Ladies and gentlemen, can we open the meeting? It's wonderful to see so many people in the room, and I hope we will have a very pleasant and interesting meeting. I hereby open the meeting and welcome all of you, both the shareholders, and all those who are interested, and all guests. For those present for the first time, my name is Rob Routs, and I'm Chairman of the Supervisory Board of Royal DSM. On the podium behind me, you find members of the Supervisory Board, Pauline van der Meer Mohr, Eileen Kennedy, Victoria Haynes, Frits van Paasschen, John Ramsay, and Pradeep Pant. Also present among us, Erica Mann. Her appointment is on the agenda today.
In the first row, you'll find the members of the Managing Board, Feike Sijbesma, Geraldine Matchett, and Dimitri de Vreeze. Next to me, Louisa van den Broek, Company Secretary. She'll draw up the minutes of today's meeting. Present in the room also, members of the Executive Committee in charge of strategy and DSM Food Specialties, Philip Eykerman. On behalf of P&O, we have Joseph Wiese, and for innovation, we have Rob van Leen and his successor, Trish Malarkey. I'll come back to this in a moment. Chris Goppelsroeder, in charge of DSM Nutritional Products, unfortunately had to be excused. Employees from several departments and business units are here, such as corporate control and accounting, legal, investor relations, and sustainability. I would like to particularly mention Atzo Nicolaï, who is leaving us after eight years as President of DSM Netherlands.
Atzo, thank you for your contribution throughout all those years, and I would like to very warmly welcome his successor, Edith Schippers. I would also like to welcome Erik van der Dussen and his colleagues from KPMG, our external auditors. In line with the Corporate Governance Code, the auditor is present to answer your questions under item four, adoption of the financial statements, your questions about the fairness of the financial statements. We will have a brief commentary by the auditor later on. I also would like to welcome Joyce Leemrijse, notary public working with Allen & Overy. There was a possibility to give proxies and voting instructions to her as an independent party. She will supervise the conduct of this meeting with observance of all regulatory and statutory requirements, and this will be happening as usual.
You had the opportunity to consult the agenda and the explanatory notes that have been published on March 26. The registration date was Wednesday, April 10, in line with the statutory term of 28 days exactly prior to this meeting. I therefore conclude that the notice convening this AGM has been published with due observance of all legal and statutory requirements, and that therefore, this AGM is qualified to take legally binding decisions. A few household announcements. Please notice the location of the emergency exits marked with green signs, and in the case of an evacuation, please follow the comments of the Shell. No, not Shell, DSM officers. That's a long time ago.
DSM will do, says the chairman, really I'm blushing. Please follow the instructions of the DSM officials. The language of this meeting is the Dutch language. If you wish to do so, you can also make any comments or ask questions in English. Ms. Matchett will answer in English. We have simultaneous interpretation from Dutch into Dutch and back. We have shareholders.
Not have a headset yet to get simultaneous translation into English and vice versa. Headsets are available at the entrance of this room. It is possible to raise questions using the English language. Mrs. Matchett will always reply in English.
We will deal with the items on the agenda in groups, and after the discussion, there will always be the opportunity for asking questions. My proposal is that as usual, for each agenda item, every speaker in the first round will have the opportunity to ask a maximum of 3 questions. I know this is a source for frustration or irritation from time to time, but this is the best way to get us through this meeting. Then in the second or following rounds, you will have another opportunity to ask 3 questions. In this way, all those wishing to do so can take the floor. During this meeting, we will use an electronic voting system to conduct the vote, and the Corporate Secretary will comment and explain on the procedure. She will also lead the voting procedure. Please switch your mobile phones to silent mode.
Let me point out that during the meeting, it is not allowed to make any audio or video recordings. For the sake of the minutes out by the notary public, we will have an audio recording. Also, we have a recording of the live coverage on the webpage of DSM. This live feed will be available on the webpage of DSM later on. Throughout the meeting, you have coffee, tea, and drinks, and some snacks in the hall with a large screen so you can follow the meeting over there as well. Please do not bring any cups or glass into the room.
After the presentation by Mr. Sijbesma, I will inform you of the percentage of the issued capital eligible to vote present or represented in this meeting. Before we turn to the agenda of today's meeting, let me point your attention to the person of José Hernandez Gomes de Freitas . In a company where safety is a core value, he died during his work as a contractor working for DSM in Pecém in Brazil. His death clearly demonstrates that DSM can only be successful as a company when any person working for DSM will safely return home at the end of a working day. This applies to all those in this room as well. Let me now carry on with the meeting. I will now turn to the discussion of item two of the agenda, which is the annual report of the Managing Board.
Before I give the floor to Mr. Sijbesma, the Chairman of the Managing Board, in order to comment on the developments of the past year, I would like to compliment him, his team, and the company with the wonderful results of 2018. The results we see flowing over into the first quarter of 2019. We've seen an outstanding year once again with a record performance. Actually since 2015, every year has been a record-breaking year, and according to yesterday's outlook, 2019 promises to do the same. We've also concluded the successful strategy period 2016, 2018, with the vast portfolio transformation of the DSM. A splendid foundation has been placed for the further growth of the company based on the strategy update presented in June of last year. DSM is known as one of the most sustainable company, a company linking corporate, social, environmental responsibility with operational excellence.
Innovation is a crucial factor in this. Projects such as Clean Cow, Veramaris, Stevia, and Niaga are only testimony to this. From my position, I would like to thank Mr. van Leen for his work as first Chief Innovation Officer. He's leaving DSM this summer, and he can look back at a very successful career in which he managed to secure innovation, technology, and science in the heart of the company. Rob, you have earned our sincere thanks and admiration. Ms. Malarkey will be his successor. She maybe can get up as well. She already started her introductory period. Trish, a very warm welcome. We count on you to preserve and continue Rob's legacy. In conclusion, allow me to briefly address the share price. I remember the fact that last year we mentioned the fact that we had crossed the line of EUR 85.
I'm very happy to conclude that for several weeks the share price has been above EUR 100. Since Mr. Sijbesma took office, the share price has more than tripled at a almost equal AEX. I think this is something that's highly interesting for those present in the room. Thanks to the Managing Board and Executive Committee for leading the company towards this result. The company is doing well. Feike, now the floor is yours to comment on the annual report of the Managing Board, and you can find this report on pages 12 to 65 of the integrated annual report 2018. The implementation of the remuneration policy for the Managing Board and the reservation and dividend policies will be dealt with under items three and five respectively. Feike, the floor is yours.
Thank you, Rob. I would almost dare to say, let's leave it with your wonderful words. First, we're going to watch a video. Anise.
That's our ability to adapt to our environment, to transform in order to survive. Look at this company. What started from harvesting coal in the mines became petrochemicals.
At the time, it was a necessary solution to the demands of a growing population.
As life changes, needs change.
It was time for them to change as well.
Exactly.
What was once a local coal mining company, they've grown to become a global science player in health, nutrition, and materials.
Through this transformation, the company flourished.
The challenges of nutrition and climate change and managing the Earth's resources can't be solved with just governments alone.
We need these companies with their technological expertise and innovative power to provide answers.
That's why DSM has decided to take the ultimate step in their transformation.
It's what they've been building towards over the past century.
arrived at the true purpose of the company.
The reason for their existence. To create brighter lives.
For all.
With one in four people across the world already benefiting from their products, I believe they can do exactly that. From the dark tunnels of the Dutch State Mines, something beautiful arose, a love for our world and humanity expressed through science. Balancing profitable growth with playing a positive role in the world.
Using bright science to create solutions for people today and generations to come. Healthy living, a stable climate, and a bio-based circular economy for all. I believe it's possible.
I'm not the only one.
Good afternoon.
Okay. On my behalf, and on behalf of the members of the managing board and executive committee, welcome at this general meeting of shareholders. It's a pleasure to see that so many of you have taken the trouble to travel to here. We very much appreciate that. I'm going to give you a brief presentation on the state of play, what we accomplished in 2018, and also look a bit towards the future. Got to show you this one. Done and dusted. The agenda. Goes without saying. I'm just going to refresh your memory. Of course, shareholders of DSM, you know this very well, but what is DSM? Two-thirds, it's a company in nutrition, and in human nutrition, animal nutrition. You see that on the right-hand side of the pie chart. One-third, performance materials, particularly focused on sustainability, green energy, making cars lighter, greener, et cetera.
Innovation Center is the nursery, if you will, of a number of innovations. I'm going to talk to you about that later on. Many of these innovations are developed in the businesses themselves. Sales of almost EUR 10 billion. Two kinds of EBITDA. This is what you see here, about 1.5, and the other one is 1.8. The exact figures you'll find in the annual report. Why? Because last year, we had extraordinary income, additional income, from the outages of one of our competitors in vitamins. We said, this is a one-off occurrence, we reported on it separately, which is why we have two different figures. Our sales obviously take place globally. 45% of our sales are realized in what we call the emerging economies, 35% in Europe, and 35% in the Americas. Oh, this is very difficult.
It doesn't add up, these numbers. Someone has to help me here because if you add it up, it exceeds 100%, so that just doesn't work. I would say 45% is emerging economies, 55% would be the West of the world, and Europe would take the lion's part of the 55%. Of course, we don't want to have more of a focus in emerging economies. 45%, 55% is a good percentage. We don't want to be overexposed in that part of the world, nor do we want to be underexposed. Innovation, about 20% of our sales innovation has been defined as the products that we've been introducing over the past five years. These are products that we introduced over the past five years, which means 20% of our sales.
In order to have this percentage, and this is the percentage that we aim for, you have to run really fast in order to hold onto this percentage, because obviously you always lose one year. R&D, 5% approximately of sales that we invest in R&D. 23,000 employees with a high engagement score. Every year, higher. Every year, more engagement, more commitment with the company. Our strategy, I'm going to talk about that in further detail in a couple of moments, aligned with the Sustainable Development Goals of the UN and the mega trends worldwide. Sustainability, you see lots and lots of abbreviations. Greenhouse gas, that's the first one, GHG. Linked RCF, which is our revolving credit facility. That means that if we need bank loans, the interest that we pay on those loans is linked to our performance with respect to greenhouse gases. This is quite unique.
Geraldine agreed that with the banks last year, in the financial world, this is quite unique, to link your interest to sustainability performance. Compliments to the finance team and sustainability team. SBT is Science Based Targets. We all know that at the time we entered into the Paris Agreement. Mr. Stevens, welcome here. I was thinking, "Oh my God, what are we going to do without you at this AGM?" I'm so pleased to see you here. The SBTs are our targets that we have defined, derived from the Paris goals. If every company achieves its own SBT target, then collectively, we will be able to achieve the Paris goals. Not everybody can do that. The climate panel a couple of months ago highlighted that the world is far from on track to achieve these goals.
Apparently, not everybody's doing the exact same thing that we are doing. Renewable energy. 41% of our energy is renewable or comes from renewable sources now. We're preparing for a world in which we have carbon dioxide pricing more than EUR 25 per ton in Europe, internally, we calculate a price of EUR 50 per ton. We also take part in the process of disclosure, transparency, if you will, concerning climate-related financial matters. How climate impacts on our business. Our employees. This is not sales, but this is where our employees are located, our global spread. Europe is the largest, but also Asia, China, particularly, a very strong position here.
You'll be familiar with this history of DSM over the past 117 years, to be precise, the transformation from being a coal mining company to a petrochemical company, being a science-based nutrition, health, and sustainable living company that we are today. This also means that if we're in nutrition and materials, that as you saw in the earlier slide, that we have activities in several markets. You see that on this pie chart. Food and beverages, dietary supplements, early life nutrition, building industry, automotive industry, electronics industry, materials. In nutrition, we have a very robust position globally, two-thirds of our entire portfolio. What we have here is global products. That's what we call them. Products that we make on several locations in the world, and we upgrade them, blend them, and turn them into tailor-made, custom-made solutions locally.
We do this in all sorts of regions in the world, in different market segments, in the animal segment and also the human segment. Actually, we're the only company worldwide that has basic products as well as the custom-made, formulated products targeted to our customers. We've got lots and lots of competitors that are in the segment that are related to the customers. We buy their products and we have other competitors that make basic products, but they don't upgrade that to the custom-made solutions for the customers. We're the only company that really covers the entire combination across the supply chain. As DSM, that gives us a very robust position, globally speaking. On the material side, here you see the different material businesses that we have. Slowly but surely, we're moving towards the top right-hand side.
There's more market growth there, and in this area, we have more possibilities to create value. You'll see which segments we're focusing on health, improved living, but also green products, and mobility and connectivity. Very important trends. Slowly but surely, we're trying to move the portfolio towards the top right-hand side. You see this in our performance. You see that we are succeeding quite nicely in doing so. What was 2018 like for us? A brief overview. Our employees, everybody worked very, very hard. That is to be expected. Our employees, and this will interest you, are extremely motivated, are very passionate about the company, are very proud of the company. Sometimes I discuss this with shareholders and they say, "Oh, yeah, that's a matter for you. That doesn't really affect me." I do think it should interest you as shareholders.
Whether you invest in a company that has highly engaged employees, very motivated employees, that's very important. It's almost inconceivable that it would be the other way around, that you would be able to show good performance if your employees are not engaged. Financially, we're talking about 2018, but also the period from 2015 to 2018. We continued to improve our performance, and we outperformed our own targets. Our own targets were rather ambitious every year. A growth in excess of the market growth and EBITDA, a profit increase every year that is high single digit. That's just not 10%, but somewhere between 5% and 10%. We've exceeded the 10% over the years. That is quite an achievement. Sustainability, actually, we outperformed all our targets and aspirations. We did better than we intended. I already mentioned our people, our employees.
We have an excellent position in the market. We have excellent technological positions in order to embark on the path towards the future, towards 2021. In numbers, what does this mean exactly? About numbers, approximately EUR 9 billion sales, which is the average between the two numbers on the left-hand side. This has got to do with this vitamin effect that we talked about earlier on. For the full year, we had a benefit that we deducted from this. You have the underlying effect here. Without the one-off effect, you will see the same thing with the EBITDA. That is why we have these two numbers, EUR 1.5 EBITDA. The official number was obviously EUR 1.8, but we had this one-off effect there. Our return on capital employed, once again, increased almost one percentage point, 100 basis points from 12.3% to 13.3%.
If you look at the underlying business and if you adjust for the vitamin effect, this is what the numbers are. We set aside the additional effects, the vitamin effect. We report that, but we decided that we need to be held accountable for the performance without this extraordinary, this one-off effect. Our net debt has decreased even further for the full year. We ended the year hardly without a debt. If we focus on sales in Nutrition and in Materials, both well in excess of market growth, 7% in Nutrition, 5% organically in Materials. That is organically without acquisitions and without the effect of currency. EBITDA 6% and 5% up. Innovation sales almost 20% and 43%, close to the 45% high growth economies. Also, outperformed the market in sustainability.
We have been able to achieve a reduction in absolute terms of our emissions, whereas we grew and we see a reduction, greenhouse gases, CO2 particularly, 41% of all the energy that we purchase is renewable, is sustainable. We have said that every year we want to realize a 1% energy improvement. Last year we achieved 1.4%. Also our water consumption, we were able to reduce that even further. If we look at our employees, our people, ourselves, how proud people are of our company, we see an improvement of our employee engagement from 75%-76%. Safety, Rob Routs already referred to a casualty that we suffered this year, and we are not proud of our general safety performance, and we fine-tuned that by the end of last year, early this year. This is something that requires our constant attention.
We are doing better than our peers. There are companies that are doing better than we are. We want to compare ourselves with the very best in the world, and we cannot claim that we are among the best in the world in this respect yet. We have made major progress in the field of diversity, not only gender, but also nationality. 90% of our executives are female executives. When I just became CEO, I always said, "Welcome, lady and gentlemen to our executives," when I was referring to the top 300. That is a long, long time ago, and we have come a long way. The Supervisory Board sets the example 50% after this meeting, I would say 50% female supervisory directors in the Executive Committee, it is 43%. Also in the field of other nationalities, not only European nationalities, we see that we have been making headway.
Also in brighter living solutions, products that have a better environmental footprint than competing products or that have a better, lighter impact on society at large. We are proud of our own company. You've always got to tread carefully here. Of course, we are proud. We're not the only ones because there are also many other people that are proud of us. This is a list of recognitions of ranking. We're right at the top of the list. Fortune publishes a list every year of companies that really have an impact on the changing world. There are about 50. We're on the list. We are a bit proud of that. Strategy, not only in 2018, but if we look at the entire period from 2015 to 2018, EBITDA, the profit, increased annually by about 13%.
Our return on capital employed needed to be higher because it was 7.6% in 2015. There was room for improvement. We're not very happy with that number at the time. We now see looking back that we've been making good progress here, almost double the number. Growth, here you see it not only for 2018 but for all these years you see that we outperformed the market. Our markets in Nutrition and in Materials grow somewhere between 2% and 3% a year over the past few years. Clearly, we've outperformed the market in this respect. We see the same growth in Nutrition at this point. In Materials, we see because of the economic situation, we see a slightly different situation. I'm talking about 2019 here. Dividend.
The box has been ticked here, EUR 2.30. This is looking forward a bit because I can't remember which agenda item it was, three. If you approve the dividend or the increase of dividend, this slide will prove to be correct. This is quite a good increase. We've never seen a reduction of our dividend. Our peers, 50% of our peers have been cutting their dividend and reducing it. We never ever did that. That is precisely our strategy with respect to dividend, an increasing dividend, stable to increasing dividend. In any case, never a declining dividend. Every few years you see we move forward with this. Share price did well. Mr. Routs referred to that over the years. I'm sure you followed that being shareholders. This is a slide that we used on several occasions. What does DSM do?
It tries to combine sustainability and impact on the environment with financial results. 10, 12 years ago, 15 years ago, there was a bit of a debate about this, whether you can actually tackle both things simultaneously. A better world, sustainability. Sustainability always costs money. Can you actually make money by being sustainable? How does this work? I think that we've been able to show that these two things can go hand in hand. In fact, that was the performance of DSM over the past few years. Sustainability, creating a better world. Good financial returns. I think that's obvious, because why wouldn't the world be prepared to spend a lot of money to tackle the major problems or making the lives more pleasant of people who live on this planet? I think vis-à-vis the future, those companies that don't embrace this will end up having issues.
I think in 10 years' time, if we meet here, I don't know whether I will be here, and I don't know whether you will be there in 10 years' time, but if in 10 years' time we were to meet here and look back on today, I think that it's safe to say, and I see this more and more also with investors, I think it's safe to say that making the world a better place, taking care of sustainability, and financial returns have to go hand in hand. Otherwise, you'll end up having problems because millennials will no longer want to work for you, buy your products, if you fail to price carbon dioxide. At the end of the day, you'll have to foot the bill. Mr. Silverton works for Investor Relations, and he made this slide.
In 2007, he joined the company, and he wanted to see this period of time for Investor Relations, 2007-2019. He says that this coincides with the time you have been CEO. Yes, in fact, the share price has tripled over this period of time. Yesterday, it closed at 103 something. I think it dropped a bit, or is it still in excess of 100? Still over 100. Yeah. Greenhouse gases, also because of the changing portfolio in the course of the years, has dropped dramatically. EUR 15 billion share price dividend. Looking forward, this is a bit of an intricate slide, but on the other hand, it's quite straightforward as well. On the left-hand side, you see the input in our strategy, Sustainable Development Goals, the goals of the UN, mega trends, our own competencies. They're all inputs in our strategy.
What is it that we intend to do? We intend to make money around nutrition and health, climate and energy, and resources and circularity. The latter two could be summarized as sustainable living. We focus our business on this triangle. That is how we make our money, and at the end of the day, that'll lead to more engagement of our own employees, more sustainability, and more growth. We reflected that in targets. Targets for the next few years are cash flow growth and our EBITDA growth. On the left-hand side, you see our clear targets, and we can be held accountable for that over the next three years.
On the right-hand side, you will see the underlying ambitions that we also have, not really target, because we've got lots and lots of targets, but they're sort of underpinning ambitions that we need to have, if we want to achieve the targets. Of course, you see your sales growth here, your working capital, our investments, and return on capital employed and earnings per share. Innovations are crucial to the future of DSM. Part of the growth will be driven by innovations, and over the past few years, we've really focused on that, particularly on a number of larger projects. I'd like to discuss a couple of them very quickly because they will be a determining factor of our performance over the next few years. Veramaris is a green ocean. It's a joint venture with Evonik. What do we do there?
We make sustainable fishing truly sustainable. Lots of our fish come from fish farms so that we don't have to deplete our oceans, but in contained conditions, we can farm these fish, and we can leave the oceans in peace. That's not entirely true because these large fish need food. So they need smaller fish to eat, and we need to fish the smaller fish and make fish meal of it to feed the larger fish. We don't really need to do that because the smaller fish eat algae, but the larger fish can't eat algae. That's why the larger fish eat the smaller fish, and the smaller fish eat the algae. If you put the algae in the fermenter, and you make fish oil of it, you can feed it to the larger fish.
That's a good thing for the ocean because you can make things more sustainable, but it's also good for our customers because of the warming of our oceans and warming of our planet, the fish stocks in the ocean are dwindling, and prices, therefore, are increasing. If you produce it in a fermenter, of course, things can remain stable. Clean Cow. Yet another innovation product also focusing on sustainability. Many of us know that a lot of our emissions come from our cows, CO2 equivalents, so to speak, because we're talking about methane here that cows emit at the front and the back, to put it bluntly. This is quite a substantial contribution to the greenhouse gas emissions on this planet. Of course, cows have been excluded from emission rights, CO2 payments, et cetera.
I don't know whether that should always remain the case. We've got ingredients that we are testing and registering right now to make sure that the methane emissions can be reduced by 30%, which is quite an important reduction. That way you can make the meat and dairy industry more sustainable. Fermentative Stevia. Stevia is a really natural sweetener. Many sweeteners are chemical sweeteners. They have all sorts of drawbacks. This is a natural product. It comes from plants. It's a plant extract. At the supply side, that makes things a bit tricky because there's a limited supply, a bit irregular, higher costs. Of course, you should be able to do things differently through fermentation technology, and DSM is very good at that. We entered into a joint venture with Cargill, and we're well-positioned to serve this significant potential in the market. Niaga.
Carpet, but also other applications in the U.S. Carpet is the number 2 landfill activity. What do we do with our old carpets? Well, we throw them into the landfills, or we turn it into a mountain. We do the same thing with diapers, with nappies, especially in the U.S. We have enormous landfills with carpets and nappies. In hundreds of years, people will start digging and won't find pyramids, but will find carpets or diapers. Anyway, the question is whether we really want to leave our planet that way for future generations. We said, "Okay, we have to come up with a solution." That is tricky because the chemicals that you use in carpets, they have a top layer, bottom layer, and they're very difficult to dissect and to separate afterwards. It's a very costly process.
If you would make the carpet from the same chemicals at the end of the process, you could reintroduce it into your plant and reuse everything and start all over again. That way, you can make it a completely circular product. Last but not least, the first quarter. Geraldine presented this yesterday as well. The figures for the first quarter and how we started the year. Actually, we started very robustly with a sales growth of 3% and 10% EBITDA growth. Actually, even a bit more, but this is because of accounting changes, IFRS. Because of IFRS regulations, the increase is even 14%. But I am not really mentioning that, although it will be the official percentage according to the official accounting rules. But if you compare year on year, it is 10% growth.
Nutrition did very well in Materials in these very tough economic conditions, has shown its resilience. Operating cash flow increased as well. Net profit slightly lower than last year, but that is because of the one-off vitamin effect. So if you adjust for that, it is better than last year. The start of this first quarter 2019 has prompted us to increase the outlook for the full year. I believe that shareholders yesterday welcomed that in general. This is how we started off the year, and as Mr. Routs just pointed out, we expect that we will realize a profit growth. 2019 is expected to be yet another record year for DSM. But we will have to wait and see, wait for another nine months.
Once again, good to see so many of you here, and thank you for your support and loyalty over so many years to DSM. We very much appreciate that. Thank you.
Thank you, Mr. Sijbesma, for your comments. The moment has come to ask questions about agenda item two. You can use the microphones that are present in the room. Please first indicate your name, the organization that you may represent. Who would like to take the floor? Thank you, Chairman. My name is Gert Hospert. I represent the Association of Shareholders, VEB. The share price is at a record level. Yesterday, we have seen a positive profit announcement. So I guess that in preparation for the meeting, the members of the board thought it is going to be a piece of cake. No critical questions today. Well, I can assure you that we will ask critical questions. Certainly, looking at the strategy update that we have seen in June 2018 after the last AGM.
When we look at the adjusted EBITDA that has been forecast for the nutrition development, we see that it had already been achieved. Mr. Sijbesma just told us that the strategy is something you can hold us accountable for. You already achieved it nearly. The question to you is whether the adjusted EBITDA for Nutrition was not too low? When taking a critical view on this target, what target you would formulate for 2021 for yourself now? Materials, we see that the organic growth is expected at 25%, and that's quite an achievement because you don't depend on the ultimate growth in Nutrition. You depend on the demand of the end users, for instance, the automotive industry, and that's a cyclical industry. I wonder how you come to 5% or 25%, 5% organic growth. Is that a realistic achievement? Then a last question.
I am listening to you, Mr. Chairman, about three questions, and I'll come back in a later turn. In June 2018 at a strategy update, we essentially thought that you would look at a demerger between Nutrition and Materials that have very little synergy. During an analyst call, you have received questions about this, particularly about the cutbacks, the possibility to invest in Materials as a business unit. As far as we can see, there only is a possibility to invest in the write-downs, and there's no real M&A budget for Materials as a business unit. That leads to the following question. Why aren't you investing much more clearly in Materials if you decide not to divest this business unit?
If you're not investing, then certainly now looking at the economic cycle, this would be the perfect moment on the top of the market to divest, to sell off. Please explain your approach on this. Thank you. Thank you for your questions. There's always somebody who ruins the party, they say. Feike. They may do so if they wish. Thank you for the questions. I'll cover them and maybe Geraldine and Dimitri then later can give some additional comments if needed. When looking at the EBITDA growth of Nutrition, this is a target we achieved for 2021. You say, no, we achieved it for the period 2015-2018. We achieved EBITDA growth high single digit, which means 7%-9%, and this is generously more than 10% by now for that period.
If we look at the upcoming periods, 2018, and we're now into Q1 2019 up to 2021. Once again, we said that adjusted EBITDA operating profits in Nutrition would once again be at a high single-digit level. Indeed, in Q1 we have outperformed. We have made about 10% of 90. I'm being corrected. In 2018, in the strategy update, you mentioned an adjusted EBITDA of 20%. If you add Q1 2019, you already overachieved this. My apologies. I see your point. Excellent point. Different question, different answer. This was about EBITDA growth, but you agree with me that this is an ambitious target and that overachieving this is actually quite a performance, quite a feat. About the margin. We indeed stated that it would be over 20%. Currently, we're achieving this. That is the profit margin ratio.
I'd be cautious about increasing it even further. Many people ask us about this. It may be an odd answer. Don't we want to make a limited additional profit? No, we don't. I am not so happy for that. It could be a wonderful profit percentage. If sales can increase with this profit percentage, then obviously the overall profit of the company will grow year-over-year, and therefore, we hope the share price. If you get into crazy profit percentages on sales, you may destabilize markets, and in a way, you don't want to destabilize them. I am happy if we achieve 20% on a solid basis. The world is volatile enough to make us work very hard to achieve this. This is not something easily achieved. Anything you would like to add?
Maybe just one clarification, I think it's an important one, which actually is fully aligned with your answer, which is that our target is actually the EBITDA growth. On the right-hand side, what we show is our ambitions that underpin the target. It's very important to remember that what truly at the end funds our innovation, our growth, the dividend, is the earnings line itself. Being the CFO, I'm very conscious of the fact that you can get a margin up relatively easily, but it doesn't drive the right economic generation, which is actually generating the earnings. I just wanted to clarify what is an ambition that underpins the assumption versus a firm target.
Yeah. Geraldine refers to the slide I switch language here. We've shown a slide, I don't remember which number. On the left-hand side, you saw the real targets that we have formulated, on the right-hand side, you saw the underlying ambitions that you refer to. We want to be held accountable to an absolute growth of our EBITDA because we assume that absolute EBITDA is somehow linked to the share price. It would not be logical if there would be no such link. EBITDA obviously has an origin. You need revenue growth, you need a profit margin, some cost levels, otherwise you simply won't achieve profits. This is what we call our aspirations. We share the aspirations with the world, and ask also from some leeway, because this is the instrument, the tool we have in order to achieve what Geraldine calls the major target, the major purpose.
Our EBITDA margin shouldn't be too much flatter, I think that applies to all categories. About materials. You said 5% organic growth is our target, in the strategy for the years to come, which is way above the market average. If the market average is 2%-3% of growth, this is our target, and it is our target. You say, "Well, can you achieve this?" The target has been presented in June of last year in a different marketplace than we see today. In Q1, you see us not making this target at all. We're not achieving 5% at all. We have a volume decrease of 5%-6% in terms of volume. We still outperform the markets we operate in, which is important for us. We're outperforming the market average.
At the same time, the markets have changed completely over the past year. We are not a company that will change its long-term targets overnight in such a situation. Be it. The world looks less shiny, sunny than it was a year ago. For the time being, we maintain our targets. Let me come back to Geraldine's words. The major target is an absolute increase in profit. Even under those market circumstances, we think we can get pretty close. In Q1, we have achieved that, what we were aiming for. Anything you would like to add, Dimitri? One thing maybe. Let's be very clear about saying that the current existing materials markets have growth levels that in some quarters have been affected by de-stocking, but we should look further than de-stocking.
We are a company that wants to look beyond de-stocking, then markets have a certain growth rate. We can outgrow the markets we stated. Why? Because we focus on new segments that grow faster, such as paint, or we want to move to bio coatings. We want to use water-based coatings that are growing faster than solvent-based coatings. The same thing for automotive. Lightweight replacement of metal is a very important segment for us. Currently, we see that the cars under construction currently have a higher growth in DSM-supplied materials than other materials. This is what we call substitution. We think we play in the right markets with the right products. New mobility, connectivity, green products and applications are what we play in. This is why we think that in the long term, we can outgrow the market 2%-3%.
It is the market average, 5% seems achievable. You had a last question. This is the link between nutrition and materials. We understand that the end markets of nutrition and materials are very correctly, as you state, are different. We have the electronics, or we have green energy. We have something completely different than nutritional products. The end markets are completely different, but we don't think there is no synergy between the segments. If I look at the technology we use, we have a lot of technology in use. We have developed a wonderful mapping for technology that featured in the presentation in June of last year. The way the various types of technology make up the basis for materials and nutrition is clear in the presentation. There is a mutual link. Also, size and critical mass are generated.
They reduce our cost, they increase our presence. We have synergy, at least in our view, in terms of the people involved. We train people across the company, not everywhere, very consciously so because expertise is also important. Some people remain active in one field, but some people also move across the company, and this cross-fertilization is really helpful to come to other insights. Indeed, you're right in stating that the end markets are different. As long as we can add value to materials, as long as we, how should I say this? Perform better than the market average around us, apparently we're good owners for this business because we add more value than is happening in average around us. If that would not be the case, if we would obviously not doing this, we would have to reconsider. You say we don't invest in materials.
That's not true. We invest in materials development. Niaga is a good We also invest in acquisitions. However, we stated that acquisitions will happen predominantly in nutrition. Why nutrition? Well, this is our largest business by far. It's two-thirds of the entire company, and we see very extensive possibilities for acquisitions there. But we never said we'll completely exclude acquisitions in materials. In one of the slides, I showed something Dimitri presented several times, which is the fact that the entire materials portfolio has shifted towards health, towards nutrition, towards green products. The problems we encounter there are very closely related to the issues we find in nutrition. We have climate-related issues that are closely related to issues concerning nutrition. This shift of our portfolio actually closes the gap between nutrition and materials. Thank you, Feike. The next speaker. You have a train to catch, so please.
Good afternoon, ladies and gentlemen. My name is Robert Frijka from WeConnectYou Public Affairs and Investor Relations. In the Netherlands, we have three champions of sustainability, Wiebe Draijer , Paul Polman, and Feike Sijbesma. That's a wonderful lineup. However, currently, only one of them is still working both with Unilever and DSM, which is Mr. Sijbesma. Despite his vast drive, there is a risk that worldwide 1 million species of plants and animals will disappear, so we need to step up the effort. Something I appreciate is the integrated approach, the practice what you preach approach of Mr. Sijbesma. He does many things in the field of lighting or warmth, mobility, energy, I want to state that he is the ambassador of the WakaWaka.
He hands them out everywhere, this is something the Shell CEO isn't doing yet, maybe Mr. Routs, through his network, can solve that problem. He didn't give me a WakaWaka yet. I think that's a wonderful step. We'll solve this during the meeting. It's your turn in a moment. It's my turn now. Please keep quiet within the rules of decency. Thank you. Isn't that important? I think we should treat each other with respect and decency. Within Unilever, you know about heating of chairs, this makes sure that we can heat people's offices very cheaply. It saves a lot of money in the office, it provides a lot of comfort when we heat chairs and the thermostat can be turned down worldwide for three degrees centigrade.
If all your employees and their families have a circular showering, that saves one Olympic swimming pool per day, including the heating. Then I think it's wonderful that Edith Schippers has been convinced to start traveling with the sustainable travel of DSM because she has this fantastic network in The Hague. She has a fantastic network in the field of sustainable care, therefore, she can speed up the sustainability within DSM, certainly in the light of her constructive relationship with Mark Rutte. Then a final remark. I'm really happy about the following, this is my question. What is the cross-fertilization between Unilever and DSM? Can you expand on this? Then the reduction of 30% of methane, I think that deserves a Nobel Prize. I mean, cows are the most polluting factor worldwide, and if we save 30% or reduce pollution by 30%, wonderful.
Thank you, Mr. Sijbesma. Thanks for your questions, your comments. Well, biodiversity, indeed, yesterday we saw the presentation of the UN report on biodiversity, and it shows that we face a major problem and that it is expected many amphibians, insects, and even some mammals are to disappear over the coming 25 years. I think this is our common concern, and it is completely valid you point out this challenge. It mainly concerned animals and insects, but the report also concerns plants, and there is a risk of creating a monoculture. I am a biologist by training, and biologists use pools of genes, and if a pool of genes is not sufficiently diverse, then things go out of hand sooner or later. That is basically what this report amounts to. This is a source of concern for our world.
We at DSM have developed policies, and Mr. Van Damme has looked into this in detail over the past two years. In terms of our own operations, we try and advocate the importance of this issue and the need to address it worldwide. I think it is more than valid that you highlight this point at our meeting today. WakaWaka, a wonderful, simple invention. You have a small solar device. Alice, if you can find one in the office, then I will give it to Mr. Routs. It is a very simple tool that can bring light and even electricity for charging their mobile phones worldwide because many people have no access to electricity in their homes. Wherever possible, I hand them out as gifts. Well, heating chairs, an issue we have discussed several times. I could even enjoy the system myself.
I found it works, and I know you are an important advocate of chair heating to see whether we have other ways of heating ourselves than heating the air around us. Circular shower technology. I know the technology always leads to giggling questions about the exact reusing the shower water and how clean you get, but actually there is a filter involved, so it really gets you clean. It is nice. It is not exactly DSM's core business, so I am not sure what I can do, but I understand the concept. Edith Schippers, well, we are happy she is with us, so we share your happiness there. Obviously, Edith has her network. But the most important thing she has is a skill. She brings a skill that will drive DSM Netherlands to even greater heights, and this is the most important. We have Unilever and DSM.
Indeed, by accident or not, I am a member of the supervisory board of Unilever as well. We run into each other there as well. Unilever is a customer of DSM, a very small customer, by the way, so there is no conflict of interest, and we have full disclosure. I learn a lot about our final markets that can be useful for our work. A final point, well, if you will argue for us as a company receiving the Nobel Prize for Clean Cow, we will not object. I can only embrace that last proposal, and in the meantime, we will carry on with our innovations. Maybe we can work on this together because I cannot really get far on my own, and this is a dramatically beautiful innovation that will bring purpose to the world. I essentially agree with you.
Cows represent a very significant part of our CO2 exhaust, and we as DSM think it's odd that cows have been excluded. They amount to almost the same pollution as traffic, and traffic will be charged by billions of billions of taxation. Exactly, and it is highly cost efficient. Let's have cows in Amsterdam instead of electric cars.
Oh, yeah. Microphone D.
Microphone D. Thank you. My name is Carola van Lamoen. I work for Robeco, and today I will also be speaking on behalf of Achmea Investment Management, Menzis, NN Investment Partners, and MN. You referred to the excellent performance. First, you deserve a compliment for your performance of this past year. DSM once again showed excellent performance in terms of sales growth, profitability, return on invested capital, sustainability targets, and also strategic targets. It's a good development that the auditor of DSM says that he has reasonable assurance instead of limited assurance when auditing the financial statements. I have three questions for this agenda item. First of all, you talked about sustainability as a driving force for DSM. We saw it on slide 23, if I'm not mistaken. DSM defines five Sustainable Development Goals as being the most relevant for the organization.
For the three environment-related SDGs, you have numerical targets. For the goals numbers 2 and 3, that doesn't seem to be the case. Could you perhaps point out how DSM measures the impact for SDG 2, zero hunger, and SDG 3, good health and well-being? Which goals you apply to that effect? I hope that you'll be providing us with more details next year. Second question, because of the good financial performance, DSM has enough money to buy back shares, 2.6 million shares as per the 1st of April of this year. What are the priorities for the balance sheet after the conclusion of your share buyback program? What is the ratio in terms of organic growth, et cetera? Finally, a question about further improvement of margin and working capital. From your presentation, I understood that for working capital, you have the ambition to achieve minus 16%.
Could you perhaps explain?
Yes, indeed. The UN, in cooperation with almost 200 countries that approved that, drafted the SDGs, the Sustainable Development Goals, the global goals. The worldwide strategy is really, or the global strategy is what we would call it. These are 17 goals. We address a number of these 17 goals with our portfolio, not all of them, and actually quite deliberately so. We set aside what we used to call corporate social responsibility as being a separate activity. That no longer is the case. We want to incorporate it in our mainstream businesses, and that is the way we look at it. Our mainstream business has been organized in a certain way. We have certain competencies, that means that we can contribute to certain SDGs better than to others.
There are five core SDGs in which indeed we can make a major contribution, and we tried to give them numerical goals. Zero hunger, that is a bit tricky, I mean, to do this numerically. Nonetheless, I'm going to give you a couple of numbers. What we said at the beginning, I'm talking about 12, 13 years ago. We said that we wanted that with our competencies with respect to nutrition, that 1 million people in the world, that we made sure that the food aid that they get be nutritionally responsible, not only calories or
Carbs. This is a goal that we achieved rather quickly, we said, "Can't we move from 1 million in 10 years to 25 million?" This is a goal that we also achieved in the meantime. I think it's now 32 million, if I'm not mistaken. 32 million people that we, as DSM, can help, making sure that they, and particularly we're doing this in cooperation with the World Food Programme. We set another target. Couldn't we improve food relief for people, and make sure that people become self-sufficient? Three years ago, we started a project, Africa Improved Foods in Africa, working with local farmers, local production for local people producing healthy food. We started with 9,000 farmers in Rwanda, now we have more than 25,000 farmers. We buy everything they grow.
We turn it into healthy food in a very large plant that we set up in Kigali. We transport all their crops, all their products to Kigali, which is where we produce healthy food for local population. 1.5 million people benefit from that out of the 4.5 million people in Rwanda that are stunted, and one-third of the issues, the problems there have been solved over the past few years. We don't have very specific targets there. It's not that it's not numerical, and that's why I wanted to give you the numbers that I just gave you. Margin improvement and working capital, Geraldine, and also priorities on cash allocation.
We start with the working capital target. Here, in the previous strategic period, we said we wanted our total working capital to sales ratio to drop to below 20%, and we achieved that very well. Actually, we closed at 19%. Here, what you see as our ambition going forward, is that we want to keep bringing that down, and hopefully we will reach 16% by a year-on-year-on-year improvement on our efficiency. That's to clarify your question on that target. I think your other question was on the share buyback and the capital structure. What we are aiming to do as a company, and we indicated that with the strategy as well, is we want to remain a high investment grade company.
We don't want to take any risks, which in the capital markets is usually referred to as having a leverage of 1.5 to 2.5 times EBITDA. When we look at the health of our business, when we look at the kind of growth we've been able to generate on the margins, we see a strong ability to generate financial returns and liquidity, and still retaining a lot of flexibility for innovation projects, for CapEx, and for some acquisitions. We felt that we had the space to also return some of this cash to our shareholders, and, of course, very relevant to the conversation today here. That's how we put in context the balance sheet's structure going forward.
Thank you.
Next, please.
Thank you. Mrs Stevens. Thank you, Mr Chairman. My name is Stevens of the Foundation of Legal Protection of Investors. Yes. Well, it was discussed earlier on. Possible split. Separation. We gave it some thought as well. Acquisitions on two fronts. You cannot carry out acquisitions that are good for both businesses. We're wondering, how resilient is this situation? How sustainable is it? You can only do acquisitions either for one business or for the other. At some point, we have the distinct impression that things should become separated. We'd like to hear your opinion on that. There's something else that I forgot. I would like to congratulate you with your excellent performance. Yes, you conducted a great deal of research over the past few years. Now what? Less research? Benefiting more from the products that emerge from your research? Consolidation?
How are you going to proceed now? Recently, you've conducted a great many acquisitions. We're wondering, given the question that I just asked, this ties in with that question. Are you going to buy more ready-made products and stuff? That things that have been designed, that you're going to work on that? Because for instance, you will take an interest of 75% or 50% in a company. We're wondering what your purpose is. What is it that you see on the horizon? What is it that you're aiming for? Those are three questions. Oh, I'm sorry. Okay. Well, I'll be back then later. "Oh, I was afraid you would," says Mr. Sijbesma. Thank you for your kind words. I am glad you hadn't forgotten to congratulate us. Split.
Well, as I said earlier on, as long as we can add more value than the average of the market surrounding us, we're doing a good job. Second, there's more synergy than you would think at first glance if you only look at the end markets, I said that earlier on. Then, of course, I do understand the debate about splitting and the different markets, and so on and so forth. I've got to be careful what I say before people start correcting me. You also have this sort of trend, this sort of fashion. If you split a company, if you look at nutrition, of course, you can once again ask yourself the question whether it doesn't consist of different segments, and you can endlessly focus. As some people once said, you can focus towards insignificance.
You can continue doing that, and at the end of the day, you won't be significant anymore. No, that was never our idea. It's just materials and nutrition. Yes, I understand that. We're in both. If we're talking about environment, health, medical, green energy, when I talk about biotechnological knowhow that we have to extract energy from plants, you see that there's much more synergy between materials and nutrition than you may think at first glance if you look at applications in the automotive industry or other applications. You also see over the years that our portfolio, and Dimitri worked very hard at this, shifted towards the higher value segment and also shifted towards things that have much more synergy with our nutrition business.
Perhaps you could even venture to say, if we would've called it green energy, you might not have had such a problem with it. Now we've called it materials, and now it sounds very much as if this is something that has nothing at all to do with DSM. Of course, you could put this into perspective, and for some parts of the portfolio, I would understand that, but it doesn't apply to each and every part of our portfolio. Particularly in materials, we will constantly work at changing the portfolio and shifting, as I showed on one of the slides. More research, or have we already conducted enough research? Are we going to slow down? When you pronounce those last few words, I saw Mr. Rob van Leen saying, "No. More." Instead of less. I think that's a good thing.
We need to continue to invest in the future. We do realize, perhaps not always everybody here in this room, but we do realize that a number of our innovation processes cover 5 to 10 years or even more than 10 years, which means that some things such as Clean Cow, Rob when did we start that project? I think it was 2007 or 2008. That's when the first ideas came up. That's almost 10 years ago. Some of these projects simply take a lot of time, and we know that we have to deal with these long periods of time, which also means that you have to constantly invest, otherwise you end up having issues.
That means that Mr. van Leen in recent months has been working very hard, as I myself have, and other members of our management have been working very hard for the benefit of future generations. I think that you have to show good husbandry, and you have to constantly show good stewardship, and there's going to be a next generation in five years' time, and then in 10 years' time, and then again, we will also have to be able to grow. No, we're not going to reduce our research. The purpose of our question was not to reduce research, but you make something and then you work on it, and then at a lower level, you focus on the future because you have to constantly work on research, but at some point, you will have to expand or benefit from what you have achieved.
Yes, you reach a point that you've developed things that you need to introduce in the market, and that's a luxury position that we're in. We have carried out a number of large innovations, Stevia, Niaga, Clean Cow, et cetera. These are the innovations that over the next few years, next two, three years, will be introduced in the market in the short term. We've developed them to such an extent that now they're commercially feasible, and they will make a contribution. At the very same time, besides the fact that we're doing that, absolutely, at the same time, we once again focus on things that will only be introduced in the market in 2025. I think that we owe it to ourselves as a company to do that.
Otherwise, you'll just erode your business, and it's very easy to increase your profit for next year and to stop our future-oriented research. Then, of course, we will boost our profit figures next year, and you won't feel the impact over the next two years, because we will still be working on the research that we started five, 10 years ago, but that's not a good strategy, and I'm sure that you'll agree with that. Question on acquisitions. I don't entirely understand ready-made things, whether we buy that. You have to help me out here. I'm sorry, I can't find it. Licenses. You just acquired a company with licenses. Yes, we do tend to do that from time to time. We were thinking, wouldn't they want to save on R&D and then buy ready-made licenses from a company that can't introduce those things in the market?
It's both things, really. From time to time, we purchase licenses, technologies that third parties have developed. Very often, they haven't been developed right to the hilt, and we have to continue to develop them. Yes, we have licenses for these patents, and sometimes we have a small participating interest, as you quite rightly said, in smaller startups. We have a DSM Venturing funds that has a participating interest in smaller startups. Very often they have something to do with technology, and this is not instead of our research, but it's on top of our research. They're very focused acquisitions, and we have an internal process for that. We only invest in those licenses and those companies that have something to do with our mainstream operations. We're not going to do something outrageous, something that we found externally, something that we might think is interesting.
It really has to strengthen our core business. Thank you, Mrs. Stevens. Can I request you not to repeat questions that have already been raised? I think this whole split issue has been dealt with, so please raise new and fresh questions. At the back of the room.
Members of the managing board, supervisory board, my name is Angélique Laskewitz. I'm Director of the Association of Investors for Sustainable Development, and I promise that I will ask three questions about sustainability. I think I'm allowed to do that. First and foremost, I would like to express my great appreciation for your performance in all respects. Obviously, for us, it's very valuable to see that a company can perform this well and can also embrace sustainability, something that we need badly, given all the problems that we're facing. We do have three questions.
Despite the good performance, we always try to encourage you to boost your efforts. In terms of climate, we would like to put forward here that we very much appreciate the fact that you have an approved science-based target in which you really make a commitment to CO2 reduction in line with the Paris Agreement. This is an extraordinary position, and we're wondering what steps you intend to take in this next year. What is it that we can expect with respect to implementation, both in terms of opportunities and risks? I'll quickly move on to living wage. Living wage has been on your agenda for quite some time and has been on our agenda as well. It's in the annual report. I would like to compliment you for that. You've been working on it.
You're carrying out an extensive analysis. Can we expect a commitment in the short term in which you would say living wage for all our employees is indeed a possibility this year or next year? What is it that you would have in mind for the supply chain in this respect? My last question about sustainability. You referred to this, the SDG 12, sustainable production and consumption. You are also looking into how to measure that. Wouldn't it be an obvious next step to say, "Okay, we are 100% circular as DSM in the short term or in some term?" Those are our questions for the time being. Thank you. Thank you, Angélique. We appreciate your critical monitoring on the part of the VBDO. I agree with what you said about the SBTI.
We are one of the first companies in our sector that has embraced that and has established clear goals. I think that's the only way to achieve the Paris Agreement, TCFD disclosure with respect to financial climate.
For the audience who is not that familiar with the acronyms, TCFD is the Task Force on Climate-related Financial Disclosures, which is a big mouthful, but it's actually a very important milestone, and we're very proud that we're one of the early companies to commit to disclosing in line with TCFD within three years. We have been acting very proactively in order to meet that target. You will have seen in our annual report, we tried to combine some of the disclosures. When it relates to governance, to strategy, et cetera, we're there. The very challenging part of TCFD are the forward-looking scenario disclosures.
For those less familiar with this, one of the requirements is to say, well, what does a two-degree world mean for DSM, both in terms of our operations, so adaptation, mitigation, but also in terms of the end markets that we serve. One of the biggest challenges with this topic is that if every company tries to do this in isolation, the outcome will be of no use. You will have an inability to compare and to understand, as readers of these disclosures, what does it really mean. In order to address that, we have been working very proactively with a number of organizations. WBCSD, the World Business Council for Sustainable Development, has actually been tasked to try and help certain sectors adopt these disclosures.
Our sector is one of them, and we're one of the companies very actively involved in trying to shape how can this be best done. I am also the co-chair of the CFO Leadership Group of Accounting for Sustainability. That is also very proactively working together, because we truly believe the private sector here needs to have a combined effort to make this relevant. I would like to add maybe on the topic, that we are very supportive of this development. For many years as a CFO, I have been on road shows where the topic never came up, and there was no interest from the investor part of the world in understanding these questions. Now that it's become a requirement from a regulatory point of view as well, what are their climate risks as investors, as institutional investors?
The fact that there's a demand there makes that conversation, I think, is going to evolve quickly. That's what I'm trying to say. There is quite a journey still to be done, because it's creating a brand new way of assessing the impact of climate on DSM. Okay. Thank you for the explanation.
Your other two questions about living wage and SDG 12. DSM's policy is everywhere in the world to pay a living wage. For Dutch nationals here in the room, this may sound like something self-evident, but it is not self-evident in all the countries of the world. Many countries don't even have a minimum wage. That means that there are all sorts of situations in all corners of the world that the wages that you have to pay to employees could well not be a living wage. Indeed, all our employees, whatever their local customs may be, we would like to pay them a living wage. At this point in time, we are carrying out the analysis and pooling all the data that we have, and we have data for that.
Assuming that we've administered everything properly in the different countries, I think that we can safely say that we have the data in those countries. We need to have it verified also with respect to our reasonable assurance. Geraldine, our Chief Financial Officer, is working on that as we speak. In the course of this year or early next year, the data will be verified. Am I correct or not, Geraldine?
By 2020. We want to make sure that we really have our house in order, and that we can comply with our high level of auditable standards, and then we will manage against that later.
In 2020. We already have a policy in place, and to the extent in which we have the data, we are compliant. The thing is that we want the whole system, the reporting of all the data, that everything can be substantiated, and in the course of 2020, that'll be available. The last one, SDG 12, sustainable production, consumption, and circularity. Well, we very often talk about scarce materials and that there's an end to materials and things like that. I've said this very often in speeches. The question is whether there are any scarce materials and raw materials in the world. It's a fable that Martians come down to Earth and steal everything from us. No, all these atoms and molecules that were ever on this planet are still here.
A bit of helium escapes the planet every day, but most of it stays here, different places in other forms and very often mixed with other molecules and atoms, which we call waste. Then, yes, you would create scarcity. That has everything to do with, and you quite rightly asked that question, has everything to do with how you develop and design your supply chain. We are convinced that you can develop your supply chains and design chains in such a way that you can always reuse everything, and you can close the loop. We do this in our sector, along with the World Business Council for Sustainable Development. Jeff, our Corporate Sustainability Director, in the front row, is closely involved in this process. We make life cycle analyses and find out where the different products end up.
We have great examples, such as the renewable carpets, but also what we do with the second-generation biofuels. Agricultural waste is being reused in order to turn it into green energy. We have endless examples like that. Can we make our entire company circular or in part circular in order to throw out as little as possible? I do not know the answer to that question. But we do see a great many opportunities, and we continue to focus on that. Sometimes it is a matter of technology and obstacles, technological obstacles, and we need to develop technology. But in many cases, we succeeded. At the end of the day, I would say that for the world with 9 billion people, there are a great many opportunities. And with many of our customers, we see that they are very interested because they ultimately see the economic benefits of that.
We will continue to focus on that. Thank you.
Ron?
Thank you. Mr. Spanjer, happy to see you again.
Yes, 4 minutes. My name is Spanjer. I obviously have a few questions about the 270 pages I read in the annual report, really interesting. Let me start, obviously, by complimenting the employees and Mr. Sijbesma. But we have a very special employee, Mr. Sijbesma's wife, because she allows him to do everything possible for the company, for the world, and Mrs. Sijbesma, thank you very much. Not here today, unfortunately. She sometimes is around, but I will certainly convey your compliments. Thank you. Let's get to business. In 2018, unfortunately, you lost a court case under patent 801 in the enlarged patent court, which led to EUR 546,060 in damages. That were the court fees, and also you have been ordered to send a letter of apology within 10 days.
Obviously, that was very unfortunate, very unpleasant for you. My 1st question is: Why the Supervisory Board did not act on this? Because the Supervisory Board is the corporate body that needs to supervise everything that happens within the board or in terms of patent cases. I have not seen anything in terms of reporting. What kind of reputation damage this case created? Because if patent 801 is withdrawn by the Technical Board of Appeal, that is no fun, and it is very expensive. I would like to know how much reputation damage this has created and how much damages this letter of apologies has created. I want to know this to the cent. We live in a digital era, so I am sure you can find this information with 1 press on the button. That is question 1.
On page 2, column 1, fourth paragraph, lines 5 and 6, I quote the following: "This allows us in the future to invest, for instance, in new nutritional facilities in Poland and India." However, the question is this, Poland and India are countries where the health and safety standards are not exactly as high as in the Netherlands, although we may question those in the Netherlands as well. If nutrition products have been manufactured in either Poland or India, how will you safeguard the safety of the products, and how will you avoid recalls? That is not mentioned in the annual report because recalls are very expensive. I will stick in my third question to the issue of the fourth column, fourth paragraph, line 8, You say that materials kept focusing on higher growth segments with higher margins.
Those in particular, however, we will also invest in the near future for improving the Dyneema production capacities. Where is this happening? In what countries? In which manufacturing sites are you strengthening your footprint in countries where you are already present? Are you moving towards new countries? What are you going to do with Dyneema? You said that because of Dyneema, you can increase technological margins. With how much? That concludes my 3 questions. I will come back later because only 3 questions are allowed in 1 go.
That is correct. They always tell me. Thank you for your questions. I am always impressed with the level of detail you find in the annual report. Patent 808. I have no clue. Do you have any disclosure on the company that is concerned? Are we allowed to disclose this information? It is not exactly a private meeting, you see. Can we disclose the corporate entity? Yes, we can. Because I am not quite sure we always do this. Yes, sometimes
We have issues with a company in Denmark making enzymes as we are. Sometimes we have patent disputes. Both ways, because they are our competitor. You are already getting up? "I am jumping up. Am I messing up already?" Says Mr. Sijbesma. You see, we sometimes have patent disputes, and sometimes we win, and sometimes we do not win them. This is what may happen. I can give you a long list of examples of successfully concluded proceedings. However, life does not always mean you win. In the procedures, we need lots of lawyers. Unpleasantly, in the present case, I have to tell you they are not cheap. You are right. Yes, it does result in expenses. It is nicer when you invest and then you win. I agree with you there. We did not win this case, and then we lost the money.
That's how it happens. Nutritional facilities, production facilities in Poland and India. What about supervisory bodies? Supervision may be different than in Western European countries. True. At the same time, people do live in India, and people in India do eat. They need food, even if the regulatory framework in India is different. In many such countries, we produce for the local markets to start with. When we start exporting, you may think we take a risk. We don't think we do, because worldwide, we have the same standards for all our production facilities, wherever they may be in the world. That doesn't mean we never make mistakes as a company, because this is people at work. We do have a system that applies very high standards of safety checks wherever in the world.
We think it's important to produce locally and also, economically speaking, this is wise. Also, given the fact that some countries have import duties for non-locally produced products, a topic that is getting more and more popular in today's world. Dyneema. Dimitri. Thank you for your questions, Mr. Spanjer. I know you're a fan of Dyneema, so I'm happy with your questions, and I can give you the following comforting news. We will expand Dyneema here in Heerlen, five minutes on foot from here. We are setting up an additional UHMWPE train, and that will be up and running in H2 of this year. The same is happening in Greenville, U.S., important for our global footprint. It means that growth in Dyneema matches the demand. Remains the question about the damages to our reputation. How can you quantify them?
It's hard to quantify them, I think. It would be the reverse. If you look at the balance sheet over the years, I think we've won more than we've lost. I'm not about other people's reputation. That would be a negative statement. I think our position in technology and patents is pretty solid. In the Netherlands, we tend to be the number 2 of patent applications actually upheld. I think in Europe, we're in the range of the top 20 or top 40 of companies receiving patents. Our patent situation is solid, and our reputation is fine. Let me use the opportunity to immediately live up to my WakaWaka promise and to share a WakaWaka with our chairman. Is that speed or not? Thank you very much. It's quarter to 4:00 P.M. We're still at the first questions under item 2.
If you have any very urgent questions. That looks like a very urgent question. Thank you, Mr. Chairman. I'm happy you thought it was urgent. My name is Con Cordion. I'm a retail shareholder. I would like to thank, following up Mr. Routs and other statements, to compliment the entire team of employees of DSM for a fantastic year. I think Mr. Sijbesma understands which party should be thanked more, himself or his colleagues. Anyway, I have three very brief questions. Most questions I could imagine have been asked, but I have questions left about the hard copy of the annual report. About three weeks ago, I requested a copy, and yesterday afternoon at about 2:00 P.M., it landed on my doormat in Delft. I'm not sure there was any intention behind that. Maybe you don't want a second Mr. Spanjer to arise.
I hardly had an opportunity to consult the annual report. I really hope it can be sent out earlier next year. Secondly, this means I had very little opportunity to study the annual report. I had a second question that I don't have to raise because one of the slides showed the spread of sales. Thank you for sharing that information. I do have a last question. I could read nowhere about the spread of the plants of DSM all over the world. I would like to have that information even more because this returns to another question about wages. We're talking about risks here, we're talking about strategy here. I couldn't find that information. If you can share the information, I'd be very happy. Annual report, why are things going wrong? You should have received it before.
I can't understand why it went wrong. Thank you, first of all, for your words of appreciation. I am not going to compete to see whether your appreciation or the appreciation of the Supervisory Board is more important. However, it is expressed at the meeting of the shareholders, and I think we highly appreciate the gratitude of our shareholders. Hard copy, we'll try and make things happen faster. At the same time, since early March, the annual report has been published online. It's been available on the webpage. The digital version has been around for a long time. Now, I understand it's not always comfortable. I personally like to consult documents in print in the company, so I'm the last one to comment on this. We'll make sure you'll get it faster, and we'll try and figure out why Mr. Spanjer did get it, and you didn't.
The spread of sales. I'm not sure what page you're referring to. I think we have a page called Sales by Destination and Sales by Origin. Sales by destination indicates where we sell goods. This is the sales spread I shared with you a moment ago. We have another page 177, you'll find sales by origin, reflecting essentially the origin of goods sold. Now, this is reflected in EUR, which means it reflects the sales that we generate from specific plants. It doesn't reflect the number of production facilities. We have another overview of the geographic spread of our plants, but I'm not sure it's contained in the annual report. But we update it from time to time, showing the plants as little dots worldwide. We have more than 200 production facilities worldwide, really spread all over the continents.
Sales by origin gives a slight impression of the location of our factories, but we'll try and see whether you can get a more detailed overview. Thank you for the question.
Thank you for the answer. Well, two more then. Thank you, Chairman. I have a question about the cash allocation policy as laid down in the June 2018 strategy. We see a list, one to four, and the last priority is in the absence of value creating M&A capital to be returned to shareholders. What should we now think that you have already proceeded to the last point by buying back shares? It's the lowest on the list. Does it mean DSM has no opportunities for large acquisitions at the moment? In this light, I'm interested to see how you look at the current valuations of the nutrition segment.
Something more interesting about the buyback, this is the current share price. Buying shares obviously is a good thing when there's a low share price below the intrinsic value. If you currently look at the share price, it's wonderful, obviously. Many tools of analysts are indicating a lower price, so you may be buying at too high a price. I wonder whether you thought about the super dividend or whether you still opt for a buyback. I'm specifically interested in the method you use to estimate whether a share buyback program will generate value. A very brief question to conclude. We see an increase in stock in Nutrition. What's the cause of that? Thank you. Thank you for the questions. Very much to the point. I thought one of the questions had already been answered. There can be a brief follow-up.
Please go ahead.
Sure. Cash allocation, I believe we addressed it actually earlier, referring to the capital structure that we're looking for. Indeed, we have a 4-tier cash allocation priority. We're investing first and foremost in our organic growth. Ensuring, we showed it in the slide, to maintain the dividend policy, a very firm promise from the company. Third, M&A, fourth, a return of cash to shareholders. When we looked at the strength of our business, at the same time as we looked at the strength of our balance sheet at the end of 2018, we felt that we have the possibility, of course, it is a privilege as a company to have that, to actually add in an element of return of cash to shareholders in addition to the 3 others. It is not either/or.
It is actually with more an ability to do it as well while retaining very good flexibility for our organic growth and for our inorganic growth. I think it's probably very important that it's understood that this is not one or the other. When it comes to valuations of targets, we are extremely careful and mindful that acquisitions should create value, we've always been very disciplined about that. The main point is much more ensuring that that will be the case than necessarily speed of going about making acquisitions. We do a lot of work, a lot of studying, make sure that when we move, we have a high degree of confidence. This is in the interest of DSM and of its shareholders.
That's really looking at the cash allocation and the share buyback. Now, given that the nature of our share buyback is much more about a strategic direction and the strength of the company, we feel comfortable that the share buyback is still the right thing to do at the current share price. I will absolutely not comment about what is an adequate share price for DSM. I leave that entirely in the hands of our investors and shareholders. You all have an individual view, no doubt, as to what is a good share price. What we do look at, of course, is return on capital, but also retaining that flexibility to invest in innovation and in organic growth. We are comfortable that the share buyback is a balanced measure and is also a very appropriate measure at this stage for now.
I believe your third question was inventory levels in our nutrition business. As was referred to earlier, 2018 was a very unusual year for our nutrition business because of this temporary vitamin effect. It created all sorts of unexpected demand and supply momentums. Sometimes an acceleration, sometimes a little bit of a slower demand. At the end of the year, we just ended up with a bit of a higher inventory level than usual. Beyond that, there's not much to refer. Business continues. We are in the targets, and we mentioned that earlier. It is our ambition to reduce our total working capital to sales ratio bit by bit by bit, and this is one piece of it.
Thanks, Geraldine.
One small addition to Geraldine. She said that we are normally not a big fan of share buybacks, and I've said that many, many times. It's also priority number four. It is clear signs of strength and our trust in the future that we came to this point number four because there's three points, like Geraldine said, we go priority above this. This is more a sign of strength than anything else.
Okay.
I would like to proceed with the meeting and conclude this opportunity to ask questions. You'll have opportunities under other agenda items. Let us conclude this item now. We've received information about the turnout at this AGM, and I can inform you that at this AGM, 3,058 shareholders are present, all represented. They represent a total share capital of 152,878,320 shares, representing 69.24% of the issued capital eligible to vote. I can also inform you that a notary public for several resolutions has received proxies or voting instructions. These proxies concern about 152.6 million shares, and they amount to 99.85% of the capital represented at the AGM. These votes have been introduced into the voting system.
That brings me to item 3, remuneration, which has three points. 3A, implementation of the remuneration policy for the Managing Board in 2018. 3B, an amendment of the remuneration policy for the Managing Board, and 3C, amendment of the remuneration of the Supervisory Board. Ms. Van der Meer Mohr, Chair of the Remuneration Committee of the Supervisory Board, will give a brief explanation on the amendments to the policy. She will also address the proposed amendments to the policy of the remuneration of the members of the Managing Board and the Supervisory Board, items that are being submitted to the vote for your approval.
The explanatory note is based on the comments on the implementation of the remuneration policy in the annual report, Remuneration Report in the Integrated Annual Report, and also in the explanatory notes to the financial statements and in respect of the amendments to the remuneration policy of the Managing Board and the Supervisory Board. You also have the explanatory notes to the agenda of the AGM. After this point, you will have the opportunity to ask questions. Ms. Van der Meer Mohr.
Thank you, Chairman. Thanks also to our shareholders and the representatives of the shareholders for sharing their view and opinion on the remuneration policy in the many consultations that have been conducted in the preparation of a new policy. In 2018, remuneration of the Managing Board has been implemented in delight of the remuneration policy adopted by the AGM in 2013. For the details, allow me to refer you to the remuneration policy of the Supervisory Board and the explanatory notes to the financial statements that can be found on page 131-135 and on pages 224-229 of the Integrated Annual Report. I would like to highlight a few elements of the policy in my presentation.
First of all, as for the base salary of the members of the Managing Board, I can tell you that the amount has been amended in July 2018 by 2.4% for the CEO and Chairman of the Managing Board and by 2.9% for the other members of the Managing Board, in line with the salary dynamics in the peer group of similar companies, but also in line with the salary dynamics of DSM executives in the Netherlands. Subsequently, in respect of the dynamics of the long and short-term variable remuneration of the Managing Board members, we determined that the targets set for them had all been achieved or overachieved, 2018 being an excellent year once again for the company, where the company performed well on all fronts. All members of the Managing Board substantially invest in DSM shares.
All three convert the maximum 50% of their gross short-term remuneration for 2018 in shares that will be held for a longer period of time. In doing so, they express their confidence in the strategy of the company, and thus, the long-term interests of respectively the shareholders and the members of the Managing Board will be aligned. Today, we seek your approval for a number of amendments in the remuneration policy of the Managing Board. Allow me to highlight a few aspects. The Remuneration Committee of the Supervisory Board has reviewed the remuneration policy in light of the following considerations. We've looked at possibilities to further simplify the policy, contributing to greater transparency. The remuneration policy tends to be very complicated, and the simpler and the more transparent, the better, in our view.
Secondly, we tried to make sure we could maintain and strengthen the link between the remuneration policy for top management and all shareholders of DSM in the light of the drive to achieve long-term value creation. Thirdly, we aimed to maintain the possibility to attract and maintain the right type of people for managing this company. Given the fact that the current remuneration policy meets all the above points, the points mentioned above, and we appreciate your support for this policy, we decided only to make a small number of amendments to the policy. The current policy knows a base salary which approaches a median from below and remains unchanged. A long- and short-term remuneration also applies, which when the set targets are achieved, represents 50% or 100% of the base salary remains in place.
In this system, both the short- and long-term variable remuneration are for 50% linked to the financial performance of the company, and for the other 50%, to targets in the field of sustainability, planet environment on one hand, and people or society on the other hand. In addition, in terms of the short-term variable remuneration, we also have individual targets. This remains unchanged. The limited amendments approached are the following. First of all, a simplification of the system for setting the targets and the relative weight of the short- and long-term variable remuneration components, meaning we can always align them with the strategic targets of the company. Let me give you a tangible example. For 2019, we will move from the gross free cash flow to adjusted net operating free cash flow, and for the long-term incentives, we move towards an absolute reduction of greenhouse gas emissions.
We aim for maximum transparency in providing insight in the determination and the achievement of targets, obviously observing confidential corporate information as usual. Thirdly, we wish to align our policy with the current market practice, in which shares must be held for a term of five years in total. Fourthly, we wish to increase the standard for a holding period by other members of the Managing Board, in which the period in which shareholdings can be accrued are brought into line with the term of office. Finally, we want to introduce a policy for hiring, including a non-compete arrangement in the hire policy for new members.
We also ask your approval for an amendment of the remuneration of the members of the Supervisory Board, which was amended three years ago, to do justice to their growing responsibilities in a complex internationalization context, and the time that this demands from the members of the Supervisory Board. For details, I can refer to the integrated annual report and the explanatory notes to the agenda of this AGM. The Remuneration Committee in its work will continue the tradition of applying best practices in corporate governance. Thank you. The word is for the chairman. Thank you for those comments. Any questions to Ms. Gilmore? Yes, please. Microphone D. Thank you, Carola van Lamoen. On behalf of Robeco, I am speaking on behalf of the parties I mentioned before. Thank you for your explanation. Thanks also for the consultation DSM conducted with shareholders about the amendments to the policy.
We highly appreciate that. We are satisfied that the principles of the current policy remain in place. We are positive about the drive for simplification and also about the proposed amendments to increase the shareholding norms for the members of the Managing Board. One point demands attention in the new policy. The Supervisory Board asks for flexibility to amend the terms for the bonuses as long as it is in line with the strategic targets of the company and with the long-term value creation. We make a public appeal to report on the measures, the tasks, the targets that you have chosen in the remuneration report and to reply to them, to react on them. The sustainability targets for long-term bonuses, energy efficiency, and greenhouse emissions reduction.
For both targets, the scores were significantly better than last year, which led to a maximum payout. Is there a trend here or was this a one-off? Can you explain how the Supervisory Board determines the targets? Pauline, yes. The first question was an easy one. The answer is yes. Obviously, we will report on this in the appropriate way because it is important for us to have the flexibility that allows our strategy to follow the breadth of the organization. You deserve transparent reporting. We will do so. The sustainability targets. That is always an interesting question. It is a give and take. How do you set the targets? Because it is about the amount of investments you want to conduct in order to meet the targets.
If you invest in targets and sustainability targets, you can't invest that money anywhere else, and that is a consideration that we have to make as Supervisory Board. Then, achieving or overachieving such targets is something we can only be very grateful or thankful about. That doesn't mean the targets weren't challenging. Every year, once again, we have consultations with experts from the field of sustainability to compare the results of this year with appropriate targets for next year. This takes a lot of time. We have our own committee headed by Eileen Kennedy. She is the chair of this relevant committee, and a lot of time is dedicated to discussing the targets and their achievement. This is not a trend or a one-off. This is rather a permanent issue in the Board. Yes, it's a permanent item on the agenda of the Board.
If you would like to suggest that we place very low targets in order to guarantee bonuses, then I would reject that. No, that was not my insinuation.
My name is Spanjer for the minutes. I have a problem with item 3C. Why? Let me read it out. Chairman, why 23.6% needs to be granted as an increase, EUR 20,000 to EUR 105,000, while Mr. Sijbesma has a potential increase of 2.4% on page 24, column 1, second paragraph, line 6. Mr. Sijbesma has moved this company from bulk chemicals to what it is now, and he has an increase of 2.4%, and now you have 23.6%. I disagree. Let me carry on. Why should the Vice-Chair have an increase of 25% from EUR 15,000, from EUR 60,000 to EUR 75,000, while Ms. Matchett and Mr. de Vreeze have an increase of 2.9%?
Page 224, first column, second paragraph, line 6 as well. Your colleagues have an increase of 16%, moving from EUR 60,000 to EUR 70,000, Mr. Chairman. With EUR 85,000 and an increase of 2.4%, which would be in line with the trend, you had EUR 87,000, which will give you a decent slice of bread with some decent cheese. Why do you have to have such an immense increase? Mr. Sijbesma is the one who made the choice to move from bulk chemicals to the current operations. He had to use his force of conviction to achieve this. He had to convince people to work in a more organic way, in a more green way, and now you want more money. No. Ladies and gentlemen, give yourself the same increase as Mr. Sijbesma.
This is way too much because really, how do you think the HR manager of the company would feel if this would be approved? Mr. Routs, how do you think Lieke de Jong, who does the media communications and who will have a maximum increase of 2%, would feel? How do you think Dave Huizing would feel, a person who serves the company so well and who has a maximum increase of 2%? This really is outrageous. You are simply on another planet. Mr. Routs, what do you think we shareholders, owners of the company, think when we talk to your employees? Your employees feel like second-rate citizens, people who are not worthy to work with DSM. We can replace you, Mr. Routs, but the ladies and gentlemen who work in the factories cannot be replaced. We can replace you, no problem.
Now international flights would be increased from 4,000 to 5,000. I don't know why. We have mobile phones. We can send apps, messages. We can communicate all over the place. Then you want to have an allowance of 12,500. This is too much. The increase of the Managing Board is fine with me, but this goes way too far. Very rarely I heard you speak with such flair. Let me start with the chair of the Remuneration Committee. Rob, this is a very awkward question for a chairman, so let me answer it on behalf of the chair. You may not appreciate that we're not talking about a salary increase. This is a change to the remuneration of the Supervisory Board. That doesn't happen annually for about 3 years. The amounts were not changed.
We review the amounts every 3 years. We then look at a peer group of companies and what they pay to their Supervisory Directors. We also look at the makeup of the Supervisory Board. Mr. Routs and myself are the only Dutch members. DSM has become a very international company with a very international makeup of the Supervisory Board. We have people who have lots of opportunities to serve supervisory boards elsewhere in the world, still they have chosen DSM. We're highly grateful for them joining DSM, but we can't expect them to fly all over the world to come to our Board meetings for a remuneration way below what they could earn with other companies. This is why the remuneration is reviewed every 3 years. We do this with an open conscience.
We are not even on the median level of the peer group, the peer level that is always approved by the shareholders. We are still below the median level, so it may seem to be a significant increase, but actually in line, in comparison with the peer group, it is a very modest increase. Thank you. I need to correct you here. You say you're below the median, but what is the median? Is it Rwanda's median? No, certainly not. For the Supervisory Board, we look at the Dutch AEX funds, while the peer group for the Managing Board is international. For the Supervisory Directors, we decided to restrict ourselves to the Netherlands, so the median is even lower than the international peer group, which we could have used. We could have also compared ourselves with U.S. companies. You would have run out of the room screaming then.
Well, if you review it in 3 years again, it will be more than 7%. Mr. Sijbesma, Mr. de Vreeze, the CFO, the people who build up this company only have 2%, 2.5%, maximum 2.9% salary increase, and you are giving yourself 7% per annum. I hope that in the committee you will make changes because this is outrageous. You are making appeals on the unions to call out a general strike. You are making an appeal upon us. You are creating problems because how we can look in the eyes of the employees when we have a drink with them, I object. I understand you object, but let's not get personal. I'm not getting personal. It's a general statement. Mentioning your name was by accident.
Well, maybe I can involve myself in this discussion as Mr. Sijbesma.
Fine with me, I think that the link with the committee chaired by Ms. van der Meer is really inappropriate.
You just referred to employees. We are very happy with our remuneration and our increase. I'm not only referring to the people here at the table, but even Mr. Huizing, Ms. Lieke de Jong, and all these people you mentioned, I know that they're happy. You can keep that in mind. There's no problem for drinks later on. These people, as I said, are happy. Second thing I would like to remark is that we, as a company and also as a board, we very much benefit from a strong Supervisory Board, and we can only hope that the Supervisory Board can be paid in such a way that we have a strong Supervisory Board. I, myself, personally, am incredibly pleased with my Supervisory Board because they help us out, they supervise us.
In the benchmark, as Ms. van der Meer just pointed out, in the benchmark, they're given much less than our peers. You can do that for a while, but you can't do so indefinitely because somehow or other, you will end up having problems. I'm saying this, I don't think we should want that.
Why can't we just have an increase every year for the Supervisory Board, along with your increase, the 2.9%? Why does it have to be every year? Why does it have to be such an enormous increase? Why not small increases every year?
I think you have raised your questions. I'm sure you'll never be satisfied with the answer, so let's proceed with the vote. I apologize. Sorry, I didn't see you. Thank you. My name is Joseph, and I'm small shareholder. I listened to the arguments that were put forward, and one of which I think is horrifying, and this has got to do with what's going on in our society, the changes towards sustainability, transition to other technology, and DSM is making money on the back of that. Of course, costs in society are increasing as well. The argument that you spend more time, and as DSM, I think you're turning your back on the population because people have more and more paperwork to do and more responsibilities to bear, whereas people are being fired. Other people took care of that work in the past.
I protest against using that argument that more work is being done. Everybody has to do that. Everybody has to shoulder that, and this is to do with changing society, has to do with health, and all sorts of responsibilities are given to citizens. So this is on the increase. That's what I wanted to say. Thank you. Yes, the holding period. Yes. Directors have to hold on to the shares. The holding period of 5 years is reduced to 2 years. I hear Ms. Van der Meer Mohr say that this is what is customary now, but I don't really think it befits DSM. These arguments about sustainability and long-term thinking, and all of a sudden you're shortening the period from 8 to 5 years. I would like to hear from Mr. Sijbesma how he feels about the shortening of this holding period.
Well, it's going to be a long, long answer. Comment off mic, the interpreter can't hear.
Exactly.
I don't think that DSM is really walking away from a 5-years holding period. I think the way that we have counted a 5-year holding period is very different to how the market does it. The market, it simply includes the 3 years vesting plus the 2 and gets to 5. I think we've been different in that we have in the past not included the vesting period in the counting. We still get to 5. We're now counting as everybody else does. I think it does fit with DSM. It's still 5 years. We also wanted to make sure that performance is also rewarded nearby when performance actually happens. 8 years felt like a very long time if you include the vesting period. I'm sorry, I was somewhat confused with your question. By definition, I will just take it that you're right.
That's why I was looking. I'm glad Judith was able to add to the answer. As far as myself personally am concerned, and you can find this in the last 12, 13 annual reports since I've been CEO, I have purchased shares, saved shares, never sold one single share, and I can also reassure you, as long as I am CEO, I shall never, ever sell one single share. I can reassure you.
Thank you, Feike. Can we now proceed to the vote?
Thank you, Chair. Time to activate the handsets. I would request you to insert your voting card with the gold-colored chip pointing upwards, and then insert it in the handset, and you'll see a welcome message appearing in the display. Should that not be the case, I would request you to raise your hands so that we can help you out.
I'm looking around to see whether everything is sorted. I don't see any raised hands, so there are no problems with the handsets. Great. You will also see on the screen that you have three options in the vote. As always, you will choose between numbers one, two, or three. If you want to vote in favor, press one, against, two, and if you wish to abstain from voting, please press three. And you'll see your choice appearing in the display. You can always change that as long as the vote is open, and your last choice will apply. I shall inform the meeting that every share entitles you to cast one vote, and you'll see the results of votes in favor, against, and abstentions, because abstentions, according to the articles association, are non-cast votes. You'll only see % for the votes in favor and against.
Now we can proceed to vote on agenda points 3B and 3C. Well, I just explained what the numbers one, two, and three stand for. I'm not going to repeat that. Now we can proceed to vote on item 3B of the agenda. You still have a couple of seconds. I'm looking at the civil law notary. I think most of the votes are being cast. And yes, the vote is closed. The result for this item on the agenda, 97.48% have voted in favor, and 2.52% have voted against. And given the results of the vote, I note that the meeting has approved 3B. Now, 3C, the amendments with respect to remuneration of the Supervisory Board. Once again, you can press one, two, or three. I'd like to open the vote on 3C. I see that the votes are being cast.
I'll give you a couple of seconds. The vote is closed. We'll just wait for the results. 98.45% have been cast in favor, and 1.55% against. The amendment of the remuneration of the Supervisory Board has been approved. As I pointed out at the beginning of the meeting, some items of the agenda will be clustered, and we'll deal with agenda items four, five, and six together. After which you'll have the opportunity to raise questions. And after that, we will proceed to the vote. Item four being the financial statements. The financial statements are submitted to the general meeting for them to be adopted. The financial statements 2018 have been approved by the Supervisory Board on March 7th, 2019. You'll find the financial statements and other details from page 158 onwards in the annual report.
The financial statements 2018 have been audited by the auditor, and the auditor's opinion has been included on pages 230 through 234. I'd like to invite our auditor, Mr. Roosen, to give a brief presentation on the audit work of KPMG. Should you, after that, have any questions with respect to the financial statement or the audit, you can always ask them later on. Eric.
Yes, Chairman, thank you very much. My name is Eric Roosen. I'm the KPMG auditor, and I'm in charge of auditing the financial statements. We've been in charge of the audit since 2015. I'd like to briefly present our auditor's opinion, and our presentation will follow the order of the opinion. We have audited the single and consolidated financial statements of DSM, and for the first time, as one of you said, we issued an opinion of reasonable assurance with the sustainability information.
In the past, it was limited assurance. It used to be limited, now it's reasonable assurance, and by the way, a reasonable assurance is the highest degree of assurance that an auditor can issue. That's as high as you can get. Another point I wanted to make in this context is that a company cannot ask an auditor to issue an opinion with reasonable assurance. A number of prerequisites need to be met to that effect, and Geraldine said so when she answered one of the questions. The company has to have sufficient checks and balances with respect to the assumptions and the data and has to lay that down to such an extent that the auditor can audit it. In my presentation, I would like to zoom in on the financials.
The opinion or the auditor's report, the end product of our audit is our auditor's report, and we've issued an unqualified opinion, which means that the financial statements give a true and fair view and are in accordance with IFRS and Title 9, Book 2 of the Dutch Civil Code. By the way, the annual report and other information is congruent with the financial statements and do not contain any material misstatements. During our audit, we focused on a number of elements. First of all, risk assessment. During our audit, we make a risk analysis focusing on those areas where there are the greatest risks of misstatements. These are large numbers and things that require assessment of management.
What is new in this statement is an explanation with respect to our audits concerning the risk of fraud, risk analysis, the identified fraud risks, and the work that we carried out to that effect. This work is by no means new, by the way, but we have described it in more detail. Furthermore, materiality is also important in order to determine the scope and depth of our work and also the evaluation of any mistakes or misstatements that we might find. At DSM, the materiality for the financial statement 2018 was €40 million, which is 3.2% of results before extraordinary costs, and this is within the bandwidth that is generally accepted. We report any deviations that exceed €1.5 million, and we report that to management and supervisory board.
From the perspective of efficiency, we decide which work we would do more centrally and which work we would do more locally. Particularly goodwill acquisitions, divestments, taxes, legal proceedings, and extraordinary items are audited as much as possible centrally. This selection of local entities is based on the scope and our risk assessment of those entities. This has led to coverage of 73% of sales and 80% of overall assets, I would say. For 2017, that was more or less the same. The remaining 27% of sales consists of a large number of small entities. In general, these entities are smaller than 2% of the total of DSM. These entities, by the way, we analyze the figures. If there's any reason to do so, we conduct additional audits.
In a number of countries that we've selected to that effect, the local KPMG auditors carry out work in order to audit for the benefit of the group audit. For most countries, we carry out mandatory statutory audits, carried out in part by KPMG auditors and also in part by other audit firms. The foreign auditors that report back to us follow strict instructions. We assess their impartiality and competencies. We've in touch with them constantly. We also assess their reports and files. Important foreign DSM organizations and auditors are periodically visited by us. In 2018, the countries that we mentioned in our report were visited. Organization in the U.S., Switzerland, China, Brazil, and the shared service center in India. In complex matters, we will involve our internal specialists. These would be specialists in the field of assessments, IT, taxes, and pensions.
Last but not least, the core elements of our audit. We spend the entire year on our audit. We periodically speak to the CFO, Geraldine Matchett, and CEO, Feike Sijbesma. We also are in touch with John Ramsay, the chairman of the audit committee. We attended all audit committee meetings. One time, we attended the supervisory board meeting. Our findings have been laid down in our report or our management letter and our auditor's report. We've sent it to the supervisory board and management. With respect to the core issues, we've issued in a detailed report. All these items have been included in the report, in the opinion, given their financial importance, complexity, and the judgments involved. Goodwill and valuation of goodwill, just as last year, was a key audit matter, given the magnitude and the estimates that require.
We feel that these estimates are within the bandwidth that we find acceptable, which is what we said in our opinion. A new key audit matter is the sale of DSP. This has been included given the magnitude of this transaction and the financial significance thereof in the financial statements. What we have not included is a valuation of the participating interest in POET-DSM and the divestment of Patheon. This concludes my presentation. Thank you very much for your attention. Of course, I'll be happy to answer any question you may have.
Thank you, Mr. Roosen. After agenda item six, you will have the opportunity to raise questions. We shall now proceed to agenda items 5A and B, the reserve policy and dividend policy, 5B, adoption of the dividend for ordinary shares 2018.
The reserve policy 5A is unaltered with respect to last year and is connected to the dividend policy. The dividend that DSM pays to its shareholders is dependent upon the circumstances and the conditions in which the company is, the financial performance of the company, and other relevant factors. DSM aims for a stable and preferentially an increasing dividend. Mr. Sijbesma already pointed that out. The Managing Board, with the approval of Supervisory Board, may propose the dividend be paid out both in cash and in ordinary shares, DSM optional to the shareholder. Item 5B is the determination of dividend for 2018. Financial statements show that 2018, a net profit was achieved of 1 billion 77 million and pursuant to the articles of association, the Managing Board, with the approval of Supervisory Board, will determine which part of the profit will be reserved.
For the year 2018, the amount is EUR 665 million. That is the amount that is being reserved. The remaining profit will first be paid out as a dividend on the cumulative preference shares A, and this payout amounts to EUR 8 million, and the remaining part of the profit is then available to the general meeting. With the approval of Supervisory Board, the Managing Board will propose to the general meeting to pay out for 2018 an amount of EUR 2.30 per ordinary share by way of dividend. Keeping in mind the interim dividend paid out in August 2018 amounting to EUR 0.77 per ordinary share. The final dividend amounts to EUR 1.53 per ordinary share. Optional to the shareholder, the final dividend in cash or in ordinary shares shall be made available by DSM.
This year, once again, a maximum of 40% of the total dividend will be paid out in the form of shares. This in order to prevent any additional taxes for DSM should shareholders together indicate that they wish to receive more than 40% of total dividend in shares. These shareholders shall receive the shares proportionately, and the rest in cash. In the explanatory note to the agenda, you will find further information with respect to the dividend. The dividend payout will be available as from June 3rd, 2019. Item six, the discharge of responsibilities of members of Managing Board and Supervisory Board. You can individually cast your vote with respect to the discharge of liability of the members of the Managing Board and Supervisory Board.
This concerns the discharge concerning any information reflected in the financial statements or otherwise notified to the general meeting before the financial statements are adopted. Now I would like to give the shareholders the opportunity to ask questions or make comments concerning item four, five, and six. Depending on the substance of your question, I shall indicate who can best answer your questions. Who would like to kick off? Is that microphone A? Oh, no, it is someone who is leaving. Mr. Spanjer, please.
Chairman, could I also ask a question with respect to the auditor's presentation? That is not on the agenda. It is not item four, five, or six, which is why I am asking. I would like to hear from the auditor, because you have quite a patent portfolio. Did you involve a patent expert to assess that or to valuate that? Because patents are worth less every year.
How did you assess that patent 808, as you know, and of course, I know which company is involved here, but that company suffered damages. Didn't the auditor see this coming? What did he say about that in his management letter? Thank you for your question. Pleasure. Patents, first of all, are not valuated in general. We don't have a valuation expert for that. What we do, there are a number of other issues, but those are other fixed assets, intangible ones that are being valuated. For that, in principle, we do involve specialists, and I mentioned that in my presentation. Those are valuation specialists. Those can be-Especially in the field of tangible fixed assets and intangible fixed assets, not for patents, because patents are not being valuated. What a pity, because in this organization, it is quite a large portfolio.
Well, if we're talking about acquired patents, yes, they can be valuated actively. In general, says Mr. Sijbesma, we hardly have a position in terms of value of patents on our balance sheet. We do have a lot of value in patents, by the way. Yes, of course. Thank you for your question. There was a question over there.
Thank you. I have a question on the scope of the audit. 73% of the audit and 80% of assets are covered by the scope of the audit, and compared with other listed companies, these percentages are relatively low. Although the part that was not audited concerns smaller businesses of the organization. How did you get sufficient security with respect to the fairness of your coverage?
I'm sorry, Chairman, we are in charge of scoping, and so the company doesn't have a say in this, so that is something that the auditor determines, which is why I like to give an answer myself. You say 73%, 80%. You say that that's relatively low, I also have companies in which the percentages are higher, either higher or lower. What is the situation here at DSM? If I were to draw a line, I would say there's a line in which you have a limited number of large companies that are quite risky. They will contribute to the first 78%, if you go further down, you see smaller entities, lots of small entities where there can be no material misstatements. What is it that we do with those entities to check and double-check? We analyze the numbers of these entities.
We do this centrally here, and we ask questions, if necessary, to central management here, or it can also be that we send our local auditor to check up on things. I can give you example, not of this past year, but two years ago here. We saw an item, indirect taxes, which is VAT amongst others, and excises. You saw an increase in a certain country that was not in scope, we asked what the reason was, there was an answer here centrally that it had nothing to do. This was a formal point, a formal thing that needed to be settled. We do see what happens in the entities, and our opinion covers the entirety of the business. Doesn't mean that if we fully audit 78%, that we or I have no responsibility whatsoever for the rest.
Everything is covered by our responsibility, and the risk of a material misstatement in this case is negligible. Once again, I also have companies in which the scope is higher or lower. It depends on the type of company. Thank you. You're happy with the answer. For those of you who have your doubts about the impartiality of the auditor, there you go.
I can remain in place, or you can remain in place. I have a question. That I've read, the report of the Supervisory Board and the Audit Committee, Supervisory Board and the Audit Committee. We read about your letter, and in the management letter, there's a recommendation for strengthening the internal controls of the company. Your recommendation was to take the internal control level to a higher level of maturity. What did you intend?
Yes. I have some limited presentation instruments, but I can show you page 110 of the report. These are the pillars. Do you have a copy at hand? Let me take you through it because it's difficult from this distance. Look at page 110. You'll see an illustration that I refer to. These are the pillars of the total framework of DSM. As you see, the pillars, for those who don't have the book, represent risk management reporting, controls, internal control framework, representation letter, operational compliance, and corporate audit. DSM has turned this into a beautiful framework that can be found to a certain extent in other companies. In comparing this with other companies and with the norm, we have very little observations about most pillars.
We had a remark about the internal control framework pillar, in particular about strengthening, not the type of controls happening, we are fine with them, the way they are recorded. It's important for management and for us as auditors for these outcomes to be verifiable. It's not under par, we would like to turn an average score into a top score. This is a recommendation, not to the extent it would amount to an insufficient score. As we said in our comments, there are no material findings. We simply like to raise the bar all the time.
Thank you very much. One other question. This is about the paragraph about what still went wrong in 2018. Compliments for 2018, for DSM for including such a paragraph. Not all companies are so open about this. I noticed one issue. There was fraud at the DSM Innovation Center. What was the amount? I remember there was another attempt for similar fraud in 2016 that was out in the papers. And maybe next time somebody will buy it. How is it possible this happened to the company? Was there insufficient attention? Well, we give a lot of attention to this kind of fraud. Regularly, emails are sent out in my name and I actually do send out emails in the company.
I sometimes have something to communicate to people, sometimes I'm not the author of the emails, but it looks as if I were sending emails. This is called CEO fraud, the most frequent requests are about payments, asking people to make a quick payment because I, as CEO, think it's necessary. We give lots of attention to this. We carry out tests regularly with it. Some time ago, we sent out fake messages, fake trials. Then it's us getting into another chair and seeing how many people buy it. We try and inform people, in most cases, almost always, it goes well. Things go well. I have a certain style of communicating, people very quickly see a message couldn't have been sent by me. Most people understand what's happening, we give lots of attention to this.
We have a rule that you have to call the person concerned and not send an email back, because then you send an email to the criminal who will tell you to go ahead with the payment. We conduct this kind of education. Last year, there was a miss, not for an immense amount, but an amount that didn't make us very happy, the money is immediately gone. It's funneled on, you can't retrace it. I think that the damage to the company is extremely limited, that we have control, but this is people at work, any employee can be exposed to this. Anything to add? Thank you, Mr. Chairman. I have a question to the CFO and a question to the Auditor. Well, the CFO, it's a general policy that you have shareholdings from 45% to higher level, 60%.
Do you do this in order to reduce goodwill? You want to have some feeling with the company. You want to see what Johnson & Johnson is doing, for instance. Doesn't that lead to too much goodwill on the balance sheet?
Companies, minority stakes, sometimes we increase again to a majority stake, it is true. Is that to have a lower goodwill on our balance sheet?
No, the dynamics are never about the goodwill. It really is on a case by case. We have very different reasons to invest in a company. In some cases, we go for an investment of even below 20%. In fact, we have a lot of venturing investments, which are very related to our innovation, it was referred to earlier by someone that sometimes that's the best way to get access to new developments in science and technologies, is to actually make a relatively small equity investment in order to know what's going on and to contribute in our own way. To every investment, there's always a very different picture, but it's not guided by goodwill or no goodwill.
Thank you. Another question. IFRS 16. One auditor reports on IFRS 16, others don't report on IFRS 16. Despite the fact that it's not compulsory this year, auditors could still make a statement about IFRS because it's in the financial statements anyway. You have almost one page in the annual report on IFRS 16. We'd like to hear the point of view of the auditor. Erik, go ahead and keep it short. Thank you, Mr. Stevens. Thanks for the answer. Indeed, some auditors in their statements address IFRS 16, the new standard. Some don't. IFRS 16 is about activating leases and rental on the balance sheet, DSM applies this starting January 1, 2019, the current year. In 2018, it made it to the explanatory notes and it's a whole page saying that the assets have increased by EUR 200 something million.
We incidentally have spent a lot of time on this working together with DSM. DSM started, we checked it because the amount is material. Our conclusion wasn't that it should be included in the auditor statement because the level of subjectivity and the level of judgment involved was limited. This is about gathering the number of contracts, assessing the lease obligations. We have worked on this, we didn't choose to include it in our auditor statement because I couldn't add statements as a critical note.
We have no further questions, that means that items four, five, and six can now be submitted to the vote. Item four will be brought to the vote as first item. Thank you, Mr. Chairman. I reiterate the menu. If you wish to vote in favor, one. If you wish to vote against, two. Abstentions, three. We now move to item four on the agenda. The vote is now opened. A few more seconds to cast your vote. We now close the vote, and we see that 99.49% of the votes have been cast in favor and 0.51% against. The AGM has therefore adopted the financial statements 2018, then 5B, the adoption of the dividend for 2018. Yes, it is on the screen. You know the procedure. I now open the vote. I hope all have been able to cast their vote. We now close the vote.
99.60% have voted against. My apologies, in favor, 99.6% in favor and 0.40% against. I would like to know who the 0.40% are that do not want a dividend. First of all, we see that the dividend has been adopted, we come to point 6. Yes. Let us place it on the screen. You can cast your vote on item 6A. I open the vote. A few more seconds for the last votes coming in. I now close the vote, and as you see, 98.78% of the votes were cast in favor, and 1.22% of the votes were cast against. That means that the members of the managing board have been granted release from liability. Now the same 6B for the Supervisory Board. It is on the screen. Voting devices have been activated. You can cast your votes on item 6B. We now close the vote.
98.78% of the votes cast in favor, 1.22% of the votes cast against. That means that members of the Supervisory Board have also received release from liability, on behalf of both boards, I would like to trust you for your confidence, for the confidence that you have in both teams. We now move to item 7A, the reappointment of Ms. Pauline van der Meer Mohr as a member of the Supervisory Board. According to the rotation scheme, she can step down next year at the end of this AGM. However, she is available for reappointment, in line with Article 24.2 of the Art Association Supervisory Board nominates Ms. Pauline van der Meer Mohr as a member of the Supervisory Board in light of her broad experience in the field of human resources, management, corporate governance, and her international network.
She has a very broad experience as a Supervisory Director, as she has shown in her previous terms of office as Supervisory Director, and more recently as Vice Chair of the Supervisory Board. With Ms. Pauline van der Meer Mohr nominations, the Supervisory Board also keeps its profile in terms of corporate governance, people management, compliance, and legal affairs. Ms. Pauline van der Meer Mohr is an independent Supervising Director in the sense of the Dutch Corporate Governance Code, Article 1.4 of the regulations of the Supervisory Board. The proposal is in line with the nomination to reappoint Ms. Pauline van der Meer Mohr as a member of the Supervisory Board of DSM as of the 8th of May 2019 for a term of office of two years, ending at the closure of the AGM that is to be held in 2021, which is in line with the Dutch Corporate Governance Code.
Under item 7B on the agenda, we find the appointment of Ms. Mann as a member of the Supervisory Board. The Supervisory Board proposes to appoint Ms. Mann as a member of the Supervisory Board. The nomination is done in light of her long experience in the field of infant nutrition, CPG, FMCG, and pharma in science-based businesses, also in the light of her international experience, including her experience in emerging markets. With the appointment of Ms. Mann, the Supervisory Board would strengthen its profile in the field of general management strategy, marketing, sales, emerging economies, and DSM's nutrition business. Ms. Mann is an independent supervisor director in the sense of the Dutch Corporate Governance Code and the regulations of the Supervisory Board. The appointment would be for a term of office of four years, ending at the closure of the AGM to be held in 2023.
As said, Ms. Mann is present at the AGM today, I'm very happy to give the floor to Ms. Mann to briefly introduce herself and to indicate why she wants to become a supervisor director of DSM.
Well, [Foreign language] guten Mittag, I should say. Firstly, thank you for this. I am both thankful and honored by this nomination. I have to say that I was attracted to DSM because of its focus on its people, innovation and sustainability. Of course, DSM's purpose for creating a better life for all is something that truly resonates with me on a deep personal level. I have over 30 years of experience across various industries such as pharmaceutical, infant nutrition, and most recently, over-the-counter medicines. I believe I'm a truly global executive. I have lived and worked and managed significant P&Ls across four continents. I have deep experience in emerging markets, especially in Africa, China, Russia, and Brazil, have successfully established businesses here and grown them successfully to gain market share.
I am particularly interested in the digital age and how this is impacting consumers and their behavior, and how they interact with companies and brands. I trust and I do hope that my experience will add value to DSM overall, I thank you for this opportunity. Thank you.
Thank you, Erica.
Thank you, Erica. As said before, it would bring us to full parity in the Supervisory Board in terms of gender, and we are very glad that we have reached that point at last. Any questions about this nomination? Yes, please.
I have a question about the reappointment of Ms. Van der Meer Mohr. She has a long list of positions within a bank and an auditor firm, and that is fine in the light of the rotation policy. It was just said that the supervisory directorship of DSM would demand more time. My question is, do you have more time available for this important directorship? Thank you. This is a question the Netherlands Authority for the Financial Markets and De Nederlandsche Bank asked me.
This takes 30 days a year. I have a nice booklet, but if things get really exciting here and the number of days would grow, I could still live with that. No concerns about my availability. The answer is yes, I have sufficient time available. Mr. Stevens?
Thank you, Mr. Chairman. That was a question on my list as well. I also would like to know whether Ms. Van der Meer Mohr would sign up for two more years as supervisory director. Maybe she can expand on that. There's a question about the rotation program. With the appointment of Ms. Van der Meer Mohr for two other years, things get worse even. Next year, four members will step down. The following year, three will be stepping down. We think that's not in the best interests of continuity.
If four members step down next year, that's 50% of the Supervisory Board. Good question. This is why we have invited Erica Mann to bring some new blood to the Supervisory Board, and we'll carry on doing so. We have some other ideas for next year. This is a topic the Nomination Committee of the Supervisory Board is looking into very carefully. We keep control, keep check of the process, and I'm very happy so far with the quality we've managed to attract to the Supervisory Board, don't be concerned. About the two-year tenure? Yes, the two-year tenure is about the Dutch Corporate Governance Code in the Netherlands. After eight years, you can be reappointed two times for two years. We have to break up the term for that reason. Some words about her motivation, maybe, to carry on?
My motivation, why I want to continue for two more years? Well, because this is the best company of the Netherlands and maybe of the world. As Mr. Sijbesma said, people who step down can be reappointed. Yes, but she is stepping down, and reappointment is a second. The issue is that she is stepping down. If four individuals would step down next year. No, that's not how things work with DSM. We have a very high level of loyalty. Well, never say never. Any other questions? Not, we now proceed to the vote. We will now vote on item 7A, which is the reappointment of Ms. Van der Meer Mohr. We have it on the screen. One is a favor, two is against, three is abstention. The vote is now opened. A few more seconds for the last votes.
The vote has now been closed, we see that 99.9% have voted in favor and 0.1% against. That means that Ms. Van der Meer Mohr has been reappointed. My congratulations. Thank you. Next item, 7B, the appointment of Erica Mann. I open the vote now. A few seconds for the last voters. We can close the vote. We see that 99.9% of votes were cast in favor and 0.1% against. Meaning that Ms. Mann has been appointed as a member of the supervisory board. Our congratulations. Well done. Based on her joining the board today, we see a big promise for the future materializing. Anything? No. Reappointment of the external auditor at the 2014 AGM, KPMG Accountants N.V. has been appointed to the auditors for initial period of three years, 2015, 2016, and 2017.
At the AGM of 2017 and 2018, KPMG Accountants N.V. has been reappointed for the financial years 2018 and 2019. In line with the policy of DSM, in line with the corporate governance code, the audit committee has carried out an annual evaluation of the external auditor, the outcome of the evaluation was positive. KPMG has a very robust process of audits. Based on the recommendation of the audit committee and the managing board, the supervisory board proposes to reappoint KPMG Accountants N.V. as auditor and to task them with the audit of the financial statements for the financial year 2020. Any questions?
No questions. We do have a question. I was too fast once again. I was already waving, but maybe not clearly enough. I have a brief question about the evaluation you just referred to, the evaluation of the work of the external auditor.
You said it was positive. That's a very summary comment, also the report and the annual report about this is brief. Can you highlight the most important criteria of the evaluation and the findings?
Yes. Thank you for the question. Well, the evaluation is done in 2 stages. Essentially every 3 years, we do a very deep evaluation across the company. Essentially involves the executives in the company that are involved in the connection with the audit. They have a connectivity with the audit processes. Following that, each intervening year between those 3 years, we do a more higher level assessment in terms of more central executives in terms of their judgment on the audit. The criteria are really about their effectiveness. We have a standard process of asking how well do they get into the issues, how well are they understanding the issues, what is the extent to which they are able to get into the assessments of the internal controls and the checks and balances.
The extent to which they're actually liaising with the staff in terms of determining what needs any correction. The extent to which they're liaising with the senior executives and the management board and giving them good feedback in terms of what is their assessment of the company. Largely outside the very specifics about the financial statements, they do give us broader assessments on the internal controls, which is very useful to management. Summing all that together, the audit committee review that and then come to a judgment as to their effectiveness.
Thank you.
Thank you, John.
Thank you, John. We can now proceed with the vote on item eight. Yes. Let me just wait until the item is on the screen. You can cast your vote once again. The most have cast their vote. We have some last voters, and I now close the vote, and we see that 99.76% of the votes have been cast in favor, 0.24% against, meaning the AGM has approved the reappointment of the external auditor. Then we have five last remaining point of a more technical nature. These are the next item on the agenda, nine A, the authorization of the Managing Board to issue up to 10% ordinary shares, up to a maximum of 10% in regular shares and to exclude preemptive rights and the authorization of the Managing Board to issue an additional 10% in ordinary shares in connection with a rights issue.
Under 10, we have the authorization of the Managing Board to have the company repurchase shares, and 11, we have a reduction of the issued capital by canceling shares. In the explanatory note to the agenda, you see further information about these items on the agenda. You now have an opportunity to ask questions about these issues. Yes, please. Mr. Spanjer. Mr. Chairman, if I look at 9B, the designation of the Managing Board as the body authorized to issue 10%, that means you don't exclude preemptive rights. If you have a rights issue, you have an extraordinary AGM or EGM? Not necessarily. We don't have to have an EGM. If we want to do a rights issue, we don't need an EGM. That's different than issuing ordinary shares, and this is the reason we have separated the two issue.
We have, first of all, issuing ordinary shares, 9A, and then under 9B, you have a rights issue which has a different procedure, and indeed, we are not asking for the preemptive rights, which complicates matters for the company. Our notary is telling me I should add something. Yes, please go ahead.The remark was inaudible. Officially, we do exclude the preemptive right, but then contractually, we can give it back. In regular Dutch, it means there is no preemptive right. Legally speaking, it has been worded in that way. Thank you. Any other questions? We now proceed to the vote on item 9A, I assume. Indeed. We start with 9A, and then we'll have a few more items. You can cast your vote now. A few more seconds. I now close the vote. For this item, 86.32% of the votes were cast in favor and 13.68% against.
Yes. One aside, we need a two-third majority for this item on the agenda, and I think we have reached two-third thresholds. I conclude that the AGM has given the authorization to the Managing Board to issue up to 10% ordinary shares and to exclude preemptive rights in line with the proposal. 9B. That's correct. The same applies to the next item. Unless less than half of the issued share capital would be represented, but that is the case. We are on solid ground here. We need a regular, an ordinary majority. 9B, you can cast your vote now. A few more votes to be cast. A few more seconds. I now close the vote.
We see that 86.84% of the votes were cast in favor, 13.16% against, meaning that the managing board has been granted authorization to issue an additional 10% of ordinary shares in connection with the rights issue. We move to item 10. Yes, 10, not 9C, which is the authorization of the managing board to have the company repurchase shares. The vote has been opened now. You can still cast your vote. The vote has now been closed. For this agenda item, 99.02% of the votes were in favor, 0.98% against. The AGM has granted the managing board authorization to have the company repurchase shares in line with the proposal. We come to item 11, the last voting item on the agenda. It is on both screens, I open the vote now. We will close the vote in a moment.
99.16% of the votes cast in favor, 0.84% against. I conclude that the AGM has created the possibility to reduce the issued capital by canceling shares. That brings me to item 12 of any other business. Who would like to take the floor? Yes, please. Thank you, Mr. Chairman. Mr. Sijbesma, since 2000, you have been in the board of this company. Since 2007, you are the CEO. According to my information, you are almost 60 years old. Let me first say that we are not dissatisfied. On the contrary, things are going wonderful, the succession discussion will arise sooner or later. You are not available for reappointment because you are still a member of the board from before the rotation system. What is your outlook? For how many years would you like to be CEO?
Then another question for the supervisory board, how much time are you spending on succession? Sijbesma, please answer this question. Let me start. Succession is one of the most important issues on the agenda of the supervisory board. This is about the continuity of the company. Honestly speaking, we have been working on the succession of Mr. Sijbesma for many years. This is not a matter that will arise three months before he will leave us. This is an item that is on the agenda of the nomination committee permanently, we are scanning the company internally. We are scanning externally for potential replacement in the case he would step down. Now a few questions to you about how much time you spend on supervising directorships. First, my outlook of the future, very positive. You are right.
The period I will remain CEO will be shorter than the period I have been CEO. I think that is a forecast I am willing to make. I enjoy it every single day. Is that a sufficient answer? Mr. Spanjer. Mr. Chairman, under 3C, there were two things we spoke about. The Mohr Committee that Mrs. Mohr chairs. There is another issue, which is the Dutch Governance Committee. It is not uncommon to mention the name of the chair of the committee, therefore we call it the committee Mohr. While it is a pity that she is also your supervisory director, maybe she could do something different when the salaries of supervisors go down. There was a second point that received no answer, that is the following. Why don't you include the remuneration of the supervisory board on the annual agenda, not every three years?
Why don't you put it on the agenda every year? That's not customary. Not customary. There always is the possibility to do it. Are you going to use it, yes or no? Putting it to the vote every single year?
That's a waste of time. Don't you think so? No, because in every year, we will have a lower amount because then it will be 2.4% annually, and some companies allow this instead of the ridiculously high percentages that we have now. Thank you for the input. We won't do this. Any other questions? Mr. Stevens. Stevens on behalf of the SEB. Something that intrigues me every time is this. When people turn 60 or slightly beyond, they're always asked about succession. Today, there was an article in a newspaper about elderly employees and less attention being given to them, and I was deeply shocked by this.
We're getting older every day. I still have this impression that people look at somebody aged 65 as someone you should lock up in an elderly people's home. In their 70s, they're still doing anything. After that, the end is nigh. That's not how I work. I hope to be here in 10 years from now. Is that a threat? Is it a threat or a promise? Up to you. I think companies should give greater care to people over 50, keeping them up to date. I think people will have to get used to the fact that people aged 80 or 90 may be on boards. That is simply coming our way. We soon will turn 100 or 100 plus.
This is why my conviction is something that I will voice with other companies as well, that people age 60 can be perfectly up to date and are worth investment. I feel great sympathy for this. The fact that Mr. Sijbesma will leave the company age 60 or 61 or 62 doesn't mean he'll stop working. It certainly doesn't mean I'm not keeping up to date, says Mr. Sijbesma. Not only about me but about the company. I was born in 1959, and that won't change. You can remember the 59, you can forget about 60 plus, they say 60 is the new 40. I hope to turn 40 soon. Done that.
If you look at the company, we are working very hard, particularly within dsm-firmenich Netherlands, on sustainable employability, and this is something Edith Schippers will work on. We try and do exactly what you're saying. We try and make sure that all stay up to date and can carry on. Everyone over 45 is shown a mirror picture, a mirror image. How are you doing in terms of health, in terms of shape, in terms of knowledge, in terms of skills? We try and help people look at themselves critically to keep working on themselves, to be employable on the long run because indeed, many of us will have to work until age 67 or beyond. Some want to work on, some have to work on, and it's important for us to help people to be able to do so. That's an important spearhead of our HR policy.
Well, if you look at the maximum age, if you look at aging, you can say the following. I visited a company last week with a 75-year-old CEO, and the question was asked to him, "How long are you going to hang on?" "Well, ask me the question in 15 years," says Mr. Sijbesma. I think it's ludicrous. I think it's a ridiculous question. How long are you going to hang around? Keep on going. Keep on going. And I think that's the most important for society. Fully agreed.
Okay. Now we can proceed to close the meeting. Oh, I forgot someone. Over there and over there. Thank you. My name is Dara Verstein. I have a question. Have you ever thought about aiming at organizing the AGM earlier in the year? I think that it would be more interesting to have an earlier date for the AGM. That would have a positive effect. The auditor's ready and the supervisory board meeting has already been in March, why can't you pick a date earlier in the year for the AGM? Well, there's a certain legal period of time that stipulates how many days you have to take into account after the announcement, the publication of the agenda of the document. The date is always so many days after our announcement.
On the date of announcement, we have to have all our documents ready, financial statements and annual report as well. That means that you need a certain amount of time in order to comply with this requirement, and that's why there's so much pressure on some of you, because all the companies have to deal with this period of time and end up somewhere around this date. I understand that, is it not your aim to organize a meeting earlier, or doesn't it really matter to you? Or would you say we would try to pick an earlier date? I must say, out of all the problems that I have, I don't think this is the biggest problem that I have to pick a date earlier in the year.
To be quite honest, I'm prepared to take anything on board that you say here, it's not right at the top of my list of priorities. Microphone A. The question to you is why you would like to have a date earlier in the year. Chairman, I would always think that once you've concluded a year, there's always a number of people who are working on that. Then the questions are asked about the previous year, and I would say, why not concentrate on the current year, the present time? The more people who are involved with the past, the worse it is for an organization.
To be quite honest, in the past, but that may have been long time before many of you were around, we had this blue flag that was given to the company that would be the first to issue its annual report of the year. That just goes to show that people appreciated swiftness in reporting, swiftness vis-à-vis the outside world. Chairman, I think that's an important argument. Thank you. You have a fair point there because Geraldine and myself, yesterday we dealt with Q1 2019, we've got everything clear in our minds, and we were thinking, tomorrow we're going to discuss 2018, and we're going to give it some thought and think, rack our brains what the situation was. Because we're already concentrating on 2019. You have a fair point there. Thank you. Thank you for your arguments on microphone A.
Thank you, Mr. Chairman. Thank you for giving me the opportunity to ask you something. First of all, I would like to point out that I did my best to get the floor earlier on, I suspect that you seem to be looking towards the right, Mrs. Schippers, I was unable to catch your attention. I have to go right back to the first point. First of all, I would like to thank everybody at DSM for contributing to the performance of this past year. I would also like to take a moment to concentrate on safety. I think it's wonderful to see that so much attention is being paid to safety and also accidents that took place quite near here. Also, in view of what I read in the annual report, I would like to say something about the future.
One of the questions that I have is, it says that you expect a lot about salt and sugar in the future, what kind of salts are you thinking of there in the innovation pipeline? I'm thinking about potassium and things like that. I don't really know what you are referring to. I would like to hear a bit more about that. Furthermore, the fact that meat here in the Netherlands, in the Western world, there's a lot of attention for products replacing meat. Even though the Netherlands is a small country, how do you see the future? All these pigs in China that are no longer alive. I don't know. I'm just saying things. These are risks that you have to take into account.
As far as sustainability is concerned, you can't always express everything in money, things that have disappeared in terms of sustainability are birds, flowers. No money in the world can get that back. What about the food chain? Algae, now you can turn that into proteins and that can distort the balance in the oceans, the food chain there, the fish and everything. Have you researched that? Would that be enough? Research very often leads to answers to questions that you have. Then last but not least, I'd like to know, how about ICT? There is this idea that with digital data, you may want to support products, develop products personally, but also in terms of animals. I can imagine that those data be used for that. What about the people who are skilled in that?
I hear that there's a big shortage of people skilled in ICT. Sorry for all these questions. We were just about ready to go for drinks, sorry, Chairman, you damn it gave me the floor. Well, salt replacement in food. We've got a lot of salt in food, sometimes to preserve food, very often because as humans, we like salty taste and salt replacements and enhancing substances so that you can reduce the salt content in a product and get the same feeling. That's what we're working on. That's important for our health because, in general, we eat too much salt, meat and meat replacement products. Yes, those are things that we do look at. We may be making announcements in terms of what we are doing. We have several technologies. It sounds creepy. Yeast is involved and things like that.
In many areas of the world, people hardly eat meat now. As soon as development increases, the first thing they will want is to have a bit of meat. There's a difference between the Western world and developing countries. As far as sustainability is concerned, the birds, the flowers, biodiversity, I already mentioned that. It is absolutely something we want to pay attention to because biodiversity is under pressure in the world. Our algae project, what we're doing is leaving biodiversity in the oceans the way it is and not to touch that. We're not removing algae from the oceans. Yes, a tiny one, a tiny little algae, we put that in the fermenter, we replicate it.
For the rest, except for the tiny little algae, we don't really touch the oceans, we just leave it intact, that is precisely the technology that we have. ICT, digitization, very important point. Geraldine has that in her portfolio, we do concentrate on our digital roadmap, the functions, business models. Thank you. Can I ask you another question, tying in with what you said that in other countries, not being the Western countries, there's not that much concentration on vegan lifestyles. What about large part of the population that is Hindu, that does eat vegetarian food six, seven days a week? Well, food is determined by culture, there's so many differences in the world, India, of course, is an extraordinary country because India has many, many vegetarians.
Many other countries, if you look at the development of African countries, look at the development of Asian countries, when these countries start to develop, one of the first things they would do is, apart from eating crops, they would eat meat. That will start with chicken, pork, on to beef. That is what happened to us as well. There's very little I can say about that. Okay.
Chairman, my name is Bom. I have a brief question. My name is Bom. If I'm not mistaken, DSM split the share in 2005. Share price increased substantially in excess of 100 or was in excess of 100, I don't know. Would you consider a new share split? That's it. That's all I have to ask.
Well, yes, we always look at that, we've done it before on a number of occasions. As DSM, there are all sorts of theories about that being important, this would mainly concern the private shareholders. Prices around the 100 would deter people because people are prepared to invest EUR 60 but not 100 or something like that. That would be if you buy one share. Doesn't really apply if you buy two shares. All sorts of theories prevail as to whether or not that is interesting or not. From time to time, we look at it, in the past, it never was an issue, but it may come up again. My name is Stevens, SRB. I would like to say something about what we said about holding this meeting earlier in the year. What does this gentleman want?
Just this basic fit that only two shareholders turn up instead of 30? I'm in favor of keeping the dates as they are because the last two weeks of April, I mean, can hardly keep up all these meetings. Okay. We've taken note of your request, we will also take note of what you have just said, doubtlessly. Thank you. Okay. That's it. Okay. It is 5:30 P.M. For those people who have to travel back to the North and want to watch the Ajax match, they need to leave on time. Allow me to make a few closing remarks. The draft report of this meeting will be available at the latest 90 days after today on the website. After which, you have three months to submit your comment. Please, when you leave the room, hand in your handset and your voting card.
After the meeting, as always, you will have an opportunity to talk to us, to enjoy a bite to eat, a drink. Hope to meet you there. I'm looking forward to see you next year, May 8th, 2020. Thank you very much for coming, it's great to see such a turnout.