Ladies and gentlemen, I would like to welcome you to KPN's Annual Shareholders' Meeting from our head office in Rotterdam. We are pleased to welcome you both physically and virtually this year, of course, after a period in which we were forced to organize the meeting exclusively virtually due to the pandemic. This year, we have opted for a hybrid setup, and this means that our shareholders can fully participate in this meeting, both in person and virtually, including asking questions and casting votes. As Chairman of the Supervisory Board, I will chair the meeting. I appoint Mr. Spanbroek, Secretary of the Company here next to me, as Secretary of the meeting. Then I would like to introduce some people here. Here behind the table are the members of the Executive Board and the Supervisory Board.
Furthermore, the following people are present in the room: Mr. Blenderman and Mr. Verhagen from EY Accountants, Ms. Leemrijse, notary in Amsterdam, who will draft the minutes, and on behalf of the Central Works Council, Mrs. Koreman and Kroese. The candidate members of the supervisory board, Ms. Koelemeijer and Ms. Vergouw, whose appointments are on the agenda today, are also here. The meeting was convened on time and in accordance with the required formalities by placing the convocation and agenda on KPN's website on the 1st of March 2022. Some announcements, including, first of all, a comment about the voting process. The participating shareholders who participate virtually can vote remotely in real-time if they are logged in to the voting platform via their own smartphone, computer, or tablet. Shareholders present in this room also vote on their own smartphone or tablet or on the tablet obtained at the registration desk.
To vote, you must be logged in to the voting platform. At the registration desk, you have, if I'm not mistaken, already received instructions for this. If you have not yet logged in to the voting platform, I would ask you to do so now, as we will close the registration in a few moments. You can cast your vote already now, if you want, on all voting points during the entire meeting, if you are logged in. Only at the end of this meeting, before any other business item, the vote will be closed for all voting items. The voting results and all voting items will be announced after that. In this way, the order of meeting is least disturbed by any delays in the internet connection for virtually participating shareholders.
I would like to make a comment on the working language during this meeting, which is Dutch. Some members of the executive board and supervisory board do not speak Dutch and, to the extent that they will speak, will make their contribution in English. For the Dutch translation of that, you can also use the headphones if you wish. Option one is translation to Dutch, and questions can be asked in both Dutch and English.
For our guests, the meeting will be translated in English. Questions can be asked in English. Answers will be given in Dutch and translated into English.
As announced on our website, the following possibilities are included for asking questions. Shareholders were able to submit their questions by email prior to this meeting, and nobody used this possibility. If you wish to speak during the meeting here in this room, please raise your hand so that I can give you the floor. For those shareholders who participate through the e-voting system, it is also possible to ask a question during this meeting via the separate video connection, the same as for shareholders in the room. You have received a separate email from KPN with a link to the video environment. In this video environment, you must then click on the virtual hand if you wish to ask a question. You will then be transferred to this room through a KPN operator.
I would like to point out that there is a slight delay in the video connection and that we will therefore deal with the questions from the room first and then any questions from virtual participants. In order to help those who are drafting the minutes, I ask both shareholders in the room and shareholders who participate virtually to mention your name and domicile or place of residence in the question and to formulate your question or comment as briefly and concretely as possible. Also, for the purpose of reporting, a tape recording is made. I wish you an interesting and informative meeting. We now start with item two on the agenda, the report on the financial year 2021.
We will discuss the 2021 financial year in the following presentations, and I would like to give the floor to Joost Farwerck first and then Chris Figee, our CFO. Then you will have the opportunity to ask questions.
Thank you, Duco, and welcome, everybody. It is great to see you here in real life, and also a warm welcome to our digital participants. It is, of course, very fitting with who we are to create a hybrid meeting today and to use the advantages of the digital era that we're all in now. Obviously, over the past two years in the COVID pandemic, we learned a lot, and we gained experience. 2021 has learned us that our Accelerate to Grow strategy has borne fruit.
Three strategic pillars mean that every day we can do everything in our power to provide the best service to everybody in the Netherlands and provide a sustainable future. Of course, the importance of that became clear last year because also 2021 was absolutely still in the context of the COVID pandemic, and we were able to make sure that everybody stayed in touch digitally and connect everybody digitally. Our ambition to create a Netherlands that is the best connected country in the world is still very, very much alive, and we are well underway. At the end of 2020, we shared our strategy with the market and this paved the way to growth. Over the past year, we have progressed. We have also shown the first successes of it.
The three important pillars of our strategy are building, managing, and expanding superior networks, strengthening our customer footprint, and simplify and streamline our operating model. During today's presentation, we will take you in our progress in these strategic themes. First, I would like to start with some highlights of 2021. We can say that it was a solid financial year. We were able to make progress. In line with our promise, we realized growth, and that is sustainable mass market, and also SME, and this meant that as of Q2, we demonstrated growth in our group revenue. SME service turnover showed inflection, which means that we're well underway in the corporate or business market. In the business market, we want segment stabilization, and it looks like we are going to achieve that in the second half of this year.
Consumer market. We see that our fiber and mobile portfolio is continuing to grow. In wholesale, still excellent contributions there, also because of our attractive open network policy for other players out there in the Dutch market. We significantly invested in our network, and we have a record connection in fiber, and we have the best mobile network. We see that EBITDA growth over the past quarters was less dependent on cost savings and really stems from growth in turnover. In 2021, EBITDA grew by 1.2%. In 2021, we started with a share buyback program, which is a reflection of our solid financial position and the confidence in our strategy.
We have also realized EUR 200 million in share buyback, and we plan to pay dividend of EUR 0.136, which means that we pay back EUR 750 million to our shareholders in 2021. What is important, the appreciation of our customer base has increased. Also very important, our colleagues, despite COVID, were very much involved and committed. We did meet our goals for 2021. Ended in EUR 3.5 billion in line with our expectation. CapEx was EUR 1.2 billion, and free cash flow was EUR 784 million, slightly above our expectation. Our promise for dividend growth is met and therefore we propose that EUR 0.136. Let's zoom in a little bit on that strategy, and let's start with our fixed and mobile infrastructure. Fiber rollout is at full speed.
Over 500,000 homes have been provided with fiber. That's a record and unique in the Netherlands. Thanks to all the great work of all our colleagues and partners, we now provide more than 40% to Dutch homes in fiber. In a year time, we believe that almost 80% will be provided with fiber. To accelerate the goal that we communicate at the end of 2020, we announced in March that we were going to work together with APG to even further accelerate the rollout of fiber in especially towns, smaller towns. The joint venture with APG is called Glaspoort and aims at connecting over a million homes and businesses to fiber. Customers do appreciate our new network. That is clear. Of all households that have fiber, 50% really uses the services offered through that network.
It's wholesale and households. Not only fiber, but also our mobile network is very much appreciated in Netherlands. For the third time in a row, we won the Umlaut Award for the best and fastest network in the Netherlands. The latest Umlaut Benchmark confirmed this. KPN has the best mobile network in the Netherlands and today in the world. Because our mobile network is continuously renewing itself. At the end of 2021, we had 80% of our network in 5G, and we will continue to roll that out further this year. We also prepare ourselves for the auction, making sure that we can provide an even better 5G experience once this spectrum becomes available in the Netherlands. We expect this auction to start the beginning of next year.
Then with the upgrades with the mobile network that we've planned and using that new spectrum, we will strengthen our network, and we will be able to offer new services without any form of delay in our country. Servicing our customers in a simple and clear and efficient way is what we are getting better at every time. Let's take a look. In the consumer market, we focus on delivering the best digital experience, and we do a lot to make it better and better. We invested in improving the customer journey by introducing the new MijnKPN app, introducing a new online shop. We also provide our customers with better equipment, a new version of a TV box that uses less energy. In 2021, we continued our SuperWifi campaign. I think you saw the commercial of that.
We have high speeds available for more people at a very competitive price, and also new entertainment partnerships with Viaplay, ESPN, and also the Microsoft Game Pass Ultimate. Those partnerships are important, making sure that our customers have more and more access to the best content. What do we see? Focus on providing the best digital experience is very much appreciated. Customer satisfaction in 2021 grew each quarter. We displayed growth in turnover for mobile services, thanks to a solid influx of new customers, but also in the unlimited propositions. More and more we are moving towards unlimited propositions. Turnover from our fixed services is stabilizing, and the underlying trend is improved growth, of course, in fiber, and it compensates the decline in copper. Let's zoom in on the KPIs that are relevant in the consumer market.
We see a solid influx in fiber. Almost 190,000 new customers that were activated. We have broadband customers, the total number. The average revenue per address increased too. Turnover for mobile services also grew with 64,000 and over an extra percentage in turnover. Then, business-to-business. We see that also here our customers appreciate our services because we focus on putting the customer at the heart of everything. You know, stability of our services and product. The Net Promoter Score therefore increased to +4. We see the turnover trend also improving in the business-to-business market. During our strategy update in November 2020, we made a promise to stabilize the turnover from the SME market.
We achieved that in 2021 in Q3, and this trend continued in Q4. We are very confident that we turned the tide and that the path to sustainable growth is now ready. This was of course an important milestone for us. We see that this growth is very much supported by the right operational drivers. Our attractive KPN precision draws in new customers each time. This platform also offers the possibility to service existing customers in a better way to provide them with better products and services in that particular platform. In 2021, we have implemented a segmented approach, as you can see here on screen. The strategy in the large corporate enterprises segment is comparable to what we did in the SME, but they're not in the same phase in the transformation.
Also in the LCE market, we are on track, but when it comes to priority and reflection, it seems as if they are two years behind the SME segment there. Tailored solutions means that we serve the top 60 customers, the biggest customers in the Netherlands, and we have combined projects. The fact that we realized growth in these segments gives us the confidence to move on, and we expect that at the end of 2022, we will also have improved the total revenue of this segment and stabilize it. That is very important for this year. Wholesale. KPN has been using for a large number of years an open network policy, so wholesale buyers are able to use our network to offer telecom services. This makes better use of the network, and we earn back our investment.
Wholesale is doing really well with more than 7% growth. The Dutch market also in 2021 was very competitive, and our wholesale providers show that solid growth is possible on the KPN network. Maybe many of you have read this. KPN made a promise to the regulator for access to the fiber network. If the regulator says that this commitment is binding, then we will have clarity for more than eight years and the market will remain competitive, which is good for the consumers and for other customers to enjoy the possibilities. We have a responsibility towards all stakeholders. Of course, we have a direct impact by servicing our customers in the best way, but we also have an impact on society. We also focus therefore on supplying the added value to all stakeholders.
We have three sustainable development goals that we've adopted, so the goals nine, 11, and 12. We commit ourselves to facilitating safe and future-proof infrastructure. We stimulate diversity and social involvement by offering internet access to everybody, and we make an effort to prevent digital exclusion. We have a responsibility to reduce the heating of the climate, and we take this very seriously. We want to do that by reducing our footprint and also, of course, by reducing our energy use. We have a very ambitious agenda when it comes to CSR, of course, to be almost 100% circular by 2025, and our efforts are acknowledged by the external benchmarks.
I think we now have a platinum status from EcoVadis, and we are the only telecom company in the world for the 10th time in a row. We are in the sustainability index. Our own operations are climate neutral since 2015, and we now extended our focus through the entire chain. Scope 3 emissions are 75% of KPN's total emissions, so we have an important responsibility there. Over the past year, we have said that we want net zero emission by 2040 in the entire chain, which is in line with the maximum goal of not having more than 1.5 degrees Celsius of global warming according to the Paris Agreement. We are right in the middle of doing that.
To be able to achieve those goals, we have several actions, among which, you know, reducing energy use of equipment and material, but also modems and TV boxes at the customers' homes, making transport modes sustainable, working together with suppliers, making sure that they also switch to green energy, for example. That concludes my presentation for now. I would like to thank you for your attention. I would like to give the floor to Chris to zoom in on the financial presentations. Chris, the floor is yours.
Thank you, Joost, and good afternoon, everyone. As Joost said before, we have achieved our financial objectives of last year, and we are very confident that we will also meet this year's objectives. Here are the results of last year. They're solid and also offer us a very good basis to continue with. The turnover has decreased a bit by 0.3% with respect to 2020, but that was mostly because of the turnover decrease in the B2B and also the fixed services to our consumers. Wholesale, however, has grown solidly and also mobile services have grown. As Joost said, the turnover from the mass market segments as a whole has increased. The cleaned up EBITDA, so basically operational profit, increased by 1.2%.
We have been able to reduce costs and, as a result, we have been able to go to 44.7% of the margin. We also saw the year-on-year growth increase, and we've also been able to invest EUR 1.2 billion last year, and the free cash flow was EUR 480 million with a growth with respect to 2020. 90 basis points has gross increase. The consumer market grew with 0.6% in 2021, and that was basically because of healthy trends in all segments. When we look at them independently, we see this. The wholesale turnover grew strongly, 7.3% year on year.
Services to SME, slight decrease, 0.5%, but with a growth in the last two quarters, and especially the flexi services have increased, and we expect them to continue to increase. Consumer market, especially, mobile grew. Fixed decreased a little bit. We see that three of the four segments since the second half of 2021 have shown growth. If also we can stabilize the turnover in the B2B, then we will have a sustainable turnover growth for the entire group, something that we foresee will happen in 2023. We are focusing a lot on investing in both networks, fixed and mobile. The investments have been significantly increased, and we have been also successful in lowering non-fiber related investments.
There has been a shift to a higher degree of fiber optics, which of course, as my colleague said, will continue to remain. Because basically, in all areas where we roll out fiber optics, we have a higher network penetration because of the combination of our own retail channel and the wholesale segment. That also leads to a higher ARPA, the average revenue per address. At KPN, we are therefore confident that the rollout of fiber is the best strategy for long-term value creation, not only for our clients, but for the society as a whole and of course, also for our shareholders as a result. The operational free cash flow for 2021 was more than EUR 1.1 billion.
In 2021 we saw a healthy growth in the free cash flow despite the higher taxes and the high investments. The free cash flow of EUR 784 million was 2.5% higher and has gone up to almost 15% of the turnover, and that was mostly a result of the EBITDA, good developments in our working capital and low interest payments. Last year, KPN therefore has been able to strengthen its very healthy financial position. At the end of our year, our net debt was EUR 5.3 billion. Our gross debt was a bit higher than 2020, and that was because in November 2021, we have issued new sustainable bonds, and the interest on those bonds are coupled to performances, and that means reduction of scope 3 emissions.
The fact that we are still way below the threshold. The return on capital employed has improved in 2021 to 11%. This is because of a consistent value creation. That's quite special because with all the money that we're spending on the fiber rollout doesn't necessarily immediately lead to higher revenues. Still, the increased operational margin has increased, and that means that the ROCE has gone up. Because of our long-term aim to create value, we believe that the ROCE will continue to increase and improve. I give the floor back to our chair.
Yes.
Chris, ladies and gentlemen, I'd like to point out that the sheets of this presentation will be made available at the website of KPN after the meeting. Now, this is the moment to ask the room whether there are any questions. I've seen already Mr. Stevense raise his hand.
Thank you, Mr. Chair. My name is Stevense. On the first page it says, "Connected Forwards," in Dutch that is Verbonden Vooruit. It seems that this is a slow progress, as in slowly ahead, but you are at least lowering the fees for access to the fiber optic network for eight years. Our question is, what will happen after those eight years? You're terminating the 3G network and there are still people who use 2G.
This is a little weird because this seems a weird move. It seems also a step back, in our opinion at least. You are asking too much for the landline numbers that have to move, and this is the second time this happened since 2019. Still, you are not intending to give those money back. Is that simply a reason for you or is this basically a de facto means to use to sell more mobile phones, perhaps?
Sir, you are very difficult to hear. Also confirmed by the interpreter, by the way.
Sir, well, I'm trying my best to speak in the microphone, but anyway.
Interpreter confirms that the gentleman is very difficult to hear. You think that this is too expensive? It is striking to us and I think we've had fiber optics for already 10 years.
We have a new secretary now, who resides in The Hague, and he still doesn't have fiber optics. Few years ago, we were surprised that in the Green Heart called area in the Netherlands, there was no fiber optics. What is your policy? The Hague still doesn't have it. That area doesn't have it. Because of the homeworking, it is very important that every household does have access to fiber optics. 4.3 million households have this now, at least until the meter cabinet. 1.8 million have a subscription. The number of subscriptions for cable internet seem to not decrease. How come there's such a discrepancy? To what extent is VULA a negative thing in this regard? Is that not a bad thing for privacy?
How can you explain that then you will have in 2026 80% of all households connected to fiber optics? When will the normal consumer start benefiting from 5G? Finally, we have observed that 2% of the full-time workers work in the office. What does that mean? Are we all going to move to a smaller location, perhaps? These were our questions for now, Mr. Chair. Thank you.
Mr. Stevense, thank you for this impressive list of questions. I think that we have been able to write all of them down, and I will now give the floor to my colleague here. The gentleman will need to use a microphone because he cannot be heard, says the interpreter.
Thank you for your interesting questions.
I will try to bundle them because many of your questions related to the rollout of optical fiber, so I will give the floor to Babak Fouladi, my colleague, for that. You've also, I think, said something about the 8 years access fees, because your question was, okay, what happens after the access is provided for eight years? After those eight years. That's a good question. Firstly, this is a model that will first enter into the consultation round of the ACM, and only once it's supported, at least it gives eight years of security. I think that's already a very decisive step. We've never had this before. Of course, no one knows what will happen in the after eight years.
Let's first see if this model can be implemented well enough and then look further in the future. You had a question about ODF, I believe. VolkerWessels is one of the biggest contractors in the Netherlands, especially in the field of fiber optics. They're a big player, so obviously they work for everyone. Also for the ODF initiative. We don't use the ODF network. We use our own network. This is all in the startup phase, so it's very important that we carry out our own execution and that we continue with that. That is the best we can do, the strongest we can do. I believe you also had a question about optic fiber in The Hague? I happen to live in The Hague. I've had copper for years and years.
There is a planning that we follow. Of course, I didn't give myself preference over any other people. Our neighborhood is planned for the summer, so we have to follow our planning. We cannot obviously fit the whole of the Netherlands from night to day. Of course, this takes time, but I hope that I can in the future share my experiences of optic fiber with you in the future. 5G still has to come. There is an auction planned for next year. Of course, we have been able to use the first generation of 5G, and the real spectrum is not even for sale. That is going to be prepared by the ministry because there were some things that needed to be solved first.
We expect that auction to take place in the beginning of next year. Then afterwards, we will be able to re-realize enormous speeds over 5G. Of course, we're very excited to see what the market will do and how it will react. For now, it is very unreliable and so it does give us the best network in the Netherlands. The real 1 Gb and more of download speed is something we will only see as per next year and beyond. You also, I think, had a question about landlines. I don't know exactly what your question was. You mean taking your number?
Yes. Taking your number with you, your landline number, when you move. You ask too much money for that.
This is the second time that this has been told to KPN since 2019.
Well, taking a number with you is something that simply costs money. If you move from one municipality to another, you cannot take the number with you. You simply get a new number. Unless of course, if you move within the same municipality, it is possible. I'm not fully aware of the fees that we charge, but we have to cover those costs, obviously. That is simply why we charge that. Babak, would you like to say something about the fiber rollout in general? It's an important topic.
Of course. Thank you very much, Joost. Thank you very much for your question and the recognition that getting a fiber connection is an important factor for broadband access, especially for the growth of a digital society. Last year, as Joost mentioned, we did over 433,000 fiber rollouts in various regions. If you add that with what we did in our partnership with Glaspoort, over 500,000, that is the highest amount of fiber that has been done ever.
This process is a massive fiber work that has happened with over 40 different projects in various regions in which these regions work with the municipalities to be able to figure out which regions to go first, which areas to go if the connectivity is needed, and how to do it with the contractors that we have within that region as well. To accelerate this fiber growth as well, last year we announced our partnership with APG on Glaspoort, in which not only we take the fiber rollout in the larger cities, the smaller cities, and rural and urban area, but we're also getting into the ultra-rural areas with our Glaspoort partnership. There is a calculation that goes within each regions.
We have four separate contracts, dividing the country into four different regions. Within working with the municipalities, we roll out and our goal is to get to 80% in the next several years. Thank you.
Yep. Thank you. You also had a question about 2G and 3G, it seems. Well, the whole market is of course moving to 4G, at least normal consumers, and of course also then 5G. The fact that we can turn off 3G is important because we want to use and reallocate that spectrum to be able to enable more data use in 4G. For 2G, we still use the small band, but that is only for critical services like smart meters, et cetera. It's wiser to keep that up for now, so that our clients can then also migrate in a realistic time period. Until 2025, I think they will have that access. Still, we can already use 3G for the network of 4G. So that was just the reason.
The next question.
Good afternoon. My name is Keyner from The Hague, and I speak on behalf of the VEB, also from The Hague, not from Amsterdam, as some people seem to think. I have a few questions. The first one will not surprise you because I would like to hear some more about the two takeover proposals that you have quite resolutely rejected. The background information I would like to hear from you is in which way you reached the conclusion that this would not be something you would like to take seriously. Because you could say on the one end, we don't want to be taken over. We stick to our own strategy and plan.
Whoever presents an unexpected takeover, we will do everything possible to be able to say no. We hire advisors, but usually they are legal and communication consultants to also know how to say to the outside world how you want to say no. That's one possible method. The other method is that you listen to the parties who could possibly be interested in KPN and then wonder whether there perhaps are ideas that we have not considered or taken seriously enough and that we could learn something from. KPN is well on its way, but if you look back in time, 10 years, it wasn't a company that has created a lot of value, not for shareholders in any case, especially if you compare it with other companies in the market.
I think it might be useful to listen with open ears to parties that could increase value. Could you explain a little bit more about how you dealt with these unexpected or unrequested takeover proposals of the two parties? That is my question number one, and this is also something that relates to good governance towards us as shareholders. The second question I have concerns a different topic. It was referred to before, and it is about the access that you offer to third parties, basically competitors, wholesale, parties. As an outsider, it seems that you gave significant concessions with sizable discounts, and at the same time you maintain your ambitions in the financial field.
Did you already took some, you know, provisions or reserves, or did you find new methods to create additional value and to be able to obtain additional profits? If you add everything up, you can see that large investments are done by KPN, and it usually takes many years before they profit, and you also need time to see how a company performs, right? Okay, fine. If you look at how the share price of KPN has gone, it's been quite solid over the last five years. Basically, we are at the same level as 2017, even though the general indexes in the world have increased, you know, significantly, sometimes 50% or more.
Question, do you see that as a problem or as an alert, as a warning, both from the Supervisory and the Executive Board? Or do you say, "Well, it might be a warning, but we just need patience." If that's the case, then when will the tipping point take place? How long will we have to wait until the damage is actually recovered? When will we finally start performing much better than the rest of the market?
Mr. Keyner, thank you very much for these questions. I would like to propose to have Mr. Farwerck answer your first question.
Thank you.
A year ago, we indeed received two unrequested proposals, and I see it as my task, and of course we as the Executive Board see it as our task to look at them with major attention because we are not only here to set up a strategy and implement it but also look at options that could increase the value of our company even more. We see this as a serious task, and we have also exercised such task. Last year, we had just started out implementing the strategy that we implemented at the end of 2020, Accelerate to Grow with the three pillars I just presented. We were well on our way in the first quarters of executing the strategy, and when we looked at the proposals that we received, we basically didn't see any added value to our strategy.
We didn't see big opportunities for KPN that we should use. We thought that carrying out the strategy and creating the value in the framework that we set up at the end of 2020 is the best way to create the optimal value for our stakeholders.
May I ask you, so the type of proposals that you received, were they based on a completely different strategy than the one that you already planned, or is it comparable and you think that or they think that they have a better way of reaching the results? Was there a different view?
Well, I'm not going to address things too much into detail, but let's say we were not surprised by what we saw, and we think that it wasn't very different from what we're doing ourselves.
We saw that what we are doing ourselves is creating lots of value, and some parties, you know this very well and therefore came with a proposal. Our strategy is not for a year. Our investments are also now for the long term and not for the short term, everyone that is smart enough and can see what value we are creating in the Netherlands. Especially continuing this execution is generating value. Then in a number of years, we'll see what we can do to add to that. Of course, we will always look at what we can do more than our current strategy.
Like we said, we take our task very seriously. The chair says the second question relates to the access to the network, and I would like to give the floor to Chris for that.
Yes. As said, we made a proposal to the ACM to charge an access fee for the wholesale. We've made the initiative to make that move in exchange for the, let's say, you know, eight years of security that we give to them, right? Now you're asking, why do I not see this in KPN's balance sheet? Well, the EBITDA is about EUR 1.2 billion, EUR 500 billion is wholesale, and part of that is broadband, mobile, and other. What is relevant for that is something that we can compensate by lowering costs in other areas, right?
For example, also by the turnover increase in the mass market segment, et cetera. Practically speaking, a proposal like that doesn't come falling out of the sky. This takes time. When we gave our guidance for last year and this year, basically what we proposed, what we were planning to propose was already included in that, right? The guidance that we gave was given when we had already detailed our own plans. This is just something that will now be compensated by simply other, you know, components of KPN. Your third question will be answered by Joost.
Yes. You're referring to the period 2017 through now in the development of our share price, and that, of course, is not an objective as such, but of course it's an important consequence.
We do believe that we create value and that this will be reflected in the share price of KPN. Since 2017 and also the two years before, by the way, until very recently, it's been very stable. It's now overperforming, but we as a board were appointed two years ago, and like I said, we set up the strategy with which we believe that we can create value, and we prefer to look ahead instead of into the past. We are very confident that this will be visible in the share price.
Who would like to take the floor?
Hello.
My name is Mathieu Sueters , and I represent the VBDO, the Association of Investors for Sustainable Development, and we have submitted a number of questions already prior to the meeting in English. Firstly, we would like to congratulate KPN with their sustainability goals and also especially the achievements. You are outperforming with respect to other companies, so we're happy with that. In 2025, you want to be fully circular, or you're aiming to become fully circular in your operations. We have two questions in this regard. Firstly, when can VBDO expect KPN to provide more information on the circularity of products that the company resells, like critical raw material compensation and CO2 emissions in the supply chain? The second question about circularity is the following: VBDO would like to challenge KPN to take responsibility on circularity for its full value chain.
Would KPN be willing to report the percentage of turnover and profit that comes from refurbished/sustainable products and services? For example, Philips' target is to achieve 25% of its turnover by 2025 from circular products and services. Then I have a question about inclusivity because VBDO is wondering whether KPN is willing to map the inclusion rate of employees in 2022. Another question about the wage difference, the wage gap, at KPN. We are very happy that KPN has reported a gender pay gap. The question is: Would KPN be willing to also assess the potential pay gap in other differences, for example, cultural background, sexual orientation, et cetera?
I would like to thank you very much for your questions.
The first two ones will be answered by Babak.
Thank you very much for your question, Matteo. Thank you very much for your recognition. We take sustainability extremely seriously. It's very much part of our everyday work here and very much part of our purpose and strategy going forward. You asked about, specifically about the critical raw materials in products and tracking them. To answer that question, we have to divide the products into two categories. One is the products that we actually do the specification. With the products that we do the specification, we actually do work through the various raw critical materials that are within the product. We work on a components passport, product passport, which these passports are generally under an NDA with the product producer.
As you know, with the Fairphone, there, some of those are available, and we put it on the website once the raw product developer has allowed that to happen. We, on the products that we actually specify ourselves, go through every component to make sure that the traceability is there. The second category of products are the products that we resell, that we buy through our partners. On those, we work very closely with JAC and ITU. We cooperate very much with them to ensure that the circularity of all of the components are there. We have moved our procurement processes, our partnership with our partners, to sort of a circularity manifesto.
We make sure that the major partners that we work for, if you take the top 20, close to 80% of our products come from the top 20. Within the context of our agreement with them, we have actually a circularity manifesto that we put into our agreements with them. We trace it very, very carefully, both the products that we do the specification ourselves and the ones that we resell to make sure that it's within the contracts that we have with them. Your second question was regarding actually putting a circularity like Philips does with some of their products. We as KPN are a service provider.
Our business is not specifically a selling of a specific product, so it's very hard to divide the revenue up by the specific product and give that a circularity based on revenue. As I've said before, we have our plans to be 100% circular for 2025, so we do work with our partners to make sure that circularity and energy efficiencies are very much part of these. We have built a circular transition framework in which not only do we track the outflow but the inflow as well, and you've seen some of this work done in our devices and our modems where we do power saving and energy saving.
Very much part of our business is to make the products circular and to make them efficient in a sustainable world as part of our purpose.
I'd like to.
Sorry. Just a response. Do you also take into account that the European Commission has a Circular Economy Action Plan which measures like Carbon Border Adjustment Mechanism will probably impact the pricing of the products that KPN will buy in the future, the Digital Product Passport and the EU Taxonomy? What I'm trying to say is that I understand that your suppliers sign an NDA with KPN, and if they exchange information, it's very hard to make it public. The EU is coming with regulation quite soon in the coming years, which, you know, these, those type of data will be relevant anyway.
Yes. As the European regulations make those publicly available, we're gonna be working with them closely as well.
Dank, Babak.
Thank you, Babak. I would like to pass the next two questions to Hilde.
Question about inclusivity then. As an organization we take inclusiveness very seriously, and if we look at what we can and cannot do at this point, I have noticed that we do have a ratio, but and we do measure quite a lot in the organization how inclusive we are and what the experience of our staff is when it comes to this. We have an engagement survey with three questions that deal with, you know, how do you fit in this organization? What do you need? Et cetera. We cannot report on all categories yet.
Definitely in the future we will look into that because we feel that it is very important that we have the right insight into what inclusivity means for our organization and how we can shape it in a better way. Within the possibilities that we do have at this moment, we have our own network, the KPN Pride, and people have made themselves known in their cultural background and sexual orientation and gender, and they have told us how they feel within the corporate culture of KPN. Do they feel safe? Do they feel enabled to speak freely about their background? And there is a great outcome of 92% who has confirmed that they indeed feel safe in the KPN corporate culture, and that is way over the benchmark of 70% in the Netherlands, so.
We can obviously shape this in the future, further. We will. The pay gap question. I can tell you that, the question was, you know, do you wanna do more with that because you don't see that right now? This is correct. There is certain data that we cannot extract because the law forbids us to register any difference in wage. It's only on a voluntary basis that we can publish. We will ask people on a voluntary basis to register so that we can further shape that particular part of inclusivity.
Dank, Hilde.
Thank you, Hilde. Who can I give the floor in the audience?
Mr. Stevense.
Mr. Stevense.
Thank you.
Yes. Stevense, SRB. I was quite surprised by the question of VEB on takeovers and the proposals submitted, and that the CEO got the floor to answer that, because I think it should be the Supervisory Board chairperson who deals with that. You know, because the CEO is just an employee, and I think that a supervisor will know better that if you want to buy a company, you just tell your employees, "Okay, listen, you know, tell me why I shouldn't sell my company."
I can of course tell you that these things are a joint responsibility of executive and Supervisory Board, in which an executive board will take the initiative to look at everything and put all the ducks in a row, and the Supervisory Board obviously will supervise, like you say.
On behalf of the supervisory board, I can confirm to you and tell you that we obviously looked at these proposals too, and talked extensively amongst ourselves and together with the executive board about those proposals. We came to the very same conclusion, and I would like to stress this, in which we are not being stubborn like your colleague suggested that we were. That is not the DNA of KPN to be stubborn or not flexible. On the contrary, we are curious. We love to look at how other people perceive us. Like Joost said, as it turned out, with these proposals that we received, it was nothing new. I have to be honest, that was really the conclusion from both boards.
The fact remains, how did this go?
Did you say like, "Okay, we'll have a meeting?" Did you then tell the chair of the executive board, you know, "Start negotiating," or talk to them for a while? You know, how did that process go?
Well, I can say this about that. Within KPN, we have very extensive manuals and procedures for situations like this. We leave nothing up to chance. We have our consultants that support us. You know, we don't want to make any cosmetic mistakes. What happens when you get these proposals in real life, you know, you go to CEO and CFO, and it's up to them to, of course, connect, and they will report back to other colleagues in the executive board and the supervisory board, and then we listen very carefully to the positions of the colleagues.
It is not just, you know, a conversation between two people like the CFO and CEO. It is something that is weighed and discussed on both boards. We talk about what it would mean for all stakeholders. You know, what would it mean for the employee, the customers? What would it do to our social responsibility, and what would it mean for our shareholders? You can trust me when I say that we are very careful, very thorough, and that we also have to be honest, you know, if we find out that this does not represent an added value to the current situation that we're in and the strategy that we're currently deploying.
Who was it who sort of ended things? Was it the CEO, CFO, or the supervisory board?
Well, again, as I said, it's a joint responsibility from all of us behind the desk here. It's not just one or two people. It is the collegial responsibility of both boards that you see represented here behind the desk. You have to trust me when I tell you that this is exactly how things went down.
Mr. Keyner, VEB, thank you, Mr. Stevense, for asking that question. You are giving the right answers, by the way, and I'm very happy with those answers. But also looking at, you know, what you can learn from this. One question to top things off. If there is a party that comes to you with a comparable strategy, maybe nothing new, but offers you a huge price, such an attractive offer you cannot refuse with the right execution of your own perfect strategy.
Will we never achieve such a share price like those crazy persons are able to pay or willing to pay? Is that something that you would be open to, or would you say, "No, you know, we will roll out the strategy no matter what the price"?
Well, if things turn out exactly what you are displaying here, then I think all members on the board will listen to such a proposal. Reality is that anybody offering a high price means that they will give the company high debts. I mean, it's not that you have your bag of cash. You know, that bag of cash will have to be put on the balance sheet of the company and then will be related to the performance of the company, and the company will have to make up for that investment.
A high price is, of course, very attractive for any shareholder. You know, we have to be very modest, as well. You know, there are many things to be said about proposals in general.
Thank you. I do understand that if you change the risk profile, you know, you can also do many other things. You know, you have to keep everybody happy, I understand. Mr. Stevense is so right in saying this, you know, that is, an important part, the responsibility of the supervisory board, and shareholders have an important position, too. There will be a moment that someone will come in with a comparable strategy, comparable but a different risk profile, and something that KPN was not able to achieve.
I do hope that you, as the Supervisory Board Chair, will take your responsibility and say, "This price is now so high. We know that the risk profile will increase, but we will not say 'and yet' like we have done."
Well, you are right. These are indeed the considerations that you will have to make on both boards, and I totally agree with you. Again, you are referring to a hard no, and yet. Of course, again, this was a well-weighed and very much considered answer.
Right.
In the end, yes, we are left with the negative response. We turned down the proposal. That's true. Who can I give the floor?
Toon, I think,
Right. I would like to go to item three on the agenda, the adoption of the financial statements for the financial year 2021. The financial statements are included in the integrated annual report 2021, which you can see on KPN's website. The financial statements have been audited and endorsed with a combined auditor's report by EY. During the year, EY discusses its reports with the Executive Board, the Audit Committee, and the Supervisory Board. Of course, the reports are also the subject of discussion between Supervisory Board and the Executive Board. In addition, both the Chairman of the Audit Committee and the Chairman of the Supervisory Board have separate consultations with the auditor about the auditor's work and findings. The relationship with the accountant can be characterized as open, critical, professional and constructive.
Current topics that have been discussed in the past year include, of course, the processing of Glaspoort, the joint venture of KPN and APG in KPN's reporting, non-financial key figures, the tax positions, important estimates in the financial statements and valuation of intangible and financial fixed assets, internal management environment, including the robustness of the IT environment. Based on the various consultations, as well as the content of the EY board report, we, as Supervisory Board, have concluded that relevant topics and considerations are discussed carefully and transparently between management and accountant and are a fair reflection in KPN's figures. I'd like to give the floor to the auditor, Mr. Blenderman, present in this room to explain the audit work that EY has performed for KPN.
In order to be able to speak to the shareholder in all transparency, KPN has released EY from its professional obligation of confidentiality for this occasion.
After four years.
Dear Chair, thank you for providing me with this opportunity to talk about our involvement as external auditor. Dear people present, my name is Frank Blenderman. I'm an accountant with EY. Since 2017, we have been the auditor for Koninklijke KPN N.V. In this presentation, I will zoom in on the following parts of the audit of the consolidated accounts and separate financial statements of KPN. We look at the audit approach, the focus, the most important conclusions, the key audit matters. We look at compliance and fraud and communication and interaction. Approach and focus. We looked at the single and consolidated financial statement. We looked at whether the report meets the legal requirements and whether the content meets the reflection of the financial statement and whether the information meets our impression of the company. These are legal requirements.
On top of that, the company gave us these responsibilities. We looked at sustainability, assessed and included the outcomes of that in the integrated audit. We also were involved in press release matters. We looked at reviews of quarterly figures and half-year figures. The strategy then. As external auditor of KPN, we have end responsibility. To be able to take that responsibility, you need a team of experts with relevant know-how, and there are certain topics within KPN that I used external experts for. Sorry, internal expert for. Goodwill, for example, financial instruments, IT, tax and fraud risks. We work with internal auditors of KPN, and we of course coordinate planning, and we share outcomes. The materiality then. The audit approach means that we wish to offer a high degree of certainty that this is a fair reflection of the company's performance.
The materiality is EUR 45 million. We address all deviations higher or lower than EUR 45 million with the boards. Based on these risks, we conducted certain actions. The most important conclusion. As you can see on page 165 of the integrated report, we give our unqualified opinion with the financial statements and there are no differences that need to be corrected. Furthermore, I can tell you that there is no difference in insight with the executive board when it comes to these estimates, and that in general we see a balanced financial statement. Looking at the CO₂ emissions and energy use was also reviewed, and all other aspects when it comes to sustainability has been included and assessed on material correctness, and we did not see any deviations.
The annual report and the supervisory board report were assessed, and the conclusion is that there are no substantive incorrect paragraphs. We did that with the know-how of Ernst & Young and the knowledge that we have from KPN. We have met all legal requirements. When it comes to remuneration, we come to the conclusion that all the information has been included according to SRD II. Key audit matters. These are the key audit matters that are fairly equal to last year. These are key audit matters that we dedicated a lot of attention to. Of course, first, the joint venture Glaspoort. As of 2021, KPN is participating in a joint venture called Glaspoort, so classification as a joint venture was complex.
During our audit, focus was on the correct way of reporting the transaction itself and the classification as joint venture. We agree with the report and the classification as a joint venture and the explanation in the financial statements. The reliability of the IT system and the risk of cybercrime. The administration of KPN is highly automated, and in the telecom industry, there is an increased risk for cybercrime or external IT-related threats. Cybersecurity is part of our audit, but we know that if KPN does not dedicate enough attention, this would indeed be a threat for the functioning of the IT systems, the financial management system, and then, of course, we would not be able to rely on it for our audit. This is why we assess who has access to the information systems and whether changes in access are managed well.
We also look at measures revolving around cybercrime that assume that limiting access and mitigating impact of external threats and whether there is a contingency plan in case of breach. We also look at outcomes of tests that KPN does to assess the security of the systems. We also assess, in that light, the activities of the risk management and internal audit departments. Our conclusion is that KPN has a solid structure for protection and risk management. They do a good job. On a quarterly basis, they assess the internal procedure, and they look at compliance and also document this really clearly so that we can audit it, making the internal management system contributing to a safe IT environment. Fraud and compliance with legislation is something that we all find very important.
Of course, it is important to dedicate attention to non-compliance and fraud risks. In our opinion, we have a separate paragraph on fraud risks and non-compliance. In the scope, nothing changed, by the way, compared to last year. Responsibilities. We believe it is very important to take our responsibility as auditor, and it is important to oversee the entire chain, including Board, Supervisory Board, internal audit, risk management, and obviously also the enforcement agencies. Fraud and compliance is high on the agenda also with KPN. There are fraud and risk factors that were discussed with both boards and was included in the plan. We have regular consultations with security and compliance with KPN Audit. The Supervisory Board and the audit committee were periodically informed by the Executive Board on risks of fraud and non-compliance, and we assessed the reports on that.
In our risk analysis, we took into account the risk of material deviations as a consequence of fraud and, of course, adequately acting on it. We involved our forensic accountants when it comes to this, which is a standard when it comes to clients like KPN. KPN has a good system and is very alert when it comes to fraud risks. When it comes to communication and interaction, we regularly have consultation with financial management, the board, Executive Board, and the Supervisory Board, and the Audit Committee. It is transparent, critical, independent, and good. That is how we would qualify the relationship. All departments have high quality level and are very professional in their action and have expertise. We have concluded that management, Audit Committee, and Supervisory Board take our findings seriously and follow up seriously.
We have a quarterly board report to the supervisory board, and matters that we reported on in 2021 regard the key audit matters, our independence, fiscal and legal matters, remuneration, and continuity of automated data processing. Our vision. Well, as a consequence of COVID-19, we of course worked remotely when we could and on-site if we had to, always in a safe way.
Closing remarks. I have been the external accountant for five years for KPN, which is the maximum legal limit when it comes to being able to guarantee your independence. I would now like to hand over to my partner, Jules Verhagen. He's a very competent accountant who works for many large corporate entities and is very experienced. I am very confident that he will have a great relationship with KPN. I would like to thank you for your attention and putting your faith in us. Chair, floor is yours.
Thank you. Who would like to take the floor about this subject?
Mr. Keyner from the VEB.
I have a question not for the auditor, but to the Board, basically, because it relates to page 105, where we have the several segments aligned next to each other, the turnover, the costs, and the operational result that remains. Of course, consumer business and wholesale people that we call competitors and some residual items. There is one residual item that is much bigger than all the others. I know that you've included also the NOI networks. If you compare the segments, then you see that without this special network, whatever item, NOI, then it would double. Basically then you could set the balance sheet aside because the biggest part of the balance sheet relates to this. The question is, what is the, you know, use of segment reporting?
Because basically NOI, I'm sure, is essential to be able to service the other segments. You would then expect some kind of allocation, right? That you allocate the costs to the segments that actually generate the revenues. The question is when you present something like this, that I'm very happy with, but why then don't you allocate it? Because it would make it much easier for us to understand how profitable certain segments are. Or do you say, "No, the other segments can exist and continue to exist perfectly well without the NOI"? Because if that's the case, then why don't you separate it? It would, you know, reduce the balance sheet by 1/3.
I will answer this question.
Yes, the NOI segment is not something that we can just set aside because that's the whole network of KPN, so that wouldn't make much sense, and that would also not benefit the profit of KPN. It's a crucial part of the company. You report under IFRS and, of course, about how you manage your company. Babak, of course, knows this. It is a separate entity with a separate management. We have decided not to implement an allocation system because everyone uses this network, right? It's wiser to focus on contribution margin of the three segments, so wholesale, consumer, and B2B, and to then focus on costs and on the performance of the network.
We think that that's a more effective way to manage KPN than to set up a whole complex allocation system that, whereby you usually talk longer about the allocation than about the results. For as long as we make sure that the contributions go, and are put to use to the cost, we are happy.
Of course, I understand that this is also the main assumption. However, for the outside world, I mean, whatever you manage, you know, inside is fine, but in the communication to the outside world, we would like to know where the pain points are and where, you know, the big bucks are earned, so to speak, and where the real opportunities lie. We would like to know, you know, from a very high level view, what does it look like?
Is it comparable pro rata per earned euro or is there a major imbalance, for example, that a bigger part should go to the consumers and not to businesses, for example? Can you give us some more background information about what way a very, very general allocation could look like?
Look, it starts out by simply the margin per BU because that's operational result divided by turnover, right? For the rest, I can refer to our capital market day of two years ago, where we gave a presentation about turnover and EBITDA. Then the mass market, so the consumer market, SME, and wholesale markets represent about 75% of our turnover and 90% of our EBITDA. That's also where the network company is with a, you know, a share.
The mass market, again, represents 95% of turnover, 90% of EBITDA. So that should give you know, a better picture.
Okay. It's clear now. Thank you.
Who else would like to take the floor? Mr. Stevense.
Thank you, Mr. Chair. Still Mr. Stevense is my name. So when we look at security, you provide security, but you also need it yourself as a company. How can we understand what security you provided and which security you need or needed for your profit?
Joost.
You're right. Security, of course, is very important to us. For this year, we have said that the topic is security first, right? That is our main theme with everything we do. An important element of security is inside our organization. We have arranged this well since the big hack in 2012.
This is all in the operational part of our company, and that is to make sure that everything we do is as secure as possible and is always continuously improved. There's a whole organization that works on making the domains of KPN secure. If you then ask, what are the services you provide? Well, that's for the business segment. That is a separate component that Marieke perhaps can talk about.
Yes, thank you. As KPN in the business market, we strongly believe that the client wants and thinks that everything is safe, expects everything to be safe. Part of our security revenues can be found in SME, LCE, and Tailored.
On top of our safe networks, we also provide high-end security services, and that means we're talking about monitoring services, SOC teams, for example, but also other security services that we provide. Those revenues are included in the LCE revenue number that you can find in the presentation.
Thank you. If there are no other questions, wait, no. Before I continue with the next item on the agenda, I would like to direct myself to you, Frank, because indeed this was your final time that you were here as a EY partner at the shareholders meeting. I would like to thank you not only on behalf of the company, but also, of course, the shareholders and all other people involved for everything that you have done for KPN over the last five years.
I believe that we have set up and maintained a very good relationship that has been very beneficial to the company. Thank you so much and good luck with the next job that is waiting for you. Thank you. This now brings us to the voting. This is the first item that you can vote on, and the secretary will tell you about how many shareholders we have present and how many that we have represented. Also Jasper will explain how you can cast your votes.
Thank you. Yes, ladies and gentlemen. Wait, there is a question. There is still a question. Apologies, I didn't see that question, says the chair. We will help you. We will help you, sir. Interpreter's informing that the question cannot be heard without the microphone. Meanwhile, I will continue with the explanation.
At the meeting, we have 19 shareholders or representatives of shareholders in the room, and we have three shareholders that attend the meeting virtually. In total, that represents 3,442,656,240 represented. That is 76.3% of the issued capital. Of those shares, more than 2.2 billion have been given to the notary through a proxy, and 877 million to me as the secretary of the company. These are all proxies with voting instructions that have already been introduced in the voting system. The numbers of votes that you'll see on the screen include already these votes cast via proxy. A brief explanation about the voting.
The shareholders attending remotely can vote through the voting platform, through their tablet, PC, or phone, and the ones in the room can also vote using their tablet or smartphone. For that, you have already been sent the link to the right website, the Lumi AGM website, that you can access on your phone, or if you've been given one by us, they will have already done that for you. You have also received instructions about the voting. There is a gentleman that is now being helped because some people perhaps have not understood everything. Then again, this will be explained to you. Like we said, you can already cast your votes. You can either vote in favor, against, or you can abstain from voting.
As soon as you've voted, the screen will tell you what you have voted. You may now cast your votes. You can also do it later during the meeting, up until the final item on the agenda, which is any other business. All items will be left open for voting, and you can therefore also amend your vote if you should want to, until that moment, right? The results at the end of the meeting, after any other business, will be made known to you. Does anyone have a question still?
Thank you, Jasper. I would like to invite you now to cast your votes on this item. This is about the adoption of the annual accounts over the year 2021. Then we can continue with item four, which is the remuneration report for the financial year 2021.
We would now like to inform you about the implementation of the remuneration policy for members of the Executive Board and the Supervisory Board in the past financial year. As per financial year 2019, you can cast an advisory vote on this, and I'll come back to that in a moment. First, I'd like to give the floor to Mr. Hartman. As the Chair of the Remuneration Committee, he will tell you more about the implementation of the policy for the Executive Board and the Supervisory Board in 2021.
Thank you, Mr. Chair. The 2021 remuneration report has been drawn up in line with the requirements arising from the applicable laws and regulations. By way of introduction, I would like to briefly explain to you the principles of the current remuneration policy for the Executive Board.
The remuneration policy for KPN's executive board is based on market and society compliant principles, and is tailored to the individual responsibilities and experience of the members. The composition of the remuneration package for the executive board consists of a base salary, then a short and long-term variable remuneration or bonus, and additional secondary employment conditions. Now, the short-term variable remuneration is based on cash, with an on-target level of 90% of the base salary for the CEO and 60% for the other members of the executive board. This reward depends on the achievement of different financial and also non-financial objectives, with a respective weighting of 70% and 30% for financial and non-financial.
The long-term variable remuneration is based on performance-related shares with an on-target level of 135% of the base salary for the CEO and 90% of the base salary for the other members of the executive board. This reward or this bonus also depends on the achievement of different financial and non-financial objectives with a respective weighing of, again, 70% and 30%. Now, if we look back at 2021, I would like to first explain the results of the variable scheme over the past period. You can see the results of these on the screen. The outcome of the short-term variable remuneration plan that we call the STI for the calendar year 2021 is in total at a level of 118.96% of the on-target level overall.
Compared to the original financial targets that were set at the beginning of the year, the free cash flow performance, as well as the service revenue performance, has come between the on-target level and the maximum level. The EBITDA performance has come to around the on-target level, so more or less on target. With respect to the non-financial targets that have also been set at the beginning of the year, the NPS, so basically the measure of customer satisfaction, has also come between the on-target level and the maximum level. The employee engagement performance, which is how we measure the engagement of our employees, has also come close to the on-target level. These results lead then to the outcome of, like I said, 118.96% of the on-target level.
Now, in line with the existing remuneration policy, a maximum of half of the short-term variable remuneration after the deduction of statutory levies will be paid out in the form of shares. If the ex-Executive Board members do not yet comply with the shareholders' directive, and this shareholders' guideline is based on 250% of the base salary for the CEO and for the other members of the Executive Board, 150% of the base salary. The CEO has reached the intended level of 250% by now, so that his STI over 2021 will be paid out in cash.
The long-term variable remuneration plan, so the LTI, concerns the outcome based on the LTI plan of 2019, for which the financial and non-financial objectives have been measured over the years 2019, 2020, and 2021. The performance of the long-term variable remuneration amounted to 92.1% of the on-target level. This outcome is the result of the performance of the financial targets in the field of relative TSR, total shareholders return, and free cash flow, and the non-financial objectives in the field of reputation and sustainability. Now, the relative TSR performance is benchmarked against the STOXX Europe 600 Telecommunications Index. This is the so-called reference group that currently consists of 20 companies. KPN takes the eighth place of the reference group and therefore performs above the threshold for vesting, which lies on the median of that reference group.
The free cash flow performance has arrived between the threshold and the on-target levels. With respect to the non-financial targets, as set at the beginning of the three-year performance period, which happened in 2019, the circularity target, based on reuse and recycling of materials, have also come between the on-target level and the maximum level. The reputation objective has been based on the three specific focus areas, namely a well-organized company, excellent managers and a positive influence on society, and this has arrived at the maximum level. In terms of reputation, it's been several years that KPN is not only performing above the benchmark in the industry in the Netherlands, but also well above the average of the top 30 largest companies in the country, and also the international benchmark in the telecoms industry.
In addition, KPN has once again been named one of the most sustainable telecom companies in the world by the Dow Jones Sustainability Index, CDP and MSCI. Partly on the basis of this performance, the realization of the two non-financial objectives in the field of reputation and, like I said, sustainability, has come out on an average between the on target level and the maximum level. Now, the screen shows the number of shares that will be acquired on the basis of the LTI plan of 2019 in mid-April 2022. These acquired shares may not be sold for a period of three years. We call this the so-called lock-up period.
Now, the outcome of the LTI 2019 for the members of the board of directors, with the exception of Mr. Farwerck's is therefore based on an award in April 2019, i.e., before they were appointed to the Executive Board, and this also explains the deviant numbers. Mr. Figee was appointed as a member of the Executive Board in 2020, so the LTI plan did not yet apply to him in 2019. The Remuneration Committee has also evaluated in the past year whether the COVID-19 pandemic would be a reason to take specific measures with regard to the remuneration of the members of the Executive Board. The Remuneration Committee concluded that there were no reasons to deviate from the already agreed remuneration policy. This conclusion, by the way, was taken over by the full Supervisory Board.
Now, for the sake of completeness, I would also like to mention the fact that the gross annual salaries for the individual members of the Executive Board have remained unchanged in the past year. They have stayed the same. The remuneration report of 2021 also gives insight into the company's pay ratio. This ratio is based on the ratio between the person, the highest earning person, in this case, the CEO, compared to the average pay of the other employees. The pay ratio has been calculated on the basis of the IFRS principles and comes to 30:3 for 2021. For a more detailed explanation of the calculation method of the pay ratio, I would like to refer to the relevant passages in the remuneration report.
At last year's annual meeting, we also discussed with you the non-financial targets, especially for the LTI. We have told you that we would review them in the future. In this context, I can now tell you that in the plans that have been issued for this year, the non-financial targets have been adjusted in parts. For the short-term variable bonus, meaning the STI 2021, we look at, in addition, by the way, to the well-known financial objectives, also at the NPS, the Net Promoter Score, and the number of broadband connections. For the long-term variable remuneration, so the LTI 2022, in addition to the standard financial targets, we are also looking at a reduction in supply chain CO2 emissions, what we call the scope 3 emissions, and also the gender ratio in the various management layers of the company.
We believe that these objectives are the ones that best connect with the strategy and the visions of the company at the moment, and that these will be the ones that stimulate management and employees in the right way to achieve the objectives for long-term value creation.
Thank you, Peter. We will now give the floor to the people in the room to ask questions if they have any about the remuneration policy. Mr. Keyner.
Yeah, Keyner from the VEB. Yes, Mr. Keyner from VEB. Just a few questions to the remuneration committee. KPN is a capital-intensive company, whereby investments usually need several years before you see the first results. One would expect that this would be represented in a more dominant way in the remuneration policy. I know that remuneration policy has been discussed many times, but as Mr. Peter Hartman just said, you know, we listen to you, and we perhaps amend things in the future.
Perhaps as a by way of suggestion, when we talk about capital, and if capital is so important and investments are so important for KPN, then why is return on investment, invested capital, for example, not one of the core elements in determining remuneration, and especially LTI and STI? The TSR, this is something that to many shareholders, understandably, is very important and it is listed. If you see that KPN is number eight of the 14 companies, that's not bad, but it's also not extremely good. It's, you know, average. Normally, you would think a bonus is for an extraordinarily well-performing person. That is not really the case now.
The question is, does an average middle-of-the-road performance really justify such a bonus even in the future? You know, if we're talking about perhaps, you know, changing or amending the bonus policy, then this is something you should take a look at. The peer group. There are quite a few enormous, big multinationals in that group. KPN is no longer a multinational, and perhaps that's only for the better, but why then do you compare yourself with such companies to calibrate whether or not your remuneration policy is really in sync with the peers? The VEB is in favor, and although many people do not think we are, but yes, we are in favor of including softer criteria, right?
That are perhaps a little bit more difficult to measure, but that, in the long term, will have a very positive influence on shareholders' profit, in, you know, the longer future. What we find more difficult, however, and we see this happening at an increasing number of companies, is that the hard financial, let's say, old-fashioned criteria perhaps are not performed perfectly at, but still they result in high bonuses, and that the management scores much higher on soft or softer criteria like employee satisfaction, behavior, all those things, diversity. The VEB says that's fine. However, let's not make one thing. Shouldn't one thing also be made conditional to the other? Like, whatever, you know, your performance in the soft skills, if you don't achieve good hard skills or vice versa, then no entitlement to a bonus.
Don't you believe that this would be better? Because in the end, the executive board has already, you know, a sizable base salary, which should be enough to just do your work, right? So these are the things that I would like Mr. Hartman and his colleagues to reflect on and perhaps, you know, to tighten a bit the remuneration policy.
Thank you very much for your question. Let me look at the question and see how we can perhaps concretely respond to this. We agree with you that capital is very important at KPN because of the high level of CapEx, and you have said that the ROIC is an important measure, and no one denies that that is indeed an important element. I believe that if the CFO were to have the floor, he would only, you know, confirm that.
Also many other criteria are taken into account. There's all kinds of ways in which we assess the financial profitability of our company. Now, currently, and this is not something that should surprise you, it's also very common in our telecoms industry, free cash flow is basically what people find most important. That is not necessarily KPN's view. That is just the way the world views telecoms companies, including KPN. We obviously, in that, you know, industry try to perform well. Currently, we focus a lot on the free cash flow because it also gives us a very clear result of the things we do, right? It's a very clear measure. I believe, I'm sure you understand.
Yes, I do.
It has the advantage of clarity, and I can add to this that your suggestion, of course, is also an important nuance that we internally do take into account. It's not that because it's part of the remuneration policy that it plays no role in other things. Of course, as you said yourself, we have to make choices, right? In line with our industry, this is what we chose to do. The TSR, just a few comments. Basically, we are a little more positive on this. We are not eight of 14, but number eight of a group of 20. We feel a little better than you have just presented. Of course, we can always be better, but please know that this is, you know, not.
To arrive at number eight, of course, you then also want to know how the rest performs. This is partly dependent on their performance, right? This is, again, that's why it's called relative performance. It's not only up to us to determine where we stand. We also depend on our peers. There's also a threshold value. It doesn't mean that you can always be there. No, it's only when you achieve, you know, this and this point, then you get. It's not a default situation. You have to work hard for it, and you also need to, you know, make this dependent on other companies.
No, I was just reading, you know, you have to be in the top 10, and I only saw 14 names.
If you say that's top 20, then that changes things definitely.
Yes, you also said something else. Heineken, Unilever are past that, and you know, the other 50%, it's just different companies. You see that there are many companies in the list with a completely different profile than KPN, but we have to refer to that. You know, it's local peer group or international telecom. You know, that seemed to us the most wise consideration. Obviously, we can all have an opinion about everything. You know, we can't just pick, take our pick on the stock exchange, for example, and say, "Okay, we want to compare ourselves with this one and this one." Anyway. Your last comment. I would rather use the term non-financial components. You say soft components, but for us, these are finan...
Non-financial components are hard, you know, because customer satisfaction, just to remind you.
Net Promoter Score, that is not. You know, you can't influence that. Your customer has an opinion about you as a company, and, you know, we are actually waiting in anticipation of those results.
Yes, we know that NPS, many things have been written about that, but you can basically change those numbers or influence those numbers. I'm not saying that KPN does this, but we know that it's very easy to influence. These numbers are not as hard as you are suggesting. That's just all I'm saying.
Yes. Well, statistics are many, just as long as you don't change the method every year, you know?
The number of broadband connections, in our field, that is a hard figure because that's one of the turnover generato rs.
Well, we don't have a conflict here. You know, soft and also qualified them as very strategic, and this is exactly why I'm making the point. I want to avoid a situation in which a company hides behind these very long-term, difficult factors, and then hide behind that, and year in, year out, you know, doesn't perform, and despite all of that, they do pay out bonuses. You know, that was the case I wanted to make.
I agree with what you're saying, and I would like to add to that 70% is financial, 30% is non-financial. Of the non-financial part, I would like to argue, you know, that this is quite measurable.
Basically, leading indicators and using those, they are predictive for many other factors in the company. Thank you.
Right. If there are no further questions, I would like to invite you to cast your advisory vote on the remuneration report. Which means that you can cast your vote like before. Again, an advisory vote in this case is positive is in favor, negative is you vote against or you abstain. Again, it has no influence, but we definitely will include it in discussions about policy in the future. You can now cast your vote or later on in the meeting up until we get to any other business then. Now, item five, the dividend policy. I would like to give the floor to Chris Figee to talk about financial policy and dividend.
Thanks, Duco.
The financial framework of KPN, we are aimed at creating value at long term, and we invest in the digital infrastructure in the Netherlands, and we are convinced that this generates value for all our stakeholders. The rollout of a strategy is successful, and we are financially healthy. This is why we can do structural additional payouts to our shareholders. We have bought back EUR 200 million in our own shares, and we will continue to do so in 2022. We have now started buyback program with a value of EUR 300 million for 2022, which means that in 2022, we will pay out more than EUR 850 million, so almost level to our planned free cash flow this year. Basically, meaning that free cash flow is paid out to shareholders.
We can do that because 2021 had a strong balanced result and strong liquidity. We were very active in the capital markets. We have the sustainable bonds that we issued. Of course, we replaced some of the credits with a more sustainable component. At the end of last year, we had a liquidity of EUR 2.1 billion, of which EUR 1 billion in cash balance and EUR 1 billion in facilities. This means that expected payments are covered for the coming years. We are fully committed to have a low risk profile, and this shows the ratings, you know, BBB or Baa3 . A solid component, solid profile is important for KPN and our stakeholders. All decisions are taken with due consideration, and solidity is always on our minds.
We announced a dividend per ordinary share of EUR 0.136. After deducting the dividend already paid, this means that in August last year, a part of it was already paid, so the final dividend remains of EUR 0.091 per ordinary share. EUR 375 million in total. That final dividend will be paid out on the 22nd of April. Next, the dividend of the financial year is 70% of free cash flow in 2021. That concludes my information on the financial framework and payout to shareholders of dividend. Please, Chair, back to you.
Thank you, Chris. Questions from the audience. Mr. Stevense?
I was too fast. Thank you, Chair. Stevense, SRB. Can I have page 50 back on screen, please? Or sheet 50, was it?
Because you talked about free cash flow, EUR 870 million, and if I heard correctly this year, then it says 2023.
Free cash flow 2022 will be EUR 800 or at least EUR 825 million for 2022. During the Capital Markets Day, we said that we strive for a cash flow of at least EUR 870 million in 2023. What you see behind me are the components of a strategy that we communicated in our Capital Markets Day. The EUR 870 million is a combined amount in 2023, so it is correct. It's the target of 2023.
Looking at whether we have any other questions, I do not see any other people. I conclude that the general meeting has been informed about KPN's financial and dividend policy.
Moving on to item six, proposal to fix the dividend for the financial year 2021. On the 27th of January 2021, KPN announced its intention to pay a dividend of EUR 0.136 per ordinary share in respect of the fiscal year 2021. On the 4th of August 2021, EUR 0.045 per ordinary share already was paid out in line with that earlier intention. Now a proposal is to pay out EUR 0.091 as a final dividend, making the entire dividend per share EUR 0.136. The total profit attributable to equity holders of KPN amounts to EUR 1.288 billion.
On the 18th of February, 2022, the Board of Management, with the approval of the Supervisory Board, has allocated an amount of approximately EUR 723 million out of the profit to the other reserves. Taking into account the interim dividend distribution made at the expense of the profits in 2021, the remaining part of the profit is proposed as a final dividend, which is EUR 375 million. It is available, and it is the final dividend in the proposal. This is the same as EUR 0.091 per share. The Board of Management, with the approval of the Supervisory Board, proposes therefore to the general meeting of shareholders to determine the total dividend over the fiscal year 2021 at EUR 0.136 per ordinary share.
Subject to the provisions of the articles of association, the final dividend of EUR 0.09 per ordinary share will become payable on the 22nd of April, 2022. We now move to questions on this item of the agenda, if any. Concluding that there are no questions, I would now like to invite you to cast your vote. The resolution is to decide on the dividend payout of EUR 0.136 per ordinary share in total. You can cast your vote up until any other business, the item on the agenda. That means we go to item seven and eight. Item seven is discharge of the members of the Board of Management, and item eight is the proposal to grant discharge to the members of the Supervisory Board.
Like each year, we ask you to discharge the members of the Board of Management and the Supervisory Board. It is a discharge. We have already looked at this under item two on the agenda. It was the report of the Management Board on the financial year, 2021. In voting on the discharge, there's a distinction made between the Executive Board and the Supervisory Board, because you can vote on all agenda items during the entire meeting. I combine these two items on the agenda. Discharge of the Board of Management is all executive members or Board members. The discharge of the Supervisory Board concerns all current members and former Supervisory Board member, Mr. Haank. Moving to opportunity for questions. I conclude that there are no questions. Yes, Mr. Stevense.
You are combining the two items, and we can obviously ask any question. What, which items are you referring to then?
It's items seven and eight. You can ask questions about both separate items, and you can vote on both separate items.
Thank you. Okay, it's clear.
Again, I would like to invite you to cast your vote. Of course, proposal to grant discharge to both the Executive Board and discharge to the Supervisory Board. You can vote until we get to any other business. Item nine, it's a proposal to appoint an external auditor for the financial year 2023. The Audit Committee has evaluated the performance of the external auditor and the developments in the relationship with the auditor.
The Audit Committee has taken into account the observations of the Board of Management, as well as the assessment of the performance of the auditor by the financial departments with a good score of 8.2 out of 10. In the evaluation, the good cooperation, the critical but constructive attitude of EY, the professionalism of the team members, and the good price quality ratio were highlighted. In accordance with best practice provision 1.6.1 of the Dutch Corporate Governance Code, the Audit Committee reported to the Supervisory Board on this evaluation. The Audit Committee also issued a positive opinion on the nomination of EY as auditor for the annual accounts audit for the year 2023. It is fully supported by the Executive Board in that.
In line with this recommendation, the Supervisory Board proposes to commission Ernst & Young Accountants LLP to examine the financial statements for the financial year 2023. As already said, Mr. Verhagen will take over Mr. Blenderman's duties as a responsible partner within EY. We shall now move on to the questions on this item on the agenda. Does anyone have anything to add or ask about this subject? I conclude that there are no questions. Again, this item on the agenda may be put to the vote. The vote concerns the proposal to appoint Ernst & Young Accountants LLP as external auditor to audit the 2023 financial statements. If you have not yet cast your vote, you can do so up until the start of any other business.
Continuing with item ten, opportunity to make recommendations for the appointment of a member of the Supervisory Board. At the close of this shareholders' meeting, the term of appointment of Ms. Zuiderwijk and myself will expire. After my resignation, Mr. Van der Aast will become Chairman of the Supervisory Board. On behalf of the Management Board and Supervisory Board, I would like to first thank Claudia for her important contribution to KPN. Claudia Zuiderwijk has been a member of the Supervisory Board since 2014 on the recommendation of the Central Works Council. In recent years, Ms. Zuiderwijk has been a member of the Nominating and Corporate Governance Committee and the Remuneration Committee. Her keen eye kept the Executive Board and the Supervisory Board alert. We will miss her very much.
I would like to thank her warmly for her important contribution to this company and her dedication to KPN, its employees, and its shareholders, obviously. The Supervisory Board intends to fill the vacancies created by the expiration of our term of appointment by nominating candidates for appointment by this General Meeting of Shareholders. The vacancy that has arisen must be filled in accordance with the profile of the Supervisory Board. In particular, the Supervisory Board strives for a diverse composition in terms of experience, professionalism, age, and gender. In addition, candidates will need to have knowledge of or experience with the management of large companies, national and/or international business, finance and/or business to society relations. In addition, the candidates must have a clear feeling with the telecommunications and IT industry. We intend to propose to you to appoint Ms. Koelemeijer and Ms. Vergouw.
First, in accordance with the articles of association, I would now like to give the general meeting the opportunity to make use of the right to make a recommendation for the appointment of a member of the Supervisory Board. Does someone or anyone in the room or through video connection still want to make a recommendation for a candidate? I conclude that no recommendations have been made for a candidate. This means that we can move on to the next item, which is the proposal to appoint Ms. Koelemeijer as a member of the Supervisory Board. First of all, the Supervisory Board nominates Ms. Koelemeijer for an appointment as a member of the Supervisory Board. I will briefly explain the nomination to you, and I would like to refer you to the agenda for further information.
The nomination for this position is subject to the strong right of recommendation of the Central Works Council, which recommended the nomination of Ms. Koelemeijer. The recommendation of the Central Works Council can be found on the company's website and also in the meeting documents. Ms. Koelemeijer has a strong background in marketing, supply chain management, innovation, digital transformation, retail, and digital commerce, a background that comes in handy at KPN. It also, all of this also meets the profile of the Supervisory Board and is considered independent within the meaning of the Dutch Corporate Governance Code. The Supervisory Board believes that Ms. Koelemeijer is a very good asset to the board and has therefore gladly accepted the nomination. The Board of Management also support the nomination.
I therefore propose to appoint Ms. Koelemeijer as a member of the Supervisory Board in accordance with this nomination for a period of four years, ending at the close of the Annual Meeting of Shareholders to be held in 2026. Ms. Koelemeijer is here in this room, and I would like to give her the floor for a short introduction.
Thank you, Chair. Good afternoon. Thank you for this very elaborate introduction. I'll be brief. I would really like to thank the Central Works Council for their recommendation and also to the Supervisory Board who has taken on this recommendation. I would like to thank everybody for taking out that time. KPN has been the most important player in the Dutch telecommunication landscape, and it's leading, and it's an iconic brand. Therefore, it's an honor to be nominated for this supervisory board.
If you look at telecommunication as we know it today, then KPN has greatly contributed to that landscape by building infrastructure and services that go with it. KPN did not only do that in the past, but is going to continue to do that in the future with physical networks that are connected to digital e-commerce. With my background, my academic expertise, and my experience as a regulator and supervisor, I would very much like to contribute to that. In my capacity as a supervisor, I will take into account the golden helix, the relationship between boards and works councils, and I will represent the interests of all stakeholders within KPN. Thank you.
Thank you, Kitty. Let's now move to the Q&A on this item. Would anyone like to take the floor? I think you both stepped up to the microphone, so first, Mr. Stevense.
Thank you.
Thank you, Chair. Yes. It is a strong recommendation by the Works Council, indeed. Now we wonder, so how did you get in touch with Ms. Koelemeijer? Did indeed the Works Council propose her, or did you find her yourself? Did you hire a recruiter or a headhunting agency? How did you find her? People who are experts in finding a suitable candidate. Did you have a list of requirements? How did the procedure go? Did you have a long list and then a short list? Were they discussed with the select committee of the Works Council? If yes, who was in the select committee? Did this lead to a limited number of candidates? Then, did you interview all candidates, and how did these interviews go? Also a question to Ms. Koelemeijer. My apologies, Ms. Koelemeijer.
Yes, you can.
Yes, Ms. Koelemeijer, I would like to have a little bit more detailed information from you. You referred to your own motivation already. In your opinion, how did you experience the process? How did you experience the interviews with the boards? Did these interviews and talks also include your future perspectives? Did you experience these interviews as elaborate and extensive?
Mr. Stevense, now that you ask this question, I must unfortunately point out that these procedures are the responsibility of the company and that you cannot ask these questions to Ms. Koelemeijer because she's not a supervisor yet. To the extent that you wish to ask questions about her background, that would be an appropriate question. You know, the questions that you are asking, you know, how did the application procedure go? I have to exclude them from the debate.
You know, again, I can't give Ms. Koelemeijer the floor.
Yes, but I would like to know from her side how she experienced all of that. It must have been a positive experience, otherwise, she would never have accepted the nomination.
Well, I hope so. Let me try to give you the answer that you're looking for and that might also apply to the nomination of any candidate. Of course, also for Ms. Vergouw. Anyway, any nomination also always happens on the recommendation of the Central Works Council, and they just don't do that on a Monday evening. They have consultants that they used, and these consultants helped the Central Works Council to create a long list and then indeed a short list.
Based on that, the Central Works Council conducted a number of interviews in the, you know, suitable candidates and announced its decision to both boards. We had the opportunity to talk with the candidate of the Works Council, which was Ms. Koelemeijer. At the same time, she had all the opportunities to ask her questions to us. This is a process that happens within the supervisory board, not by including everybody, but obviously, first of all, by the nomination committee.
They will look at the nominations, they prepare the whole process, and then in the end, the candidate is presented to the entire supervisory board, so that the entire supervisory board can say, "This is a good candidate for the future of KPN." That is the process, and that is basically most of what I can tell you at this moment. Later on i f we have drinks and snacks, you can go up to Ms. Koelemeijer and talk about her enthusiasm, and also for Ms. Vergouw, because I know that both are very enthusiastic, and that they bring heaps and heaps of experience into the company, and that is essential for a company like KPN. Thank you.
Yes, Mr. Keyner from the VEB. I was almost afraid that he would ask my question, but no. I have no doubt whatsoever about Ms. Koelemeijer and her background. It's very impressive, and I believe that it fits perfectly with what you were looking for. But I do worry a little bit about the time that she will have available for KPN. So my question is to you, how will you as Supervisory Board members will ensure that your new colleague has sufficient time?
It seems that she's a full-time professor, and usually they are highly intelligent, but also usually very ambitious. That means that there's room for only one serious ancillary job. Perhaps for Ms. Koelemeijer there is some doubts because I already saw that Brunel and B&S Group is in the news all the time about possibility of some criminal cases. As a supervisory board, you have a very important role as a supervisor for all stakeholders. This is not something you can do, you know, on a Monday evening, and Brunel is a serious company. It's listed. If I add everything up, then it seems that there are four, let's say, normal ancillary positions and three charities. It's a little much if you compare that, if you add that to a full-time job.
I wish, of course, the best for all these other companies, but I want also KPN to have a Supervisory Board member that has sufficient time on her hands to really dedicate the time needed to the company.
This is always a very important topic for the Chair generally, 'cause the Chair has to ensure that the members are available on the necessary moments and also has the time. In life, it happens all the time that the real top people are always busy, so this is something that often coincides. The same thing applies to Ms. Koelemeijer.
I do think that we've given a good overview of the tasks that will await her at KPN, and the control or supervisory mechanism that you're referring to is something that indeed the chair is responsible. Once a year, we either have an external evaluation of ourselves or an internal revision, so to speak, right? Then we talk about this. Is everyone, you know, available enough? We also record the attendance of meetings, and this also shows then and will be discussed also, are, you know, people sufficiently attending meetings, et cetera. We have some guarantees to ensure that every member is and can participate in the activities of supervision of the company. Really, honestly, precisely a professor usually has the benefit that they have a very, very free disposition of their time.
Honestly, my own experience is that academics usually have more availability than people in the business community.
Your answer does not fully surprise me, but we can be light about this, I know. Really, I just want to be sure, because in the portfolio of Ms. Koelemeijer, there might be more than we expect now. For example, one difficult thing can be, you know, an IPO that goes wrong or a criminal case or whatever, and then all the rest will have to fall out of her hand. Many issues in IPOs, for example, have happened not because people were incompetent or because they were of bad faith, but simply because there are too many people have too many tasks on their hands.
Perhaps yes, they attend meetings, but don't prepare them, don't have time to prepare them, or don't have the time to look for extra information themselves. In the end, this is detrimental to the company and, as a result, shareholders. I know your responsibility. You, you're the responsible person, and you're acknowledging that. I would like to really make sure that you always keep a close eye on this because if with, you know, all the experience that she has, it should turn out that she doesn't or she cannot give KPN the time that the company deserves, then we will have to say goodbye to her.
Thank you, sir.
You're making a few good points about the need for the board members to be available, and I believe that any member of any supervisory board, especially at KPN, continuously makes those considerations. Like, what does my portfolio look like? Can I still do this? And then do I need to make certain changes or shifts? I think that every person has, where necessary, also that possibility. Thank you for your comments. No more questions I can see about this agenda item. Then we can now vote on the proposal to appoint Ms. Koelemeijer as a member of the supervisory board. You may now cast your votes, and this will be possible until any other business. I'd like to propose now to continue with agenda item 12, which is the proposal to appoint Ms.
Ms. Vergouw as a member of the Supervisory Board. Let me also briefly explain this presentation to you and for the rest, I can refer you to the information provided with the agenda. In our opinion, Ms. Vergouw also brings a very valuable addition to the Supervisory Board. In particular, through her experience in leading large organization and also the extensive knowledge and experience she has gained in areas such as digitization, customer service, operations, marketing, branding, and omni-channel sales in the field of B2C and B2B. Ms. Vergouw also meets the profile of the Supervisory Board and is also considered independent within the meaning of the Dutch Corporate Governance Code. Ms. Vergouw's nomination is also supported by the executive board and the central works council. The position of the works council with regard to this nomination can also be found on the company's website.
For these reasons, the supervisory board would like to nominate Ms. Vergouw for appointment as a member of the supervisory board for a period of four years, ending at the close of the annual meeting, just like with Ms. Koelemeijer, to be held in 2026. I would like to give the floor to her for a brief introduction. Chantal, go ahead.
Thank you, Chair. Thank you also, members of the supervisory board for this nomination. I'll be brief because you can already see some things on the screen, but what I think is important is that just like Kitty, I feel honored to be able to contribute to this wonderful royal company with a very rich history, but especially as was just said, a wonderful future ahead of itself.
I'm very much impressed, partly by the talks that we've had about how the company is led and especially about the digital services and the network it has. Perhaps even more so the purpose of the company. It is the best-connected country in the world we just heard, so that requires something. This, of course, relates to connectivity, but also people. Connecting people and connecting people in society. I believe that especially during this pandemic, we've experienced how important that is, right? Doing well by doing right is a mantra that I apply in my career. The triangle that my colleague already referred to is something that we also focus on.
I have 20 years of experience in the services field in all kinds of roles and positions, and my natural focus has always been on increasing client base, increasing share wallet, but also firstly, making clients happier and more satisfied by providing them with excellent services. I hope that I may contribute to this board with that experience, and I will ensure you that I will dedicate the required time to it.
Thank you, Chantal. Any questions about this item? Mr. Stevense.
I basically have the same questions for this lady as for the other lady.
Again, I can tell you that this was not a nomination of the Central Works Council. This was the reverse order because it was us requesting the nomination committee to come up with suitable candidates.
We do that with a search company that presents us with a long list, then we move to a short list, and this Nomination Committee has had talks with several candidates. In the end, the proposition was made to the plenary council of the Supervisory Board, and they were also able to talk with Ms. Vergouw. Again, that moment also leads to a process that then takes place in the Central Works Council. They also had an interview with her. On the basis of that interview and her background and everything, they gave us the advice to either support or not support. As I already said, that statement can be found on the website. I can see that there are no questions. We may also vote on this agenda item.
This relates to the proposal to appoint Ms. Vergouw as a member of the Supervisory Board. Just like with all other items, you can vote until the final item on the agenda, which is any other business. Agenda item 13, the announcement about the vacancies on the Supervisory Board that will arise next year. At the time of the closing of the general meeting in 2023, two vacancies will arise, namely Mr. Hartman and Mrs. Sap will resign in connection with reaching the end of their second term of office. The Supervisory Board intends to fill these vacancies and will nominate candidates to the general shareholders meeting for this purpose. Of course, the Supervisory Board strives to maintain a good balance of expertise, diversity, and knowledge. Also in accordance with the profile that we will discuss in a moment.
Mrs. Sap's vacancy is also subject to the reinforced right of recommendation of the Central Works Council. Agenda item 14, which is the discussion of the profile of the Supervisory Board. As stated on the agenda, the Supervisory Board has updated its profile. Prior to the adoption of the profile of the vacancy, we would like to discuss this with the general shareholders meeting in order to obtain any further insights. The profile was first established in 2005 and last modified in 2013. In response to the current views on the composition of the Supervisory Board, we have had a new draft drawn up, which you've been able to view on KPN's website. This new profile has also been submitted to the Central Works Council for their vision.
We would now like to invite the general meeting to share any suggestions or insights they may have with the Supervisory Board. Does anyone have anything to observe with respect to that profile, either in the room or, of course, online for those attending online? No one apparently has any questions. Good. Thank you. We've now arrived at agenda items 15, 16, 17, and 18. Point 15 concerns the proposal to grant an authorization to the Board of Directors to acquire own shares by KPN. 16 relates to the proposal to reduce the capital by cancellation of its own shares. 17 relates to the proposal to designate the Board of Management as the competent body to issue ordinary shares. 18 is the proposal to designate the Executive Board as the competent body to restrict or exclude preemptive rights upon issuing ordinary shares.
These four items are very closely related, so I will explain them at once. Of course you can cast your vote on each one independently. The supervisory board requested to have a bit of flexibility. This is a scheme that is on the agenda every year, and this is also fully in line with the Dutch market. What happens on the Dutch market. We therefore ask you, as every year, to one, authorize the executive board to repurchase a maximum of 10% of its own shares and to withdraw its own shares, and then reduce the subscribed capital. Three, to grant the board of directors the power to issue up to 10% of ordinary shares. Four, to give the executive board the power to exclude or limit the preferential right in such an issuance.
For the exact modalities of these agenda items, I would like to refer to the explanatory statements on the agenda. Finally, I'd also like to point out that these decisions are valid for a period of 18 months from today, and if accepted, they will then replace the decisions that you took last year. Let's move now to questions on this agenda item. Does anyone have anything to add or to ask, either in the room or through video? Mr. Stevense.
Thank you, Mr. Chair. My question relates to the exclusion of shareholders. As you know, we are against this. Yesterday, we attended the Heijmans meeting, and the approach was a little different there. Namely, a claims emission was presented to us as a future possibility to do away with this concern. Have you considered this a possible claims emission? I think that.
This is to put it mildly, I don't think everyone will say yes to this proposal.
Look, sir, I understand your point. We have no intention to do this. It's not part of our plans. I would like to propose to have your comment included in the report, and will be included in the policies towards the future. Currently, we have been very comfortable, you know, with these policies and actually we have presented this at every meeting.
Yes, sir, but you run the risk that you do not get a majority on this, and then you'll have a problem.
Well, what we are requesting is very much in line with market practices. We are not an outlier.
No, I know that, but it hasn't gone exactly the same way for other companies either.
Well, but sir, there are good reasons to make this proposal now.
Perhaps you are right, and in voting it may turn out that there is less support for that. We'll see that when we see the results. Currently, after all the consultations we've had, we have not received any negative advice on that.
Are you considering to change it?
No, we're not. Like I said, we will include your input and discuss it and take it into account. Any other questions? Because if not, again, you may cast your vote on each of these agenda items. Please do that now, because we will close the voting process after this. The proposal for item 15 is to authorize the Executive Board to resolve that the company may acquire its own shares. 16 is a proposal to reduce the capital by revoking its own shares.
17 relates to the proposal to designate the executive board as the competent body to issue ordinary shares. This is also a resolution. The last one is the proposal to designate the executive board as the competent body to either restrict or exclude preemptive rights upon issuing ordinary shares. I'd like to request you now to cast your votes, and these are also the final voting items of today's agenda. After this, we will close the voting on these and all other topics. Please make sure that you cast your vote on all topics insofar as you've not done so already. I'll give you a few seconds to cast your votes or if you want to change them. I hereby close the voting on all agenda items.
We will share the results with you on the screen after any other business, which is the agenda item 19. Who would like to take the floor for any other business?
I have one remark and one question. I'll start with my remark. I would like to express my appreciation about the stance that you have taken with respect to the next World Championship of Football. That is just a compliment for you. Secondly, I have a question, which is about something that Mr. Stevense referred to in the beginning of the meeting, which was the introduction of optic fiber in The Hague. I live in The Hague, so I'm not going to ask when will we get it. But once we have it, will that mean that the copper will go away or will we keep copper?
I forgot where you live. Otherwise I could tell you when you'll have it, but I can also do that after the meeting. For now, it will be parallel. We will migrate our customers from copper to fiber. In the older areas, we do want to do away with copper because it's much more sustainable, and it's also easier to maintain. In the longer term, we will phase it out, but at least for the next five years it will be in parallel.
Okay, good. I always want to keep old systems. To ensure that we have a backup plan.
Yes. Believe me, the backup will be 4G and 5G by then, so no worries, sir. To be continued. Thank you.
Yes. Thank you, Mister Chair.
This is the final point of the agenda. That is the results of the voting. I would like to give the floor on to my colleague. Yes, I see that we can also see them on the screen, great.
I will share the results of the voting with you. The first ones may be shown so that I can also take a look at them. Firstly, agenda item three, the adoption of the annual accounts of 2021. You can see that the proposal has been adopted with 100% rounded. Then the proposal to approve the remuneration report approved with 97.45% of the votes, 2.55% against.
Agenda item six, the proposal to adopt the dividend has been also adopted with 99.76% of votes in favor and 0.24% against. We can proceed with the next series. First, the proposal to discharge the members of the Executive Board from their liabilities, 96.81% in favor, 3.19% against. Adopted. Agenda item eight, the same, but then for the Supervisory Board, also adopted with 96.8% and 3.2% against. Agenda item nine, to appoint the external auditor for next year, adopted with 99.82% and 0.18% against. Next series. Here we are. The appointments. Firstly, Ms. Koelemeijer as a member of the Supervisory Board, adopted 97.68% in favor, 2.32% against.
And for Ms. Vergouw, it is even higher, 99.64% in favor and 0.36% of all votes were against. Both resolutions have been adopted. The final four points. The proposal to purchase own shares adopted 99.84% in favor, 0.16% against. Item sixteen, capital reduction by revoking the own shares, 99.98% in favor, 0.02% against. Agenda item seventeen, the proposal to designate the Executive Board as a competent body to issue ordinary shares, adopted. In this case, 98.83% in favor, 1.17% against. The last one, the restriction or exclusion of the preemptive rights upon issuing ordinary shares, that is point eighteen, adopted. Percentage in favor, 98.48%, and against, 1.52%.
Thank you very much, Jasper.
That means that the general meetings has adopted all the proposals that it was presented. This result also means that I can congratulate Ms. Koelemeijer and Ms. Vergouw with their proposals. We're very much looking forward to your membership and I wish you lots of success and especially fun. KPN is a wonderful company. You can learn endlessly from people and the digital infrastructure for the Netherlands and providing that so many other companies and applications use is really something that makes working for this company very special. I would like to wish Gerard success. He will have the very easy task of acting as chair. But no, I'm kidding. He will take this very important role very seriously. He'll do a fantastic job.
We have already experienced him as a director, and I think that I can very confidently say that the company will be in his very capable hands. I would like to thank you for your presence, and we expect next year's meeting to take place on the 12th of April, 2023. As soon as this date has been confirmed, it will be made known on the website of the company. Before closing the meeting, I would like to give the floor to Joost for a moment.
Yeah.
Yes, because today we are saying goodbye to Claudia, who already was addressed by Duco. Of course, we would like to also, as Executive Board, thank you very much for your services and good luck. I also have the honor to thank you, Duco, because obviously we cannot forget that you're also leaving. When you arrived and became a member of the Supervisory Board eight years ago, you really strengthened it, and you immediately contributed content and experience. With your experience, you soon became a sparring partner and a challenger of the Executive Board on very strategic and substantive topics. When you became the chair a year later, your network in the financial world turned out to be very valuable and useful for us.
Apart from your substantive contributions, you've always been very focused on the personal and personnel side of our company, the HR side. You always said that the right person at the right spot is an important topic, an important thing to take into account, not only for the management board members, but also for the people lower in the company. Jointly with the supervisory board, you have implemented quite a few changes, and we have the results here on the stage, so to speak. The executive board under you has changed a lot. It has become much more dynamic, much more diverse also. That is something that we're happy with. It works very, very well, at least in my experience.
For the average employee of a big company, supervisory board is something that is more at more of a distance and less known. Duco, but Claudia also knows this, you really always looked for the people, right? When you talked with our employees, you always did that, you know, very cordially, very sincerely, and you were really interested in what they had to say. It is important that you have a supervisory board that was always, you know, in contact with the work floor and really wanted to be up to date about everything that was going on in the company. We've of course launched our strategy that is about our infrastructure, long-term investments and investments in our customers and the digitization of the company. We are, you know, we've set our course and we're staying it.
Because of your involvement, you have ensured that KPN is now, you know, on its way to growth. I would like to personally thank you for your trust and for the very good and also pleasant collaboration over the last years. I would also like to thank you, obviously on behalf of the company, for your very intense contribution over the past eight years. Thank you very much, and I wish you all the best.