, 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 introduced the GBS model. Well, what exactly does it entail? Things need to be done in a more central way, I understand, especially in functions such as finance. 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 three years, from EUR 373 to EUR 363, and the last year to EUR 347. Is there enough room for investments? Can you keep them at four, or shouldn't you increase them? Pensions, another item. Are you going to take any further action to de-risk your pension activities? Is there an obligation to pay extra benefits into your fund of EUR 880 million to top up those benefits? 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, a discount rate of 3.5 is used, whereas 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 EUR 78,000. In the table below it, nobody receives EUR 78,000. Is somebody being short paid, or didn't you have a vice chairman in the past period? You have asked 11 questions. I have to say, I've done this a number of years, these meetings, 11 questions, Chairman. All of them, I have to admit, are very good questions. I represent quite a number of shareholders.
I do have to compliment you on one thing, on complimenting us, because that's how you started out, we do appreciate that. Thank you very much. We'll start. Most of your questions will be asked by Ton Büchner. Strong positions and more competition due to consolidation. How are we going to defend our positions, Ton? From my side, too, thanks for the question. Acquisitions. At Akzo, we've made a lot of acquisitions in the years behind us. If you look at the ICI and Croda, we're one of the consolidators in the paints and coatings markets. Also on the chemicals side. We've only been less active for the past three years, we have resumed our activity there. 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. We were a participant.
We took it a bit more easy in the past few years, we're 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, people are looking for growth. I think we've earned the right to be a player there, we are very selective, we absolutely want every acquisition we do to generate value. We'll continue along that line. We've signed one intended acquisition now, that brings us back again. Only if we see correct opportunities for acquisitions, we'll join in again. 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. 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? Especially looking at consolidations, no, that doesn't change our individual positions, neither in chemicals or in paints or coatings. They continue to be one, two, and three positions. This consolidation is not going to change anything there. 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. There was a question about the dividend. Hadn't it been invested in the company better? 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 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? Many of your targets have already been approached, 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, we'll move on from there in improving our performance, in improving our growth. 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, if you look at the return on capital, then we have clearly reached a position on the high side. In financial value generation, we're in the better corner of the companies you can compare in this respect, profitability can be improved. There was a question on the fraud case in Chicago. Have we improved our internal controls? Well, we've done a lot there to see what controls and systems we have, we've established that our controls and systems are good, certain rules were broken. We've conducted audits, we've carried out extra training programs, there's a total training program that was implemented throughout the company, which has proved to be very effective. Well, GBS was introduced.
It so happened that this morning we had a meeting of the supervisory board, we evaluated that very carefully. How are we going about this? Well, in the past, every individual Akzo Nobel business had its own management, its own HR and IT people. We've consolidated all of them, we've optimized them. We've analyzed and standardized systems and processes. We've combined smaller companies, especially in their HR and IT departments, which has enabled us to save costs, to enhance efficiency, to standardize processes. This is still going on very effectively. 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 EUR 365 million-EUR 375 million. There are fluctuations indeed.
This is to do with the timing of certain projects. This is the size of magnitude we use for investments, which is fairly good if you compare it to many of our peers, and it also produces good results, as I've shown. The 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. It's clearly on the decrease for the next few years, so we see a positive development there as well. 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. 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 Carola van Lierop. I work for Robeco. 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, Menzies, and De Goudse. Wow, look there. I don't have 11 questions. 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 Akzo Nobel is making small bolt-on acquisitions, which we welcome as well, provided you comply with strategic and financial hurdles. After the cost savings and the rearrangement of your balance sheet, we would say Akzo Nobel is ready for that. We also find that dividend payments are now covered by your cash flow. That was an important target. We also assume that Akzo Nobel will from now on allow the dividend to grow along with the cash flow. We also compliment Akzo Nobel on retaining that first ranking of sector leader in the Dow Jones Sustainability Index, which is a magnificent performance. Well, this brings me to the market in which Akzo Nobel is operating. It is by no means still or quiet.
The previous speaker already mentioned the acquisition of Sherwin-Williams and Valspar. This means there's a bigger gap between Akzo and the numbers one and two in the market. You just indicated that individual market positions remain the same. The concentration in the top with number one and two is increasing. I have a few questions there. This new combination has an overlap with the activities of Akzo Nobel in Europe and emerging markets. Do you see the combination in these markets as a threat? The competition in the British deco market is also intensifying in the long term. How is Akzo Nobel dealing with that? It also implies that competitors are more paint to paint companies. Does this have any implications for the strategy for the other businesses of Akzo Nobel? I'd also like to dwell briefly on your tax policy.
The tax policy of companies is getting more interest. I understand that Akzo Nobel is following the outcome of the OESO guidelines. It was indicated last year that Akzo Nobel 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. From this place, we'd like to ask Akzo Nobel 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. The consolidation, Sherwin-Williams with Valspar, there is more overlap with Akzo. Is that a threat, Ton?
Well, Valspar was the global competitor in terms of the coatings or lacquers. Sherwin-Williams was mostly a decorative paint company in North 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 three in the paints and coatings market, and then there's a certain distance to the next players. Unfortunately, the top three continues to distance itself from the past, and this movement doesn't change things. We always look at all our individual positions, and 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 U.K. market?
Well, the U.K. market, we are clearly the strongest brand there and the strongest player, and nothing will change there in the future. 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. Taxes. The request is then to specify per region or per country. Well, per region, we don't do that. Can we consider doing this, Maëlys?
Tax-responsible payer. We pay tax in each of the country following the regulation. In term of the disclosure, we do disclose our tax principle and also under IFRS. Today, we're not disclosing the country-by-country, but we're preparing, of course, towards the new regulation as of next year towards disclosing too, the tax regulation, the 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. Thank you. Thank you. Who else would like to have the floor? Gentleman at the back. My name is Van Karlser. I represent today the VBDO, the Association for Investors in Sustainable Development. 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 compliment Akzo Nobel on its integration of sustainability in all aspects of its operations. We see very clear successes that are being achieved in certain areas such as safety, and also what is mentioned, the historic efficiency index, the Resource Efficiency Index. This has led to the remuneration and also to achieving that first rank in the Dow Jones Sustainability Index with tremendous performance.
I have four questions for you. The fifth 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. 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. The report indicates now that you have achieved 90% of sales, and you are very near your target of 20% in 2020. Our question is, 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. 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 to come up with specific high-level targets for energy and CO2 and also with programs to attain those targets? 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 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. We also see that it is sector based. 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 your own program, which you call SSV, are you going to make an extra effort there, both in its breadth, width, and depth? Sorry. The EcoVadis program could, for instance, lead to the knowledge of second-tier suppliers, the next step in the supply chain. It could lead to business ethics. There are certain issues in the supplier chain. Are you going to address that increasingly? The last point, as you mentioned in your introduction, we find it very interesting to look at your four-dimensional profit and loss, and the approach is really appreciated, and we ask you to do more. You mentioned certain things, 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 Akzo Nobel, had roughly the same definition four years ago. We decided to aim higher. Of course, 90% of our innovation pipeline is more sustainable than what's available today. That makes things too easy. Of course, 45% and 50-plus% is the old style Eco-premium. 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.
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 as nearly eight dimensions to the customer and for the customer. You need to get the customer to agree with them. It's also a moving target because as soon as we deliver a moving target, somebody else tries to copy it. 20% was aiming high. That was already ambitious, and we're very close to that in our innovative strength. We're not ready to adjust these targets yet because we do need to compensate the ones that are discarded. It's very important for Akzo Nobel. This is a standard differentiation for us.
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 Akzo Nobel. 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. 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 Akzo Nobel, 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 three or four 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. We're very actively working with our suppliers. As far as product development, we try 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 water. We raise the temperature a little bit and then recycle it. It's not traditional wastewater. 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.
In our operational eco-efficiency, we have seven 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 going to extend that to second-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. 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. We certainly don't always do that, but if we think it's important, we do. The final question was the four-dimension P&L.
Akzo Nobel is at the vanguard here, too, like with the Resource Efficiency Index. We're 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 one country and then extended that to one business unit. Now we're trying to see which business unit will benefit the most. 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. Thank you for the compliments. We really do appreciate them. Who else would like the floor? Nobody? 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&A, I'm going to hand you over to the chairperson, Mrs. Sari Baldauf 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, Hopefully, I will get a slide on there, which I will use to present the remuneration slide. Anyway, as we-
Can't you dive over in the,
Up at the top. Could you please project the slide?
There we go. I will briefly go through the remuneration of the board of management, As you can see from the slide, it consists of the following components: annual base salary paid in 12 equal monthly installments, This is something we review annually. Short-term incentive paid in cash, one-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, 30% related to personal performance. We have long-term incentives, which is based on conditional grant of performance shares. There's a three-year performance period and then a two-year holding period. The measures that are being used there are total shareholder return, 35%, return on investment 35% way, as we have discussed already, this Dow Jones Sustainability Index with 30%.
If I get the second page of this. The other elements there, the post-contract benefits that relate to premiums paid over the base salary in order to enable build of old-age benefits. Basically, pension-related matters. Shareholder requirements. We have three times gross base salary for the CEO and one time for the CFO. Which will be increased after the first four-year term for the CEO to 150. As you have read in the remuneration policy, we have the share matching arrangement where up to one third of the net short-term incentive can be matched in shares after three years of sustained performance. 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 Akzo Nobel shares, shareholders approved that the investment on shares would be matched by Akzo Nobel after four years in case of sustained performance by the company and continuous employment as CEO. This four-year condition will be met April 23, very soon. As stated in the annual report, page 136, the share matching amounts to 11,582 Akzo Nobel shares. 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, Sari. Are there any questions about this item? If not, I'm going to move on to the financial statements. In his presentation, Mr. Büchner, this would be agenda item 3B. Mr. Büchner 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. Büchner or the auditor, 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, if I understand correctly, that's a provision for claims. That's EUR 458 million, some claims are pending, including cartel forming. To Mr. Büchner, who will certainly confirm this, as well as a question to the auditor, is this enough? Is your provision high enough?
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. Maëlys.
Yeah, we review very carefully as you know, every year, all the provision, which are related to either claim or any environmental matter. We do believe that the current level of provision is appropriate.
Would you like to elaborate on this point after the CFO's statement? I'll give the floor to the gentleman from KPMG. Thank you. Okay. They are based among others on estimates by the management. We assess the estimates by management to see whether they're reasonable. We're comfortable with the decisions and choices by the management in this context.
Thank you very much, Mr. Van Leeuwen. Are there any other questions? Yes. In the future, to follow up on the answer from the auditor, I'd like to ask the auditor, obviously via you, I would never dare ask him directly.
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. Van Leeuwen. 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. We have a risk-based approach. We examine the risks in the firm and the internal audit measures taken. We determine our approach in auditing Financial statements. We discussed this at length with our team and with the Supervisory Board and the Board of Management. We have six 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. At year-end, we examined the balance sheet and the financial statements. We observed carefully during the course of the year. At the end of the year, in the auditor's 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 Board in a management letter as well as in a detailed report about our findings concerning the financial statements. 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. Did that answer 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. 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.
Five seconds left. The vote is closed.
You'll see the results on the screen. I see that the proposal has been accepted. Would the secretary please record the result? On to agenda item 3C, which is discussion of the dividend policy. Our CFO, Maëlys Castella, will elaborate the dividend policy briefly. Please note that this is not a voting item. Dividend policy is not a voting item. Maëlys.
Our policy is to pay a stable to rising dividend, the dividend is paid in cash unless the shareholder opts for a share dividend. As mentioned by Ton, for 2015, we are proposing a dividend at EUR 1.55 per share, which means a 7% increase versus 2014, in line with the policy of stable to rising.
Thank you very much, Maëlys.
Moving 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 EUR 1.55 per nominal share of EUR 2. In November 2015, an interim dividend of EUR 0.35 was declared and paid. Upon adoption of the resolution, the remaining final dividend of EUR 1.20 per share will be paid in cash on May 19th, under the terms published by Akzo Nobel, 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? No. Please cast your vote. Another moment, please.
The vote is closed.
The vote is closed. The result will now appear on the screen. Yes, the proposal has been accepted. Would the secretary please record the result? Thank you. Agenda item four, 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? We'll start voting. Please cast your vote. Another moment.
The vote is closed.
The vote is closed. The result appears on the overhead screen. The proposal has been accepted. Once again, would the secretary please record the result? 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. 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? We're going to discuss the proposed reappointment of Mr. Büchner. This is agenda item 5A. Ton's current term of office ends this year. He has confirmed that he's available to be reappointed for another four-year term, and the Supervisory Board is pleased. Ton joined the Board of Management as CEO in 2012.
A detailed CV appears on our website. In the past four years, Ton has delivered an essential contribution to Akzo Nobel, heading up the Executive Committee, and he 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 four-year term. I'm going to hand you over to Mrs. Baldauf, 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 accordance with our policy, to position his total direct compensation around the median of the peer group. This is as per approved policy. Here the components are the same that I explained a moment ago as part of the remuneration policy. Annual base salary, the value EUR 936,000. Short-term incentive paid in cash, targeted level 100% base salary. Long-term incentive, the conditional grant of performance shares, three-year performance period, three performance measures, the same as I discussed earlier. Total shareholder return on investments, and then some sustainability. The value, the 150% of base salary. Then the pension or the premiums paid for old-age benefits, 22.5%. Then the shareholding requirements I already mentioned earlier, three times gross base salary.
going forward is up to one-third of the net short-term incentive can be matched in shares after three years of sustained performance. Again, if you have questions, I'll be happy to answer. Thank you.
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. Büchner. You were asking us to vote about the reappointment of Mr. Büchner, but I don't have any question about remuneration policy. I do have a question about reappointment of Mr. Büchner. In the past four 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. He worked hard for four years and achieved a lot of operational excellence. The figures look wonderful now, but each stage needs its own captain. The question is whether you believe that Mr. Büchner can deliver the same performance in a growth-focused Akzo.
My second question is that Mr. Büchner is also a Supervisory Board member at Novartis. Is that in Akzo's interest, and is that compatible with his growth-oriented performance now? Basically what you're asking is Mr. Büchner 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. Büchner's reappointment. First, his review was excellent according to all members unanimously of the Supervisory Board. Of course, we discussed the topic, but we believe that Mr. Büchner 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. Büchner and his executive.
Mr. Büchner came up with the idea of this Executive Committee after two years of thinking about it. He thought this was the right moment to announce it. 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 we'll be calling more upon his creative growth skills in the future than in the past, but nonetheless, we're confident that Mr. Büchner 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. I believe that concerns Novartis in Switzerland.
Akzo's policy has always been for board of management members and executive committee members to be allowed to hold one 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. We support it. We do set a limit at one. They're not allowed to be members of two or three or four supervisory boards. It ends there. I agreed that Akzo Nobel needs to get its money's worth, but knowing Mr. Büchner, 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.
A few more moments before the voting will be closed. You will see the result shown on the screen. 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 six, the change in the short-term incentive performance metrics. I now hand over to the chairman of the Remuneration Committee, Sari Baldauf, for a brief explanation of the proposed change. Ms. Sari,
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 board to annually select two to three financial metrics from a list of six. And you see those six over there. And what we would like to ask for now is your approval to add one, which is revenue growth. 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.
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 three to four metrics from the list of now then seven financial metrics. And we will publish these chosen metrics with their weightings in the annual report. Thanks.
Thank you, Sari.
Thank you, Sari. Questions about this? Mr. Joorna.
Thank you, Chairman. Chairman, we see that the strategy is to promote organic growth, as we've seen. We'd like to add that in the list of six, you've added that. Suppose you do so very well. This translates into the above position, the EBIT and EBITDA. What else? It's not really clear to us why growth should be a separate element. The more so, as it says below that, add revenue growth, not organic. We do find this an omission. 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. If you steer at pure revenue, 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. Baldauf said, there's a link between the amended strategy and the targets. Revenue, of course, has two components. First, the first one can be acquisitions, the other one is organic growth. In the area of organic growth, Mr. Büchner has mentioned that in our strategy so far, that was lacking a bit, but bolt-on acquisitions are also important. That's why it's been proposed and decided to go for revenue growth. We do expect organic growth to be a clear component of that. It represents two, both elements. 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, no extra comment. Thank you. Sari? Thanks. Chen.
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 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, of course, it should come with a bit of revenue growth, which may be via two routes, acquisitions, organic growth. The latter one being more and more important as we go along, the volume growth we see in our business. 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, but also in the supervisory board members you appoint. If you have indications at a certain point that create 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. Still, the revenue growth is the odd man out here.
There's another question. We regret that Akzo Nobel 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, you indicated then that it would be reviewed in the reviewing process. Can you indicate why you haven't decided to change that?
Your question is really, if you are below the median, payment is made nevertheless, though heavily reduced. Why have you not reduced that to zero? That is what you're asking, in fact?
Yes.
Thank you. Sari?
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 remuneration?
You don't have the kind of system that you refer to, the performance shares. 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.
When you say performance below median?
Below the median of the peer group. At least that's how we understand the remuneration policy, maybe this is too complicated and should we leave this for?
No. Well, perhaps I can shed some light on that. Is that basically because the remuneration consists of both fixed and variable elements, and the weighting 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. In the case of Akzo Nobel, we have quite heavy emphasis on the variable part of that. In that sense, our remuneration policy is very dependent or strongly linked with performance. 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 the market data. When you look at the market data, there are companies that pay at lower quartile, companies that pay at medium, companies that pay at higher quartile.
Our policy is to be on the median on the market when everything is taken into account. If the performance is bad, the result will not be median level because then the variable parts will not pay out. That's how it works. I think we have taken that performance element very strongly into account in our remuneration policy.
Yeah. In fact, what Sari Baldauf is saying is supported by the fact that on this particular component, the last couple of years, the last five, six years, I think, this component has scored zero. Yes?
Okay. Well, at least we see that some other companies have different best practices on this. Maybe you could reconsider it again. Thanks for the explanation.
I will be happy to talk with you offline also.
Right. On we go then to the vote on this policy. A few more moments. Okay. 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 our agenda item seven. This is about the supervisory board, the appointment of Dr. Pamela Kirby and the reappointments of Ms. Sari Baldauf and Mr. Ben Verwaay 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 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. This brings me to the first of today's supervisory board nominations addressed under item 7A, the appointment of Dr. Kirby. Dr. Kirby is the former CEO of Quintiles Transnational and chairman of Scynexis, Inc., and has previously held senior executive positions at Astra AB and Hoffmann-La Roche, and non-executive positions at Informa, Smith & Nephew, and Novo Nordisk. She is currently a non-executive director of Reckitt Benckiser, 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. Dr. Kirby, could I ask you to please stand up? Thank you. Are there any questions in relation to this proposed appointment? No? Let's vote then. Aye's are open.
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 second nomination item under item 7B, the reappointment of Ms. Baldauf. Ms. Baldauf's first term of office ends this year. She has confirmed that she's available to be reappointed for a second term of four years. Ms. Baldauf has been a member of the supervisory board since May 2012 and is chairman of the remuneration and a member of the nomination committee. Ms. Baldauf 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 reappointment is approved, the Supervisory Board intends to maintain her expertise and experience as a Chairman of the Remuneration Committee and member of the Nomination Committee. Are there any questions in relation to this proposed appointment? No? 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 second nomination for reappointment under item 7C, the reappointment of Mr. Ben Verwaayen.
As with Ms. Baldauf, Mr. Verwaayen has been a member of the Supervisory Board since May 2012, and his first term of office ends this year. He has confirmed availability to be reappointed for a second term of four years. Mr. Verwaayen 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. Verwaayen has also been evaluated, which has resulted in this proposal. The Supervisory Board would like to see Mr. Verwaayen reappointed as member of the Supervisory Board and its Remuneration and Nomination Committees. Are there any questions in relation to this proposed appointment? No, let's put this to the vote. The voting is almost closed. The result is closed now. That's the result on the screen. The resolution has been passed.
I ask the Secretary to record the result. Congratulations to you too, Ben. 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 every year. At this agenda item, two 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 two-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% 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 outstanding today, April 20, 2016. These additional subscription rights may be issued as common shares and/or preferred shares at the Board of Management's discretion. The authorization is 18 months, 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, let's vote. The voting is now open. The result is now on the screen. You see this resolution has also been passed. Please record the result, 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 20th, 2016, or if 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 there's still a large majority. On we go to item nine.
This is the proposal to authorize the board of management to acquire common shares in the share capital of the company on behalf of the company, for a period of 18 months, starting on April 26th, 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 capital 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 and 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 N.V. 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 par 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. The voting has been closed. The result has appeared. This is far more popular, it appears.
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? Gerritsen 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. Vuursteen, said he would consider it. That was a question whether a shareholder visit to one of the plants could be organized. I remember that some 6, 7 years we went to Delfzijl and to Sassenheim, 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 one of our plants.
Maybe you're going to answer in the same vein as Mr. Vuursteen , I hope I'll be hearing more about it than from your predecessor. Well, I'll check with Mr. Vuursteen what was the basis of his motivation when he said he would consider that seriously, I'm definitely going to do so as well. Mr. Gerritsen, I will know how to find 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. The secretary will definitely 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. 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.