Ladies and gentlemen, welcome. I'm opening the meeting. We really appreciate your participation in this meeting. I'm also pleased to welcome everybody watching the meeting and listening to it via our website. First, a few opening announcements. We have interpretation to English. If you'd like, you can obtain a headset at the entrance to the room. The hostesses will be distributing microphones in the room, and we are recording this digitally. The convening notice, complete agenda for the meeting, and corresponding documents were posted on the Randstad website from 14 February 2017 and have been made available. Some of you have already spoken to me about the very fine weather today. It is now end March. The documents were issued on 14 February, and 10 years ago, when many of you were present, this meeting was on 7 May. We've moved everything up by 38 days.
I'm sure you can imagine how much pressure we were under to get the annual report out. It was also very warm, but it was 38 days later. In the convening notice, you'll see that shareholders had the opportunity prior to this meeting to submit questions in writing to be addressed today. Nobody took this opportunity. The convening notice also indicated that shareholders unable to attend the meeting may issue voting instructions to an independent third party, SGG in Amsterdam. Seated at the board table, we have the five executive board members. From right to left, Chris Heutink, François Béharel, Linda Galipeau, Robert Jan van de Kraats, and Jacques van den Broek. Representing the supervisory board, Jaap Winter, Giovanna Kampouri Monnas, and Barbara Borra. Unfortunately, Henri-Jean Gouverneur and Rudy Provoost are unable to be present, and I'm sorry, I left out Frank Dorjee.
We also have present, Pieter van D oorn of Deloitte Auditors. Please rise. Thank you, Peter. At agenda item 2C, the adoption of the 2016 financial statements, you'll have the opportunity to ask him about his statement regarding the financial statements. He'll provide a brief introduction about the annual audit process and the auditor statement. Registration for the meeting closes at 3:15 P.M. After that, we'll compile the list of attendance, and I'll tell you how many parties entitled to vote are present and how many votes may be cast. I designate Jelle Miedema to serve as the secretary at this meeting. The draft minutes for this meeting will be made available within three months and will be posted on the website. After that, you'll have three months to respond to the draft minutes. The minutes will be adopted by me and the secretary.
At the registration desk, copies were available of the minutes from last year's meeting. Once again, we will be using ballot boxes to vote this year. If they malfunction, we will vote with a show of hands in which those voting against and abstaining will be recorded. Upon entering this room, each of you will have found a ballot box, and you will have received your chip card for voting at the registration desk. The instructions for the voting procedure will be provided at the first voting item on the agenda by Jelle Miedema. On to agenda item 2, the report concerning 2016. In agenda item 2A, we will be discussing the executive and supervisory boards reports on 2016. At B, our accounting for implementing the remuneration policy in 2016. Under C, the proposal to adopt the financial statements for 2016.
At D, the explanation concerning the reservation dividend policy. At E, the proposal to establish the dividend for 2016. I'd like to start by giving Jacques van den Broek the floor, who will present the general course of events in 2016. After him, Robert Jan van de Kraats will deliver a presentation about the financial aspects and other points. Jacques van den Broek and Robert Jan van de Kraats' presentations are understandably in Dutch, and the presentation notes that you'll see on the screen are in English because it is being delivered simultaneously with a presentation on our English language website, which is viewed primarily by foreigners and other interested parties abroad.
I'm going to take you through last year. There we are, in highlights. Of course, we were all brought up by Frits, we're never satisfied. I still go to Frits every quarter in Laren, he says, "Well, you should have been growing faster." Of course, he's right. He's always right.
Sorry, Jacques.
Yeah.
We do it in Dutch
Oh, sorry. Yeah, Frits. Frits, [Foreign language].
Frits, thank you very much. Apparently, I pressed the wrong recording. We'll continue in Dutch. Frits, I said that you're never satisfied and you always want faster growth. I'm sure you were nodding. In retrospect, we didn't do badly at all that year. Were we growing less fast than the previous year, especially in Q2, growth in the U.S. slowed down after several years, even though Europe was picking up, but was a bit less. Over the course of the year, in the U.S., modest growth remained. It did not subside, but Europe rebounded nicely. By the end of 2016, we saw additional growth. We also made some earnings, and we'll tell you more about that when we get to the dividend, and you'll see earnings per share dividend EUR 1.89. That's a record high. In Dutch, that means we never paid that much. EBITDA margin is 4.6%.
In the last three years, we increased the percentage of the revenue that we pay out. As you'll see, the gross profit is not growing as quickly. That's exclusive. I don't know whether you have any questions about this. We acquired a lot of companies. Sometimes they are on the book, sometimes they're not, but we have not included them in these results. We're still growing in perm fees, and that's the compensation for recruitment and selection. We're delighted that we were able to purchase Monster, we're getting a strategic partnership off the ground, we purchased the French company Ausy, as well as BMC. That's a Dutch company that is mainly active with the authorities and the government. You see that strong finish. Look at the nicely colored lines. Rest of World grew very quickly.
It was declining, but it's picking up again, largely in Australia and Japan. As you see, Europe, very strong in that fourth quarter. Wonderful rebound, that has carried over early this year as well. As for North America, you see Q2 over here, then it basically stagnated but did not slump. That's good news. If you look back quite a few years, back to 2003, you see our real cycles. Sometimes growth, this was a different, much smaller company. It was smaller and got a grip on its figures later on. That's strange, but the same barometer, massive decline. That was 2009. In Europe, we're below the level of temping staff. The only country where we have more temping staff than in 2008 is Germany, so we're still catching up.
People often ask me, "Why is temp staff growing faster than permanent people?" That's because we're still catching up. We did get back to growth later on, there was a decline, and then a pretty stable trend for a few years, in part because we don't see as much economic growth, not as cyclicals in the past, but we're also a different, much larger company. We operate all over the world, when the U.S. slows down, Europe accelerates and vice versa. In those countries, our businesses are far more broadly based with professionals and temp staff. We're mitigating the peaks and troughs, and that makes us more stable, especially with respect to our cash flow. Now, a rapid overview of the countries. I told you a little bit. Canada, 10% of North American revenue. They're outperforming the market.
The market had been difficult, is recovering, as you see, we've earned a bit more in America. North America is by far the largest market in the world and the largest company in Randstad's portfolio. Now, the Netherlands. Once again, growth. More growth in 2015, largely because of that payrolling we mentioned. That's about temp staff being there, we handle their payment a lot in government service, the government decided that they would hire them, and that impacted us, impacted our revenue by EUR 100 million. You see that impacted our growth in the Netherlands. There's a lot of pricing pressure in the Netherlands, especially with large customers. We're choosing our customers carefully. That's our focus on profitability. Here you see recruitment and selection is growing. It's outperforming the 8% from last year. Professionals are stable.
Earnings are not as high as the previous year. That's also because of the payrolling. We were turning a nice profit there, it shrunk and there was a lot of pressure on pricing. Excellent year in France. You see here 7% growth, 6% in staffing and in-house professionals stand at 12%. That's thriving. Perm grew by 29%, even though the French economy improved. It's much better on that market. You see that we did better than the previous year. We had an excellent year in France. Germany, strong top-line growth in our German operations. Recent years, it's a good trend that's continuing. Germany accounts for EUR 2 billion of our revenue, SME, outgoing large clients. That's for the first time in Germany that the SME growth is outperforming that of large customers.
We worked hard for that, did a lot of customer visits and phone calls, we reap the benefits. Results are roughly comparable. High sickness rate. That's interesting. The German system is remarkable. Everybody is on our staff. In Germany, the wages vary based on the order. You may have been paid EUR 15 per hour in one place, your next job is EUR 12 an hour. There's some German temporary staff who then go out on sick leave because then they'll get paid EUR 15 an hour. Well, that's a nice deal, isn't it? There's a snag in the regulations. We're trying to resolve it, that just gave rise to even more sickness due to absenteeism that we have to pay, and that impacts our result, and that applies throughout the German industry. Some other countries, Belgium, modest growth, wonderful profitability.
Iberia, which comprises Portugal and Spain. We're the market leader in Spain. We've outperformed Adecco. We're delighted with this new achievement. In Portugal, we had a large company, but very low margins. We're revising that business to a more profitable business, and that's working. We've discussed Brexit at length, and the announcement of Brexit seriously impacted our share price. We said that's 2% of the earnings, so what's the big deal? You see that there isn't really much amiss in the U.K. That's why we say limited impact of Brexit. Italy is going great guns. That's the Frits Goldschmeding version. Marco Ceresa started with zero temp staff in 1998. Perhaps my mic isn't positioned properly. Each year, the revenue increased by EUR 1 billion, so that's doing great. Obiettivo Lavoro is one of our acquisitions that we're integrating on track.
Last week, Chris, didn't we have about 10 people visiting us? 25. They were difficult to count. We welcome them, and the growth is wonderful. As for emerging markets, double-digit growth in Latin America. That's fine, but it's modest. Japanese growth stable at 5%. Careo is one branch with 120 placement officers in Tokyo, and two of them speak English, so those are the ones we speak with. We're doubling our presence on Tokyo's market. In Australia, we did have some difficulties. Three years ago, we were losing money, but it improves year after year. I showed you this one last year. Do you recognize this one? ABFS, that's the Activity Based Field Steering. How do we steer the business? As for organization, how are we instrumentalizing that total talent architecture? Our message to customers, what we talk to customers about. Talent means our candidates.
Increasingly, we need to focus on those candidates. Unemployment is declining. Technical people are difficult to obtain, so increasingly, we need to find the candidate first and then the business, rather than first the business and then the candidate. We're working on that. Tech, I'll tell you more about that later on. Our profession is going digital, or it's digitalizing. We're going to use technology to support our placement officers. What did we do in our Randstad Innovation Fund? We made five new investments. We analyzed 2,000 startup companies, each one involved in temporary staffing or recruitment and selection, and we examined their technology. We learned a lot from that, and we experiment a lot in our own company with new forms of technology. We acquired some companies as well. Robert Jan and I did not receive a new credit card to burn. We didn't just purchase willy-nilly.
We always set an M&A agenda and look at companies we're thinking of acquiring. Proffice in Scandinavia is a case in point. We first spoke with these people in 2005, and they were not interested in being acquired. Next, in 2010, they said no again. Last year, they said yes. It's like customer prospects. You have to stop by a few times until you make it work. Now we're in the top three in Scandinavia. That's an attractive region. Obiettivo Lavoro, that took a couple of years of talks as well. It's partly a coincidence that we made so many acquisitions this year. I already mentioned Careo. Next, Twago is a freelance platform that we bought because of technology. That means that the customers don't need a candidate. They simply position what they need on that platform, and a freelancer will take care of it.
We think that may be the work of the future, and we can use Twago to cover that development. I will tell you more about Monster in a moment. Ausy. We do not have enough professionals in Europe. Half of our business in America is professionals and half is temporary staff. In Europe, the ratio is 25/75, even though the labor markets are not that different. We want to grow in professionals. Ausy will help us get there. It is a French company with branches in Germany and Belgium, as well as a small one in America. François was speaking with them for about three years. We know the people, we trust them, so we teamed up with them. BMC, market leader in professionals working for the government, especially the decentralized government operations. They need to do a lot and recruit professionals all over the place.
BMC was the market leader. They are a nice company, and we are going to team up with them. Are we satisfied? Never. Do we think we can keep this up? That is a question. In April, we met with all our general managers and played a video about the world around us. I will be happy to share this with you. It is in English. I think it is obvious, but if not, I will be happy to sum it up.
The tech storm. New disruptive companies are toppling existing business models all over the globe, in finance, in travel, in retail, and in the world of work. Here we are, Randstad, in the tranquil eye of the tech storm. New competitors are emerging, and we are increasingly aware of the monumental impact changes like online talent platforms will have for us and the way we do business. Because without us, talented professionals and employers are rapidly offered and are discovering new ways to interact and connect with each other. As technologies continue to evolve, they will change the world of work in ways that we can only begin to imagine today.
Through the Randstad Innovation Fund, we have evaluated hundreds of HR tech startups, allowing us to look into the future and understand what is coming. Like Crunchr, which uses big data to help employers harness the power of HR analytics. Or Checkr, allowing recruiters to make better matches while saving hours. Or RiseSmart, which is changing the world of outplacement. This is a great beginning. Is it enough? If we want to stay relevant to all our customers in this new digital reality, we need to do more to lead the market.
We need to create the perfect mix of tech and touch, where artificial intelligence and automation perform high volume, repetitive tasks like sourcing, qualifying, and matching, and our people perform tasks that require social skills, judgment, and analysis, like sales, relationship management, and solution design. The role of our consultants will change fundamentally. Supported by new digital technologies and data-driven insights, they will have the ability to engage with candidates and customers on a whole new level.
In online staffing, we'll offer our customers and our own consultants a completely new digital experience through automated pre-selection and fully automated matching systems, enhancing quality and service while creating even better matches at competitive pricing. By using aggregated, highly personalized digital data, our consultants will be able to connect to high, in-demand professionals and become their personal guide in the new digital world of work. Where do we go from here? Digital transformation will require aggressive investments, clear priorities, and well-orchestrated cooperation between local and global teams, using technology to enable and enhance human engagement. Tech and touch, powered by Randstad.
What did we discover with that Innovation Fund? There are many sectors, for example, if you book trips or look for books. Sectors are very dynamic, we want to check what we could do to keep up. We didn't want to be overtaken. If you have a job and you want to make the next transition in your career, you don't simply click onto a site and get a new job tomorrow. You need to speak with somebody to see whether it's the right job for you and whether that company is compatible with you. First, you look to see what's available. With customers, this is even more the case because the customers are slower to embrace digital. They want to check the candidate profile, and if it's a freelancer, whether we've covered the red tape.
We're not going to go entirely technological. That's why we say tech and touch. Touch means human contact supported by tech. What else did we discover? All those little startups are going to stay small. If it's something new, things happen more slowly. That digitalization is going to be at our large companies because that's where the impact will be. Here you see four blocks. I'll take the two in the middle. This is what we do every day. Job scheduling. That's about large groups of temporary staff that we've selected and met. We know them, and they work for a certain company. We schedule them day after day. In food and beverage service, hospitals, in-house branches, the customers want to know what the story is every hour of the day. We're digitalizing job scheduling.
Each temporary staff has a personal app to review schedule details and communicate their schedules for the next few weeks, they can trade certain shifts. They can also say whether they like working in a certain department, the customers have planning tools to see each day what the status is and whether all shifts have been filled. This has quite a few consequences for the placement officers. Rather than doing everything on their own, a lot is already being covered. Placement officers can be more productive and have more valuable contact moments with customers and candidates, they can keep supplementing the pool if people leave or decide to resume studying for whatever kind of reason. This in-house business is under construction in France, if it yields good results, we'll roll it out throughout Randstad. There's search and match. That's temporary staffing nowadays.
You check whether a certain customer needs people, you search for the candidate, you make the match. Job scheduling is about 30% of our revenue, and search and match in deploying professionals is 40%-50%. What are we doing here? You saw in the video when the placement officers search, they know exactly who needs workers. That's what the world is like today. For example, suppose I work with welders, I'll enter searches for welders and approach only those customers. You time your efforts, and you can sell more effectively if you're a placement officer. That's one end. As for matching, if candidates are on our doorstep today, 40%-50% will find a job through us. Another 40% or 50%, it depends on the country or the sector, will find another job. After that, we never hear from them anymore.
We're going to transition this to stay in touch and maintain contact. If you ever bought something from Amazon will get in touch with you every day, whether you like it or not. In the future, Randstad, it gives me a nice warm feeling. Randstad will always be with you. When do we reach out? We reach out the moment you post something on social media. You're not the target group, but taking a picture of your lunch every day to show your friends what you're having for lunch. There are many people who do that. That's not a relevant moment to us. What is relevant to us is suppose you completed a course, or you had a difficult interview with your supervisor, you're moving, your wife is expecting. At those moments, we reach out to you because that might affect your professional situation.
We identify that on social media. That's an interesting trend, we'll keep in touch that way. As Randstad, we have about 20 million-30 million profiles of people we know. Monster has 300 million. We do keep in touch with a large group of people, and on that market where people are increasingly difficult to find, we find people when they're not looking for a job, but maybe they are. Technology will help us. In the future, placement officers will be checking which customers to contact and which candidates are right for the job. Nowadays, we've left everything up to the placement officers, but you saw in the video that they'll maintain far more personal contact. That's what we're up to. Why did we acquire Monster? If you want to do that, you need to come up with some new tricks.
You need to devise new skills. You can purchase them, develop them, or hire people, Monster already has a lot of those skills. It has a global website, 300 million profiles. They can find those people that we need on social media. We think that Monster will help us accelerate that journey, and we think that's necessary. On the video, you saw some logos of competitors, you didn't see Adecco or Manpower. You saw Google, and you saw LinkedIn. We think that those will be our future competitors. We think that in return, we should offer tech and touch. Randstad will become very knowledgeable about candidates and have a wealth of data about candidates, labor markets, and customers, as well as 35,000 placement officers scheduling that contact moment day after day. It doesn't exist yet, we're getting there.
In the future, customers at any given moment can reach out to us. They can stop by for a cup of coffee. We'll take care of all the procedures for them. Many customers still appreciate that, but there are others who want to do business just by a mouse click. They should be able to do that as well. We're doing well now, but we want to be doing well in a decade or two as well. What is that tech and touch about? These are the RIF companies, Randstad Innovation Fund. We see how they're doing. We try to team up with them. Jaap, I'm watching you, don't worry. These are our internal innovations. We have two global companies, Sourceright, that serves huge customers worldwide, and RiseSmart, one of our acquisitions. They have digitized outplacement because that's changing, too.
In the past, if you lost your job, you'd go to a booth, sit down with somebody who'd help you. RiseSmart does it differently. If you lose your job in the U.S., they generate your social media profile and match it with all available jobs. They'll automate the job search. After that, we'll have that talk without having seen you. It's all online and just much faster. We think that's part of the future as well. We have search and match and job scheduling. We're going to roll that out. We've got acquisitions. All of this is part of the innovation and future of our company. It's not only digital. It's not the computer, it's the combination. It's how it all ties together.
On average, our placement officers are ages 27 to 29. They expect this type of work setting because they've got all this at home too. Many of them want to work that way. We're going to provide it. This is our ambition. I started off in English, but I'm going to wrap up in English too.
Agile integrator of tech supporting a core human touch. We are the trusted. We should be the trusted partner in the world increasingly driven by technology. We've discovered that candidates want human contact. They don't want to do everything through technology. That's why they keep coming back to Randstad. We had a good year. We're building an even better future. Frits, we're going to get back to that growth from the past.
Thank you, Jacques. Just from me, some economic and financial details that are part of last year's developments. Interesting growth. Let me start with the economic side and then the financial side. Lots of people think that both are very much interrelated. That is indeed the case, but it's not that you can show the economic developments through IFRS very easily. I'm sorry, but IFRS tries to do so, but fails, so it shouldn't even try to do that. As an aside, these are some sheets that I would like to share with you. We have a committee that deals with corporate governance, the new draft Code of Corporate Governance. We really believe that it's going to be approved now, and it's going to be laid down in law, and that's why they refer to long-term value creation.
The supervisory board of Randstad felt that the board of Randstad should assume this chore. I did that myself. It was an extraordinary experience. I'll discuss the details later on, but long-term value creation is one of these dimensions of our contribution, 15.9%. You'll see that broken down at the bottom. We want to achieve a return on the money we actually invest from shareholders. Of course, you've got the costs. The costs are around 8%-9%. It's also a matter of rocket science, but also of intuition. Here you see how the mathematics work. We have the net operating profit after tax, and this is then compared and divided by invested capital. You get an amount, 15.9, and then some things that we keep an eye on in the company. Growth, obviously, is very important.
Organic growth is extremely important because that means you don't have to use a great deal of capital, 3%-4% of capital. We generate a return. All sorts of things behind it. The idea is not that we discuss this in detail with you, just so that you get an idea of the economic way of thinking of Randstad. At the bottom of the page, right at the bottom, behind the people here at the table, you'll find dividend. Jacques mentioned it quickly. Very important for us to make sure that we generate a very competitive dividend and that this dividend be paid out with as little dilution as possible. This is our economic mindset in the long term. I have three other slides on the economic mindset and the acquisitions for us are strategically bolt-on, they are very important.
We look at a number of things. The acquisition has to strengthen our strategic position, so that's the first one. Second thing, obviously, it has to provide a significant value creation. Within 3 years, we want a higher return on capital than the cost of capital that we've acquired in the first place. Last but not least, we have to be able to manage it. You can't just stack this one on top of the other. You really need to pay attention to it and groom it for it to be a success. These are the three elements we keep in mind when we carry out acquisitions. If you look at the situation over the past few years, in 2010, we did an acquisition in Japan. The investment in that acquisition generated returns in less than 3 years, so that's wonderful.
It's a good foundation of our company there. In 2011, we acquired SFN, and now we have a value of $750 million. This was an acquisition of SFN, $2 billion revenue in the U.S. Strategically, a very important step in the field of recruitment process outsourcing, MSP. It became very important very quickly. USG, a wonderful transaction in which we could buy something that somebody else no longer wanted to have. We modified it, very quickly, we turned it into a profitable business. These are some acquisitions. Jacques referred to this very briefly.
What we aim at, you'll see this at the top here, we aim to have a relevant top position in the staffing market in the Netherlands, we want to improve and strengthen our professional staffing business accelerate our digital strategy, this is the requirement of having higher return cost of capital within 3 years. Here you see 2/3 of revenue is in staffing. We can put a small tick here because 1/3 is professionals. This is the Italian acquisition in the staffing market, this one is in line, we'll be able to tick that box in 3 years at most. Here we're coming close. This was a company that was shrinking. The company has started to grow as from the beginning of the year. Quite apart from cost synergies in terms of revenue synergies, we're doing very well.
This is Japanese acquisition in staffing and in professionals. We're doing very well. Excellent situation. We are quite envious of the enormous growth and commercial power in this company. Small acquisition here and a large acquisition here, Monster. It's early days yet to do the sums, clearly from a strategic point of view, it is an acquisition with considerable synergies. The BMC acquisition in the professionals field, it's early days yet, I don't think that we stuck out our neck with a very high acquisition price also strategically, also very important in the professionals segment. Once again, early days again. Now let's go back to the financials, our bookkeeping. This is what you get if you have 630,000 people at work every day, which is an important indicator for us, we look at this on a weekly basis.
It's not only an indicator, it also makes us happy. It puts smiles on our faces puts smiles on the faces of the people who are working for us, people who have temporary jobs or permanent jobs or go from one to the next. As I said, puts smiles on our faces. This leads to these numbers. These are the outcomes, if you will. Jacques discussed the underlying elements of these numbers, of course, I explain things in press releases. Here, the most important numbers are EBITDA of almost EUR 950 million, which is 7% up from last year, based on like-for-like organic growth. We don't have a big increase in costs, we of course, take out the items that have to do with acquisition and integration. We need to understand everything and put everything very clearly.
The outcome is a reported EBITDA of EUR 892. Below that, you see the different items. You see EUR 10 million impairment on our operations in India, emerging markets. Very important, India, China, but not right now. That's going to take a couple of years. In those markets, we are rolling up our sleeves and preparing ourselves so that we are prepared when the time comes. Usually, if we do make money, we reinvest it in further growth. The wages are low, the hourly rates are low in those markets, so you really have to make an enormous effort to actually have a powerful position there. Funding costs are very low, and that's got to do with the fact that in the past, I always tended to say that we don't really use very much.
We do use a lot now, but our interest rates are low. We have a floating interest, that for us is the best hedge with our results. Usually, you pay slightly more if the economic situation is good, and you pay a lower interest rate when the economic situation is slightly poorer. It's even lower now because in those items, there are some revaluations of other items. In any case, this is a very low amount. Fiscal issues and that leads us to an EPS of EUR 3.75. Let me move on to the performance per category. The Boston Consulting matrix could be used to assess this. It's all about the potential. Sometimes potential is high and the market share is not high, and then you have great opportunities. This is the situation now in staffing. We have quite a market share. There's potential.
Our returns are going in the right direction. Digital is going to make a major contribution. In-house, that's perfect. Return of 5.2% on relatively low prices. They're large customers, high productivity, high returns. We're renewing this concept now, what we need to do here is do much more of the same thing. This is an excellent business, we really want to become really big. Professionals, a slight improvement as compared to the previous year. Market share is small, potential is great. Returns aren't what they should be. There we do have quite some ambitions. In the last part, in the professionals, we have the acquisitions, Careo, Ausy, and Proffice that support this, also BMC. That way we can reel in success and expertise to strengthen our position and growth.
Profit, this is what we're left with after staffing, we've got to pay our systems with it, including this meeting, by the way. The gross profit was 18.7% in 2015, 19.0% now, which is a nice improvement, but we're always very honest and show you how this came about. The addition of Monster was very important in this respect. In the left-hand side, you see a red line, that is the price pressure, particularly in the Dutch market, because there's a bit more aggressive competition over the past few years than we faced earlier on. That, of course, puts pressure on our performance. We've got the costs that we incur. As I said, we've got to pay for those costs, this is how we spend our money.
You see that there's an increase from EUR 2.7 billion to almost EUR 3 billion a year. There's a very big item here, which is called M&A. These are not the cost of our transactions. It's not that we're sort of bankers. We have an internal team to work on that. These are additions as a consequence of M&As, and these are the companies that are added on to our business, which increases our cost basis. We have investments that are mainly focused on digital growth and some readers will see, you're also increasing your expenses at corporate level. This has got to do with some additional spending on digitization. This is actually the balance sheet. What have we invested in the company?
EUR 4.9 billion, goodwill is a large chunk of that, and this is what you get if you deal with your working capital in a very efficient way. Don't need a lot of that. It's a consequence of the acquisitions carried out by Randstad. We fund this with our own equity and also with debt, EUR 800 million at the end of the year. In total, EUR 4.9. We have a return of 15.9%. Lower than last year. This has got everything to do with recent acquisitions. These are transactions that in the future will have to help us boost this percentage. We also share the number of days that it takes for the invoices to be paid. It used to be 51 days, and now it's 51 days again. This has got to do with transactions and acquisitions.
Italian acquisition here. Obviously, they tend or people say that they tend to pay a bit later. We usually can adjust this when the company joins us because Randstad hardly has that problem. The acquired company does have a longer payment term of approximately 100 days. We don't like that. We are going to do something about that. The idea is things that are good should be standardized. We copy-paste and used it all over the globe. One day less in DSO will save us EUR 80 million. You can really save a lot of money if you're more efficient on days sales outstanding. This is the free cash flow. We would like to improve that a bit more. You can see that in terms of EBITDA, we have invested quite a lot in working capital.
Once again, partly this is due to the Italian acquisition. We paid a bit more taxes this year. That could be by chance. The result is that the free cash flow is slightly lower than it was in 2015. Bottom line, we see cash dividend. Last year it was in part stock dividend. This is the possibility that we have withdrawn. I'll be discussing that in a moment. This is the development of our cash flow over the years. It's always an interesting slide to show, 2008-2016. You see that there's quite a bit of volatility. If you compare this with the stock price situation is even more volatile. The company has more stability than you would see expressed in the stock price. I would just like to draw your attention to that.
2009, we didn't do so bad. 2010 was worse than in 2009, it was a growth year, that was a year in which we started to invest in working capitals. Of course, we don't want those years, but if we have to face an economic downturn, we want to have a lot of working capitals to reduce our debts. This is also Randstad. I'm extremely proud of that. We fund the company, I wanted to underline this. We want to work with bank financing, very flexible. It's cheap. It has been fixed for five years. Others usually work with bonds, you've got the money, you've also got to withdraw the money. This is flexible, it's cheap. We have it for five years, that way we always have five years time to change things.
We're also prepared for that variable interest rates, as I said. We restrain ourselves. Internally, we agreed on a target leverage ratio between zero and two with a maximum leverage ratio of 3.5 times EBITDA. We don't want to do that. If there is an economic downturn, you don't want to have to talk to the bankers about this. Dividend, Jacques was very proud when he said that for many years we paid out dividend on two occasions. We had to say that we had to keep our eye on the business, 2009 and 2010, this was about 2008 and 2009. After that, we had quite a firm and steady policy. This time it's EUR 1.89. We're paying out 50% of adjusted net profit. All these bookkeeping issues we have adjusted for that.
It'll be only cash, this has got everything to do with the fact that the company's balance sheet looks healthy, we don't want to have any further dilution at this point in time. We expect that our investments and acquisitions will be limited. Those transactions won't be major transactions, this tallies with the financial situation. We also want to do something with the dividend in the future. If we have a low leverage ratio, it should always be a cash dividend. We're going to agree on that. It also says if the leverage ratio increases, we will also allow this optional dividend and make it more attractive. Should we be faced with serious downturns, hopefully it won't happen, then it would be stock dividend. The process is that on April 7th, we need to have the money on the bank.
That is the conclusion to be drawn from this slide. There's one more thing that I have to tell you, is that my children always compliment me. At Christmas time, I give my children some shares in Randstad is an investment for when they grow up. They always say: "What about the dividend? The share price is one thing, but what about the dividend?" We're doing well there, I wanted to highlight that. That's a good thing. Sustainability now, this is the strategy that we pursue. The progress that we've made in 2016 is what we call pre-assurance. We had an audit done on non-financial data in order to make sure that we improved our quality.
We are back in the Dow Jones Sustainability Index, which we believe is a great signal to the market. We are working with a third party to see how we can update our ambition and strategy, fine-tune it with everything we have learned over the years. The executive board has performance targets relating to sustainability, Net Promoter Score, and everything you see here at the bottom of the slide. At the very bottom, you see 50% electricity from sustainable resources. We have these aims, these objectives, frankly I have to admit that at Randstad, energy consumption is less important within sustainability than all the other things. We are very busy creating jobs for people, that is also a very sustainable thing. This is, as far as we are concerned, something we need to focus on.
We need to find jobs not only for very general profiles but also very specific profiles. There were a couple of questions. I would like to anticipate on those questions. There were questions on migration. We published an analysis, a report on that. We also referred to local initiatives to help specific groups to find a job. We have been rather successful in this respect. There were questions also on the remuneration of candidates. We have international rules, which we obviously also apply. We are providing further explanation here. We know that we are complying with those rules. We also know that we are giving a very good signal to society. As I said, we are going to focus more on the people side than on the planet side.
Wherever it is possible, for instance, energy consumption, we also have an ambition that we are going to work very hard to achieve. This is the most exciting slide of my presentation. It is the last one as well. It is all about internal controls. I know that you were extremely excited to find out more about this because there were some questions about cybercrime. Now, we are concerned with that. I am not going to go into all the details, what we see here is the process of the client on the one hand and, on the other hand, the candidate to be matched and anything supporting that. On this slide, we have all sorts of scores. This is in-house. Per element, we know to which extent we are in control. In-house, we have KCF, Key Control Framework. This is what we have.
We know what our risks are, what our controls are to manage those risks. Afterwards, we will check to see whether those controls work, if you have them and they are not working, they are useless. That is what we do. We do this for all these blocks. It also says IT processes are part of our control to see whether these things work properly, is hiring hackers. These hackers are told to try to get into these companies. They can always get in, how fast can they get in? What do you do once these hackers get into your company? We are rather successful here as far as this is concerned, we have not faced any relevant problems. We have to constantly challenge ourselves. At the very bottom, you will not be able to read it says something. These are the Randstad standards.
This is all about our core values. What is it that we stand for? What is it that we want to abide by? It's all about culture and behavior, very fundamental elements, quite apart from all the other controls and checks to see whether controls work. What are our values? Our founding father paid a lot of attention to these issues from the very beginning. We grew up with those values and the corporate governance. I said at the beginning that I was going to talk about that, but there you are. Corporate governance says that culture, and by culture, we mean particularly behavior, is not something you just need to accept, but you need to have a program, you need to maintain the program, update it. You've got to live the program. At Randstad, this is also part of our controls.
EUR 23 billion is quite a lot of money, pro forma 2017, to control everything. That's quite a challenge. Anyway, it was a pleasure to share this with you. We can now proceed to questions and answers.
Thank you, Jacques and Robert-Jan. After this very extensive presentation, I would like to turn to 2A, the report of the Executive Board and pre-advisor Supervisory Board for the financial year 2016. This concerns pages six through 110 of the annual report. The annual report this year, 2016, new collections now. I'm proud to say that the annual report 2015, which was tech and touch, and Jacques quite explicitly focused on the touch side, that that annual report won the Sijthoff Award. Isn't that great? This wonderful annual report, well, let's wait and see what happens, whether we get an award. Pages 110.
Mr. Stevense, your name, the organization that you represent. In the first round, we want to limit the number of questions to three. Thank you. Pages 6 to 110. Mr. Stevense, I'd like to congratulate you with your results and your wonderful presentations. It struck me that you are distributing the responsibilities. If the CEO can't count to 10, that worries me. I think it's great that Mr. Kraats is the financial or the CFO, and he's the one who talks about the financials. Well, anyway, that's as an aside. Should we start with Monster Board, Mr. Chairman? Yeah. Well, yes. There've been quite some issues about this. Let me look it up. With the acquisition. Up to 2011, the company did very well, and you acquired a company that wasn't doing very well, and one of the directors left, which was not a positive sign.
Anyway, what's happening here? You have given it a bit of a positive connotation, but we would like to hear a bit more about this. In the fourth quarter 2016, there was a higher revenue. There was integration of acquisitions. Your revenue had been put under pressure and had declined somewhat as a consequence of acquisitions, so it must have been Monster Board. We'd like to hear the ins and outs of that. In the Netherlands, the growth is not really taking place. You said a few words about that, but we're quite curious to find out what the situation is with your returns, with the yields. We have heard that amongst other things, in logistics, at some point, the revenue had to go from EUR 25 million to EUR 100 million.
We would love to hear from you how you go about this and how you achieve your objectives. We also heard and understood that you're trying to recruit IT people from abroad. You will understand that I live in the Bommelerwaard, but I am, by origin, someone from the Betuwe region. Not very happy with that. Financial corporations, apparently, lots of jobs are being lost. How is it that you try to find IT experts? These are three questions. I can count to three, for your information. I think we should leave it at that. Three questions, if you agree, and I suggest that Jacques addresses the Monster acquisition. True. Monster is a company that is not doing all too well. If it would have been doing well, we would have never been able to afford it.
We do think that there's a lot of potential in Monster. The technology is good, is very modern, very important. We're not all too satisfied with the way the company was being run. The director left, not so much on his own initiative, really. We have three projects. First of all, to stabilize Monster. We're replacing people in management simply because we believe that a different team will do a better job. This team is in place, so that's one thing. Second, that'll be later on. First of all, the company has to be stabilized. After that, we are going to improve the capacity of Monster social media aggregation. We're going to give the Randstad people access to the profiles of Monster Board, and we're going to do that in the second half of the year.
The third thing is, we're not going to disclose all too much about that. We think that Monster is very good at doing certain things, we're good at doing certain things, and we can join forces. The competition is listening in. We will be telling you more about that later. Only three months have gone by. To be continued for the moment. Just some economic observations. As I said, we have considerable synergies. The challenge here is to achieve better revenues. Because of the synergies, we are getting some tailwind here, and that's about EUR 20 million a year. That is quite a substantial part of the purchase price of $400 million. That was in dollars. $400 million was the purchase price. About the Netherlands. We're lagging behind in terms of growth. We're not very happy about that.
On the other hand, it's a conscious and deliberate choice. The payroll decision, we're not very happy with that. Payroll didn't go to competition. This was a government decision. These people were hired by the government or have left. Anyway, that is water under the bridge. Constantly, we have to ask ourselves the question, if a client wants to pay a very low price, whether we want to go along with that. Sometimes we have to sacrifice growth in order to serve a client. The returns are stable and higher than most of our competitors in the Netherlands. There's a lot of price pressure. It's something we simply have to deal with. To be continued. Undoubtedly, you will be telling all your companies that they have to grow faster. This is something that can apply to all the parts of this company.
I think you should be really pleased that we are recruiting IT people from abroad. 2.4 million jobs are required in the Netherlands in the technology segment, which is at academic level and also vocational level. It is called Science, Technology, Engineering, and Mathematics, STEM. 2.5 million jobs are needed, and we hope that there is going to be a lot of training and investment, et cetera. In the same period of time, up to 2025, we will have 1 million people available, which means a shortage of 1 million people. Very difficult to predict this, but it has got to do with economic development. If we cannot find these people, this will dampen the growth in the Netherlands. Europe does not have a proactive immigration policy. We do not determine what kind of people we want. That is dangerous, because without these people, our growth will be mitigated.
Canada and Australia can do that. 1% of their professional inhabitants are accepted based on the jobs that they want. We do not do that. The 80% that I was referring to, we need to focus on these jobs. I offered the report that we made to Henk Kamp, the Minister. He was very pleased with that, and it is also going to be submitted to Parliament. It is a very important policy document. Hardly ever happens, so we should be very pleased with this report. What we also calculate in this report is that for every technology job, white-collar job, that we bring to the Netherlands and all the activities involved, 2.5 to 4 other jobs come along with that job. Eindhoven is such a region. You have got people in a company, you have got the highly trained people, but you have got all the other people.
These people are required as well. These people live in those cities, go to restaurants, go out, and that has a very big positive impact, which is why we are arguing in favor of this.
Microphone here.
Good afternoon. I'm Robert Vreeke. We connect to public affairs and investor relations. As known, my operations are focused on people, planet, and profit, and I'm delighted to hear that Randstad is at the vanguard in digitization, robotization. As for those 80,000 IT and technical people, I just mentioned to Mr. Van den Broek that we have to try a lot harder in the Netherlands because we have a gigantic potential, and it's wonderful if you can steer people in that direction in secondary school. Randstad sees the trends and can play a role here, and it's important to deal in a customer-friendly manner with your potential relations. I'll give you one nice example.
I knew of a wonderful job at a software company. Somebody from Randstad stopped by and said, "I know a wonderful job for you at the ING." I became the global communications head of the ING. It was a wonderful job. Six months, first contract, then a permanent appointment. You earned a great deal from that, but I never heard from Randstad after that. Randstad never stopped by to see whether I needed some people to work. I'm sure that new approach is going to work wonders. Next to you is Ralph Hamers. [Sjoerd Beerdraijer is also known from the Rabobank, and those people often need IT experts, so you can really work with that. If you team up also with people such as Kajsa Ollongren, Eric van der Burg, and so on will help society a lot because responsibility is increasingly shared.
For example, the Arena stadium is very sustainable, operates 90% solar energy, 10% wind energy. They've leased secondhand generators. I think Randstad could help them there too. The good news is that the number of electric rechargers has doubled from four to eight. That's wonderful news. As requested, I'm not talking about the Tesla, but the Birò, that's a little vehicle that can ride on a full tank for 1 EUR, and your placement officers could visit a lot of customers in them. It's great to hear you're cracking down on cybercrime. My next question is, what about protective structures? That's important. Americans have a lot of money, and it would be wonderful if this remains a Dutch company. Lots of suggestions as in previous years. I imagine Robert Jan would take the second question.
Jacques, could you answer the questions about suggestions?
I'll take some of them. IT people are not leaving the banks. That's unfortunate because a lot of people are being made redundant at banks, but they're not the IT experts, so there is a mismatch. You don't train IT people overnight. If they've done customer relations, they won't be an IT person within three months. We analyzed the unemployment figures in the Netherlands. I gave you the figures you need. There is a shortfall. I agree wholeheartedly with you that We need to start coding in primary school, and by the time people work at the ING Bank, a lot of water has run under the bridge. There will be a shortfall. I'm worried. You read the papers too. This is basically a call in the dark. We don't mind. We're happy to sound the alarm. We need people. I'm not talking about migration.
I'm talking about the economic restructuring on the labor market. We really need to work to keep up with that. As for your other question, we don't have any protective structures. We do have preference shares, but those are financing prefs, where we obtained long-term capital at a low rate. The best type of defense in this situation is good performance and long-term value creation. That's why I started with that. All the digital trends here are intended to safeguard our significance also at a larger scale. We also have a founder. Randstad has maintained about a third there and explicitly mentions that the interest of Randstad is decisive, and that's how they'll be voting. That comes into play. There are a great many Dutch companies that have a leading shareholder. We're happy to have one as well, and that's where he is. Thank you, Mr. Chairman.
I'm André Jorna, speaking on behalf of the Association of Stockholders, the VEB. In Mr. Van den Broek's introduction, you mentioned digitization. If I listen carefully, am I right to conclude that a great many placement officers will be working differently and that you won't need as many of them either, that digitization will take over? Your revenue will rise, but your operating costs will decline. That's an excellent prospect for Randstad. The question applies for Mr. Stevense. If financial institutions are laying off a lot of people, will this also impact Randstad? If we consider the Rabobank, Mr. Dekker, no flex workers are being brought in because first they try to give work to their own employees. You mentioned pressure on margins through regulations. A permanent job is better than a flexible job. Do you agree?
What consequences will you have to face? The French elections are upon us. You have a tax arrangement in France. Do you know the programs of the candidates, and are you worried that your tax benefits might be lost if a certain candidate or any of the candidates wins? Adecco is also investing in-house. That's one of your show pieces. What can Randstad offer with respect to Adecco that Adecco was not able to do? Can we stop you for the moment now? Before I hand over to Jacques, what I love about Randstad is that connection with technology aspects, but also the people aspect, that you saw opportunities for operating more efficiently with fewer people. I hope that after today, you'll understand the human factor. I'm delighted with your first question because the consequences of digitization at Randstad, they're totally different from at banks.
We give our placement officers far more discretion in their contacts with customers and candidates. Digitization will generate additional growth. We certainly don't need fewer placement officers. We're still trying things out. The initial indications, if instead of calling 20 customers and half saying, "We're not looking now," or you call 10, and each and every one of them is looking, then something will happen. Something really great will happen with your job too. It will be more fun. If you've joined us recently, then you'll learn far more quickly because we help you on the way. That's very good. In banks, the situation is different because a lot of the people in the branches are doing clerical work, and that's becoming automated. You need to find other jobs for those people, and you may or may not succeed.
If banks ask us, we'd love to help them out. You mentioned trimming down. We keep telling companies, get ahead of that issue. We offer employability advice to a lot of companies. For example, suppose all these people between ages 40 and 50, let's take a look. Could they find a job elsewhere? Will they still be employed where they are now five years from now? Let's not wait until they have to be made redundant. They're very receptive to that. That's career coaching rather than outplacement, and we think that service would interest our companies. As for the permanent versus flex work, that's an ongoing discussion. There are plenty of ministers who may have spent six months on the labor market and think they know everything. We've been in this business for 55 years. What matters is work, not necessarily a permanent job.
I wouldn't say embrace flexibility, but accept that it's with us. What we want is a labor market that will accommodate people who lose their jobs and invest in them. We also want people to take the responsibility in remaining employable. For example, being able to get a mortgage as a freelancer, but perhaps freelancers should purchase insurance as well. Increasingly in Germany and in the Netherlands, we might think this is behind the screens. We've been talking with governments and with trade unions. It's happening. One third of people will no longer have permanent employment. People will be working from home. You have to invest in people in the years ahead because change is rapid. Can we help? Those are the debates, and that's a bit different from what's highlighted in the media.
We always say that a permanent job is overestimated and the security of flexible jobs is underestimated. France and taxes, I think you mean the well-known CICE. We'll hear about that, and then about the in-house showpieces. You mentioned the tax structure. In France, they subsidized a certain wage level up to two and a half times the minimum wage level. All French companies are subsidized. That's because the wage costs are very high. You don't get that subsidy right away. You can subtract that from corporate tax. You usually have to wait over three years until you receive that. Everything that we have accumulated in receivables won't be paid until Q3 of this year. It does infringe on our working capital, ties up a lot. We've examined all types of programs and possible scenarios. We've analyzed that and taken a look at the possible consequences.
You heard us in the presentation telling you, suppose the system is replaced by a system that will involve a discount on social insurance costs. The question is whether the French government could afford that. That doesn't seem very likely, but that would make it taxable, whereas right now the payment is net of taxes, and even if it were taxable, Randstad can certainly offset that. We've analyzed everything, and we think we're well prepared for different scenarios. We don't know which one will be chosen. There are four or five subsidies in the French wage subsidy system. I've been working for the company for 29 years, and I've never seen a French subsidy system being abolished. There are also some measures of the Hollande regime that were considered to be successful because the French economy is improving as well. Adecco In-House.
This is our 21st year with Adecco In-House. Each year we expect to start a new chapter. Who would like the floor? Here in front. Good afternoon. I'm Mirella Bodisco. I'm speaking on behalf of the Investors in Sustainable Development, the VBDO. We're particularly involved in getting all kinds of important sustainability topics on the agenda. We'd like to help you. Our mission is to make the capital market more sustainable. Robert Jan van de Kraats already presented a wonderful sheet based on some of the questions that we submitted in advance. He went through it very rapidly, and that wasn't the sheet that you seem to love the most. I do have some questions about this. First, my compliments on your sustainability policy. You've been working on a sustainability framework since 2011.
It's very clear that even though you're revising the framework, we do understand that you're dedicated to sustainability. That's one of your core values, is simultaneous promotion of all interests, and that's comprehensive and very identifiable. It certainly rings a bell. I'd like your disclosure to be more integral. I may sound vague, but because I'm so fascinated about it. I find a lot of the information. You publish wonderful reports and memos. This year, the local sustainability initiatives produced is full of excellent news, and it's very inspiring and certainly enhances your corporate appeal. I think this is one of your unique selling points. I don't find this in the CEO's message or in the Supervisory Board reports, not in those messages. Those groups that are primarily interested in finance and economics and the opportunities To feature your labor market performance.
Why don't you elaborate on all these wonderful initiatives that are already ongoing? I think that would benefit you enormously if you communicated more extensively about that. I have two other questions. This was basically a request. My questions are very brief. They're about living wage. You said something about it earlier, and yes, we really do understand that you pay more than average, and you pay good wages. Last year, you said you acted mainly in the higher wage segment. This is basically the same as my first request. I see very little about this in your reports. Once again, do you pay all your candidates and all your people according to this principle? Would you like to extend this reporting? You mention your memberships and even the fact that you're the chair of the International Organization of Employers in the World Employment Confederation.
It's easier if you convey the importance than if you hide it on page 180 near the end of your report. I think you could do far better justice to this important message. Finally, about the SDGs, the Sustainable Development Goals that are wildly popular with all kinds of companies that are involved in corporate social responsibility. Randstad is clearly in that league. I can see you're analyzing this, and our question is, do you intend to set new ambitious targets? Thank you for the floor. One request and two questions. That's quite a challenge. Thinking about more cohesive communications and disclosures, we'll certainly think of that challenge. I think that's the only right answer. Second, living wage. I've got something interesting I'd like to add.
You said that we're on the right track, what's interesting is that favorite slide of mine with the Key Control Framework, that addresses that as well. If you care about things, the risk is that you may not get it right even though you care about it. You have to see what works best. A lot of authorities and professionals have taken a look at that. Your last point concerned our Development Goals. We are reviewing that program because we had a framework, and we're on track, but we've adjusted it. We'll tell you more about that next year. I have one addition. That is the offer needs to be compatible with demand. That's your request now, but institutional investors rarely ask about these topics.
We have a beautifully integrated annual report, but the responses and the questions that arise on that topic are very few and far between. Perhaps you'd like to raise awareness among the listeners on the other side. Just to follow up, we take it for granted. We have been in sustainable development since the late 1970s. That's quite a while. This is our stock in trade. Rather than turning this into the core of our marketing and sales policy, this is what we do, this is how we train people, and of course, we report on that. That's part of it. The 1979 annual report literally stated that a company has no raison d'être if it does not add anything to society. That's us, together with a lack of demand.
There are also horrible things such as earnings must be some kind of accounting error. Thank you very much for your comment because we can tell you that we do a lot more than we report, and all of our reports are very conservative. Well, the Calvinist spirit at the left shouldn't know what the right is doing. If I have to choose, I would want the Randstad model that is very dynamic, and we're very proud to have embedded this in our DNA, and our founder is here in the room, and those are the values that he's imparted to the company. To this day, it's a magnificent framework. We listen to you very carefully, and it's unique for the CFO to present this, even though there are several people in this room who are very passionate about it.
Thank you for your remarks. Good afternoon. I'm Mr. Spanier from Amsterdam. I have a few questions. They are in part about the annual report. The core of the framework concerns the clicks in the annual report, apparently, people apply through clicks and innovation through clicks. Wonderful future, what's the future of the bricks? How many people actually come to your physical offices in the buildings? Won't you reach a point where you have too many bricks that in the Netherlands there's a building that comprises both Tempo-Team and Randstad right at the same premises, and some branches may need to close?
Do we want a system like you have at the airports where all the car rental companies are on the same row, and then here in one building, we would see all segments of the Randstad Group in a single office. What should I envisage? Will we converge? Are you going to introduce cuts? Because you've got placement officers that all they do is sit in front of a screen. That sounds wonderful. But where are you headed? That's what I'd like to know. On page 39, it says something about accidents among the staff and candidates. Well, that shocked me, that fatal accidents among candidates in 2015 in the U.S.A., where the lawyers are chomping at the bit at accidents in the Netherlands, but you didn't mention what type of accident.
In Germany, they cut accidents by three from three to zero, and of course, that's preferable, but how did they get from three to zero? You didn't explain that, and that's really a shame. We do see what you need to do. But what about safety protocols? I didn't read anything about those. That's a pity as well. Okay, Jacques, two very specific questions, and rightly so. As for those branches, we're working on that. So your question, how many people simply walk into a branch? Not too many, but we do meet our candidates at the branches. Of course, we will be reducing the number of branches. Because in France, that was three years back. In the larger cities, we went from 65 small branches to 70 large ones because that's how we set the appointments.
Nonetheless, in the medium-sized towns and the small towns, we will maintain those branch offices, and that serves the interests of our customers because part of our sales is being part of the local community. For example, the tennis club or the Rotary Club, that's where we meet our customers, and that's an important driver for ongoing presence. The branches may change in appearance. May they remain shops, or we may move up a flight. In newer countries, you see different systems. So this is an important aspect of our strategy. We don't own real estate, so there's no risk there. We lease all our branches with relatively brief rental leases. So there's no potential financial risk to the company. But we have cut back on the number of branches. There is some increase, but those are in-house branches, so that's a very good question.
Well, we do still own this building. Now, about those accidents, that's precarious. This year, we decided that we would no longer report fatalities based on natural causes because that's beyond our control, but we provided a breakdown between people on their way to work and at work. Of course, we have detailed instructions about how to deal with health and safety. There are standards for that. We adhere to them rigidly. The information that you mentioned, our annual report would be too thick if we printed all that out. So just please take our word that we're managing. You also suggested that there was a risk of lawsuits in the U.S. Obviously, we consider that in following up those cases too, but our first concern relates to the situation of those involved. Are there any more questions?
I thought I saw one more hand.
Thank you, Chairman. Jorna, VEB.
Thank you, Mr. Chairman. My name is Jorna, VEB Stockholders Association. The last measure that the competition is not supposed to know about, I'm sure that's the turnaround. Anyway, if you look at Monster, you just made it by the skin of your teeth. Compliments for that. You were able to insist, and you didn't buy Monster at too high a price as you did in the past, VDR. Oh, don't you compare apples and oranges. I can't count to 10, but he can. That was just when the share prices dropped by 50%. Yes, well, that's bad timing. Anyway, the 51%, has it increased and/or what are your plans to increase it? We have total control. We have 100% ownership of the company. This is the American procedure that will allow that just over the 50%.
That way, you can transfer the company to a different entity, you can manage it and settle the rest. There are many losses carried forward. What is your position in terms of promises, commitments of Mr. Trump? Questionable, though. He's going to do something about taxes. What about taxes carried forward of Monster? Have you secured them?
Oh, that's an interesting question as well. These losses carried forward have such a long duration that they have been insured. The question is, at which percentage? If Trump would decrease the fees, the value of those synergies would drop. On the other hand, future profits would not be taxed as highly as they would otherwise. You have a great value creation within three years. You have to exceed the cost. Obviously, it was early days yet to answer that question. By and large, do you think that in three years you can recover the cost of capital that you invested in order to cough up the returns at Monster? I just said when I discussed my slide that sometimes we're anticipating on things and sometimes we're in line. At Monster, it's a bit more of a challenge.
Monster is not an acquisition as all the others. Great part of the value that we believe to create, will be created at Randstad. If we succeed by tapping into the potential of Monster, 50% of the intermediaries and getting one more person to find a job, that's great. There's one thing that's different. It'll accelerate our digitization process. Obviously, the most positive scenario is that we also restore the days of glory for Monster, and we digitize Randstad and the business model that you want to continue to discuss, that I don't want to continue to discuss. If that business model starts becoming successful, I will be very optimistic. Twago was another acquisition of yours. This is for freelancers.
Do you see potential to expand this to the Netherlands, particularly where the self-employed people, if you look at HeadFirst or Source, for instance, in the IT field, might want to use the platform for supply and demand for self-employed people? I must say that the market, the offer of self-employed people and jobs, we had great expectations. There's a company in the U.S., Upwork. We've analyzed it very carefully, but it doesn't really grow very rapidly. It's a wonderful model for people who are self-employed, and it's good to manage them that way. Of course, anybody can log in to Twago tomorrow and offer his or her services. Ausy, I don't know how to pronounce it. Ausy. A French consultancy with a staff on its own payroll. That's slightly more odd model than you're used to have your professionals on your own payroll.
You'd be less flexible. I don't think you can adjust as swiftly as you could do in the past with flexible staff. Is this a model that will be followed up on, particularly in the professional world, that you would say, "Okay, I would prefer to have them on my own payroll"? I have to correct you here. We do have experience with that. We have 50,000 temporary workers in Germany on the payroll, because that's the situation there. We have lots of experience with that. At Yacht, 60% of the people who work there have a contract with us and our Belgian company, our professionals company. Everybody has a contract there as well. We do have a great deal of experience in that. This company, Ausy, has a great deal of experience with that as well.
Yes, on the one hand, it's a risk where people might leave. On the other hand, you can invest in people and their training, and these people are few and far between. We feel this is an acceptable risk, and this company has a higher return than any other company within the Randstad Group at this point in time. We are very pleased to have these competencies. Perhaps your question on Monster, what is the status of Ausy on the French stock exchange? There is good news there. Oh, yes? Yes. We have more than 95% of the shares, and we acquired them in the first round already. That means that we are in a squeeze-out procedure, and we will get 100% of the shares. There is no risk involved whatsoever. Last question. Turkey.
For a number of years, you haven't been achieving your goals in terms of more returns than costs. It's a country with high unemployment rates. Economy is suffering a downturn. I won't even speak of the president. The question is, are you going to continue there, or are you reaching a point at Randstad in which you might consider other measures, perhaps, in terms of Turkey? Robert Jan implicitly was speaking about India and China. Big countries with great potential, but we have EUR 75 million turnover in China, for instance. Turkey is an eternal promise, and Mr. Erdoğan is doing a good job in making this promise less attractive, and high unemployment rates are not interesting. In Turkey, we do recruitment and selection at the top end of the market because anyway, we were mainly active in Istanbul.
We thought we could build an interesting company, given the promise of Turkey as a country. Nobody's in there right now. By the way, we have an American manager from Greece. It's not doing very well, that country, either. She is running a successful small company. We said, "Why don't you take a look at Turkey?" She has reasonably improved that company, but we have to wait and see. Also with other countries that sound interesting. Argentina is a good example. We have a wonderful company, but Argentina, with the inflation that it has, it has more of a promise towards the future. We will have to wait and see, as many of these other countries. Fortunately, as total revenues, it's fairly easy to manage. Mr. Stevense.
Thank you, Mr. Chairman. My name is Stevense, S-T-E-V. Last year, our junior asked a question about sustainability, and that would also be a risk factor. The answer was, environment is only a limited aspect. It's more about finding jobs for people. Don't you think there is a causal link between these two aspects? You can find jobs for people, if you find a job for someone from the north of the country in the south of the country, it's not going to be very attractive. It's not going to be very good for the environment either. What about your CO2 footprint? That might be in a squeeze as well. We would love to hear a bit more about that. Furthermore, it struck us that the CFO is selling shares.
We tend to look at that, what members of the board do, and when they start selling shares, we start scratching our heads and thinking, "What should we do?" Yes, we would like to hear a bit more about this as well. Just recently, I heard about the event at NSI. Mr. Zeman sold everything, and he said we should do the same thing. We are curious to hear your comments on that. Yes, the apps. How does that work? Is it an app like something you can order from your chip shop, you pay for it, all you need to do is pick it up and take it home and update it? Should I see that in this context? I cannot really picture what this is.
Let me start by answering your last question.
There is one example, because we are a large company, very diverse company, app technology has many, many applications. My eldest son worked for Randstad this summer. He finished secondary school. Of course, you have no skills then. He is doing the washing up, and he visited a branch office one time out of curiosity, and after that, he never visited the branch office. He is spending his time on the sofa. That is what adolescents do, and he checks his app, he looks at his planning, knows where he has to be, and should he have any questions, he can send those questions by means of the app, and he knows exactly how much he has made so far. That is how it works, more or less.
We have all these branches to find jobs for people in Groningen, the north of the country, because there are very few people who are in Groningen who want to find a job in Maastricht. There is a bit of a dialect problem as well. It does not happen. People from the north do not want to find jobs in the south. Our forte is to find jobs for people in the location where they are. We contribute to reducing the CO2 emissions because we fine-tune the offer and demand. That is our trade. That is what we are being paid for. Of course, there are differences in offers in Europe, in the Netherlands, and unemployment is dropping, which is why we have this migration situation. We have surpluses on the one hand, and then we have a shortage on the other hand.
It is good news and it is bad news because clients want to deal with a company that will arrange these things for them, and that is us. Your question, natural capital. Lots of companies are held accountable for that, and the human capital side that we are dealing with, I am very pleased that Randstad is focusing on the business where it has its greatest impact and competencies. I would like to refer to the wonderful discussion that we had with the Association for Sustainable Investment. 2B, the implementation of the remuneration policy for the financial year 2016. I know you had a question about personal actions of the CEO and what he did with his shares, and I am wondering whether we need to address this question now. I will leave it to you entirely, Robert Jan. I love a challenge every now and again.
I can tell you that in 2017, it is going to happen yet again, because part of this had to do with options that vested. You need to do something with that, and the same applies to the series that we have now. To be quite honest, I sold a small package of shares. Four times my basic salary in shares is what I maintain in Randstad, and part of my portfolio management, I take a critical look at this from time to time. The share price of Randstad is not only dependent on the performance of Randstad, but also the economic climate or political decisions such as Brexit. I look at this from the perspective of risk management. Thank you. Now I suggest we move on to 2B, which is account for application of the remuneration policy in 2016.
Well, you will find extensive information on our remuneration policy, pages 101 to 105, and also in the extensive version of the remuneration report for 2016 that you will find posted on our website. The proposal to amend the remuneration policy for the Executive Board will only be discussed under agenda item 5A. For now, please limit your questions to pages 101 to 105. Are there any questions? Who can I give the floor? If not, I confirm that there are no further questions. 2C, the proposal to adopt the financial statements for the financial year 2016. These are pages 111 to 167 of the annual report. This has been discussed in detail by Robert Jan van de Kraats. First of all, I would like to give the floor to the Chairman of the Audit Committee, Frank Dorjee.
Then I will give the floor to the external auditor, Pieter van de Goor . Frank, as Chairman of the Audit Committee, I am looking back on a year in which we addressed many subjects. Most of the meetings of the Audit Committee took place prior to the publication of quarterly figures, and therefore, we focused on financial reports, but also on a large number of other topics, such as fiscal topics, tax topics, and legal topics, funding, and the World League Finance Program to further strengthen the financial functions within the operating companies. Robert Jan and Jacques have announced this. We also particularly paid attention to the acquisitions that Randstad closed in 2017. The valuation funding, and incorporation in the financial statements were important. In the purchase price allocation, we also used external consultants to help us.
We spent a lot of time in including the acquisitions in the reports of Randstad. There were also new developments in the field of IFRS. This was discussed in the Audit Committee, the most important of which was a new directive that would become mandatory as per the financial year 2018 regarding the way we deal with lease obligations. As always, we discussed further improvement in internal controls and the control environment. We discussed the quarterly report of the Department Group Business Risk and Audit, and also the findings of the external auditor. In 2016, we also paid attention to IT, and we once again strengthened the department by means of improvement and expansion of competencies. In 2016, we paid more attention to IT and also Tech and Touch Strategy. In 2016, the group digital officer was hired in order to support this strategy.
In connection with the new laws on data protection that will be introduced in 2018, we paid attention to the data protection and the emergence of cybercrime, therefore, we also hired a security officer. Tone at the top of the organization is good. Core values and code of conduct, et cetera, are very important elements. Strategic repositioning of the company leads to an open and clear, robust dialogue between all layers across the organizations in which the objectives, the goals, and core values are leading. The internal control in the different country organizations has also been improved again. Every 6 months, the management of all local companies draws up a risk register and also carries out a control self-assessment in which the most important risks are being evaluated and also progress of action plans are being discussed.
These risks and action plans are also part and parcel of the forecasting cycle. Also, certain imperfections are addressed with regard to control. The information that we gather this way is discussed with the executive board and the audit committee every 6 months. Every quarter, we have an intermediate update regarding progress of the improvements. In 2016, we integrated risk management further in the quarterly reporting of companies. By means of further digitization of the business models and business processes, they are being supported by further focus on IT control for the coming period. This past period, we focused on data protection, information security, and IT general controls. This way, we can make sure that Randstad is ready for the EU directives that will be introduced in 2018 regarding personal data and data protection.
These programs, with a very strong IT component, have led to a further update of the Key Control Framework. Robert Jan commented on this during his presentation. The Key Control Framework depicts the way the internal controls work regarding risks concerning operational, financial, business processes, and the group business risk and control department very accurately monitors the quality of internal control progress. This way, we can, as a management, continue to focus on internal control. Because of the transparent structure and the open dialogue on Key Control Framework, we have a culture of accountability and taking responsibilities at all levels of the organization. In 2016, we made a good start with data analysis in order to evaluate internal controls. This way, we get a clearer picture of the quality and control of operational processes.
Furthermore, tying in with further digitization, the Department Business Risk & Audit will use data analysis more and more in order to check the reliability, efficiency, and effectiveness. Now, as an audit committee in 2016, we paid quite a lot of attention to four specific aspects. The following are these aspects. First of all, evaluation of goodwill, also based on the annual goodwill impairment test, which based on the current way of thinking and estimates have led to an impairment of EUR 10 million. Second, the valuation of the position regarding deferred taxes as extensively discussed and explained in the annual report, and third, the tax treatment of new acquisitions. Last but not least, a number of issues concerning fraud, which are not material for Randstad, fortunately. Finally, I'd like to give the floor to our auditor, Pieter van D oorn, who is a partner at Deloitte.
Thank you, Frank. You'll find our statement, our auditor's opinion. I'd like to comment on a number of elements, such as materiality, which is EUR 30 million based on 5% income before taxes. Some countries will use the lower materiality. It all depends on the country and local circumstances. Based on the materiality, we have found no errors in the financial statements. Second point is the scope of the control. All important or financially important countries have been involved in our scope, and we apply full control, full audit of these countries, which means that in the countries themselves, we have local Deloitte teams that carry out these audits, these full audits. Through the central team, which I supervise, we supervise these audits in these countries in order to determine whether or not they are auditing in accordance with our quality requirements.
We do this by means of instructions and also reports that they send us, and we also have access to their files, and we very regularly talk about their findings, and we also communicate this with the audit committee. The third element that I would like to highlight in this respect is internal control and IT. Very important subject in control because we pay a lot of attention to this. The basis for this is the Randstad Key Control Framework, as Robert Jan just showed us on one of his slides. Randstad in 2016 further improved this Key Control Framework, and we see that Randstad is constantly focusing on updates of the framework as a consequence of changes in the business. For instance, as we said earlier on, the implementation of the tech strategy.
Obviously, you can imagine that this has an important impact on internal controls across the organization. We also see that those issues that we report on in the management letter are being followed up on and are taken into account, and that as a consequence, the control framework is improving. Therefore, we believe that the tone at the top in this respect is good. The fourth element I would like to draw your attention to is key audit matters. You'll find that in our auditor's opinion, two of which you will have seen last year, the valuation of goodwill and the valuation of deferred taxes was discussed earlier on. The third one is this year, acquisitions. You've seen that Randstad conducted many acquisitions in 2016.
We looked at them, and particularly, we looked at the allocation of the purchase price regarding the purchased assets and liabilities as we should do in IFRS. Extraordinary thing here is that first, we concentrated on the valuation of intangible assets such as customer base or candidate databases needs to be valuated and incorporated in your accounting. Besides the IFRS accounting of these acquisitions, we also took a look at the integration of the entities in the Randstad Group, and particularly the implementation of the Key Control Framework or the equivalent thereof that such an entity would have. Last point, report from management. We have determined that it is materially correct and complies with rules and regulations, and we particularly took a look at the risk paragraph and also the report concerning corporate governance.
It pleases us to see that Randstad is already anticipating on the new corporate governance code and is focusing on long-term value creation and culture of the company. You see this nicely reflected in the annual report. That's all as far as my explanation is concerned. Thank you, Peter and Frank. Are there any questions about the financial statement or the auditor's statement?
Thank you, Mr. Chairman. Jorna from the VEB. Mr. Dorjee mentioned the IFRS 16 that will be changed. I.e., paid lease contracts need to figure on the books, and that will change your P&L statement with respect to deducting the lease contracts. Do you know how this will impact the EBITDA, that transition? That's one of my questions. You mentioned as a target that 50% is a fine incremental concession ratio. It had been 41%. Are there any ways of improving this, or was there a cause that led to the 41%?
Those are two important questions. I'll start with your question about leases.
In the financial statements, we stated the nominal effects, which means that over EUR 750 million will be added on both sides of the balance sheet, to put it basically, and that would cash out to over EUR 500 million, and that will impact calculations of EBITDA. We'll need to teach everybody how to understand that. First indications suggest that would exceed 10%. Shifting the EBITDA around will be a modest effect on the bottom line. At the Capital Markets Day at the end of this year, we expect to indicate how 2018, which will be the basis for comparison in 2019. We'll provide details about what we'll do concerning this for our 2018 books at our Capital Markets Day later this year. The other question concerned the drop-through of new gross earnings to EBITDA. That's our objective. We've set that ambition, and achieving ambitions remains challenging.
The longer you stay in a growth scenario, the closer you are to the conversion ratio. When we start growth, you'll see that the surplus capacity is used, we may have relatively good surplus, but over time, we even have to use the back-office people to achieve that growth. We've said that in 2017, it should be between 40%-50%. Last year, it wound up being 41%, as our price releases show, this is due to pressure on pricing on the Dutch market. Your volumes keep growing, but you don't get a price that takes you to the desired conversion. That's the way it is. Okay. One more question over here. Thank you, Mr. Chairman. I'm Mr. Stevense from the SRB.
You have operations all over the world, I haven't understood from the auditor in what measure they audit on site whether there's a special schedule, of course, each year they visit the same company, we're interested in how you've organized that. What we also don't understand, we also saw this in the annual report. What is the auditor's view of the acquisitions? What will the return be, what does he think of them? Okay. A company that operates all over the world and has a single auditor or two auditors. Well, that's quite a job. Luckily, we're also distributed worldwide, we have local offices to work locally at each Randstad branch. As I mentioned, we're very closely involved because I want to ensure that they deliver the quality that meets our standards.
There's a close interaction between what they do locally at my instruction what they then report, I visit them as well. Now, your other question was whether the acquisitions will yield benefits that meet Randstad's expectations. You'll need to ask the management about that. Okay. We're playing musical chairs with the mic. Well, the accounting rules have changed, I have to get used to them as well. If I understand correctly, the auditor in the future will also need to investigate whether the acquisitions will deliver a result that meet expectations whether sufficient data have been provided. I think you mean how is this reflected in the board report. It's true that the rules changed in 2016, we have to check whether the reports from the Executive Board are materially correct.
If they say this acquisition will contribute to the results, I need to check that. If it doesn't, I would need to write that up in my auditor statement. That does not cover the future. Future information does not figure in our audit, assuming that we didn't use it for other aspects. Yes, we do audit the information reported in the annual report about acquisitions. Okay, now we're going to start the first vote. There are 11 voting items. We have one minor voting item that Robert Jan has already introduced, I see one more question, which is being asked off mic. Yes. This is the first time Jelle Miedema is getting the floor, he'll start with that because we completed that at 3:15.
We have present individually, and mainly through proxies, because a lot of institutional investors issue voting instructions to third parties. We have present or represented 893 shareholders representing 213,328,023 shares, including 25.2 million preference B shares and over 15 million preference C shares. Jointly, they can cast 47,197,671 votes, representing 67.50% of the total number of possible votes, which is virtually the same as last year. That includes 3.6 million votes for preference B shares and 5.6 million votes for preference C shares. We're going to vote. If you haven't done so yet, please take your voting card with the gold-colored chip inserted facing upward in your ballot box, you'll see your name appearing on the display. If you don't see it, please raise your hand and one of our hostesses will come assist you. The options featured on your screen.
Option 1 is to vote in favor of a proposal. Option 2 is to vote against the proposal, option 3 is to abstain from the vote. If you don't make a selection, you'll be considered not to have cast a vote, your vote will not be counted. After a few seconds, I will indicate that the vote is closed, the outcome will appear on the screen. We're not going to do a trial vote. We're going to start by voting on agenda item 2C, which is the proposal to adopt. We did the same thing last year, too. This is not a revolution. The proposal to adopt the financial statements. Please cast your vote. Press 1 to vote in favor, press 2 to vote against adopting the financial statements, press 3 to abstain. Please cast your vote.
I am now closing the vote, the outcome will be projected on the screen. You see that the proposal has been adopted with 100% of the vote. Yes. I note that the financial statements for 2016 have been adopted. On to the final discussion item. That's 2D on the agenda. It's already been explained by Robert Jan van de Kraats. That's the explanation of policy on reserves and dividends. Would anybody like to ask any questions about that? Good afternoon, Mr. Chairman. I'm Holger Weide. I represent the shares at BNP Paribas Investment Partners. Something's already been said about dividend policy. I read about it. My question is, if you look at the record dividend, which basically delights me, in reconsidering or revising the dividend policy, have you considered a progressive dividend policy? If you did or did not, what thoughts entered your mind?
We benchmarked. We did a reconnaissance of standard practices in our field, based on that, we reached the conclusion we did. In the past, we have a fixed dividend of EUR 1.25, the ambition was for this to be progressive. That just before 2009 and 2010. You know what happened with that experience. We believe that with the present dividend in our playing field, we have a nice offer. If our results grow, the automatic result will be a growth in dividend as well. Mr. Chairman, I've heard from the CEO, Jacques van den Broek, possibly also from the CFO. Jacques van den Broek said Randstad has become a different company. If we consider the peaks and troughs, they're mitigated. That means that Randstad may be maturing in that it's becoming a more stable company.
One characteristic of such stability would be having the courage to introduce progressive dividend policy. Another point you made about the cash flow and free cash flow generation. To put it correctly, that is very stable. If you compare the share price to that, I see a very dynamic line on the screen. Once again, you might mitigate the mobility of the share price if you introduced a progressive dividend policy, but you decided against it. Did you think about it? As I said, we thought long and hard about it, and we did have that on the market for a while, even after 2010 when we resumed payments, and we concluded that the appreciation in the field did not match the relatively complex dividend policies.
We didn't get return in the sense of feedback from investors, nor did investors ask for a progressive dividend, at least not in large numbers. Nobody asked us to transition to progressive dividend. We did discuss it because it was enhanced previously, so we announced it earlier, and the feedback we received from investors at our roadshows is that they appreciate the present system. Finally, about the volatility of the share. Of course, we analyzed this, and although I think Randstad is a very important company and it is the hub of my universe, that is not the reason for declining or increasing share prices. Mainly macro, everybody is getting excited about China and Brexit. We also see the share price on the rebound.
If you don't mind me pointing out, Mr. Chairman, if you have a progressive dividend policy, then despite what is going on in China, it might become less volatile and capricious because from my perception, over time, shareholder value creation is more sustainable if you have an underlying progressive dividend policy. I know you from the active engagement, so I imagine that you will be talking to these Executive Board members in the future about this as well. If there are no additional questions, I propose we move on to 2E, which is the proposal to determine the dividend that has been explained in detail as well. The dividend on preference shares B and C will total EUR 12.6 million, and the dividend policy proposes to pay dividend on ordinary shares equaling EUR 1.89 per ordinary share, which corresponds with a maximum payout of 50%. The dividend will be paid entirely in cash.
Are there any questions? If not, then I propose. Excuse me, I determine that there are no questions, and I am going to hand you over to Jelle. Okay. We are going to start with a vote. Please press one to vote in favor, press two to vote against, and press three to abstain. You may now cast your vote. The vote is now closed, and you will see the outcome projected on the screen. 99.9% has voted in favor, so the proposal has been adopted. As chairman, I confirm that now. That takes us on to 3A, which is discharge the Executive Board members from liability for management.
I propose the following decision, the general meeting of shareholders shall grant a discharge to the Executive Board for their management in the financial year 2016, insofar as the exercise of such management is reflected in the annual accounts or otherwise described to the general meeting of shareholders prior to the adoption of the annual accounts. Are there any questions?
Thank you, Mr. Chairman. I'm Jorna from the VEB. Mr. Chairman, I didn't know at which other item I should raise this, we read that Mr. Robert Jan van de Kraats actually serves on two supervisory boards, and that's within the restrictions of the law. We don't think that supervisory board memberships can be added on to being a very busy CFO at Randstad, plus having children that may want dividends as well. We'd be happy to grant a discharge, but we're concerned about Mr. Van de Kraats's availability.
Thank you for your point. It certainly rings a bell. I'd like to add the two supervisory board memberships of Mr. Van de Kraats certainly add value. In addition, he contributed beautifully to the monitoring commission, which greatly benefits Randstad, but duly noted. That takes us to the vote. Press one to vote in favor of granting the discharge to the Executive Board members, press two to vote against, and press three to abstain. Please cast your vote. The vote is closed, and you'll see the outcome projected on the screen, and you'll see that 99.3% has voted in favor, therefore, the proposal has been adopted. That takes us to agenda item 3B, discharge of liability for supervisory board members for supervision of the management.
The general meeting of shareholders shall grant a discharge to the supervisory board members for their supervision of the management in the financial year 2016, insofar as the exercise of such supervision is reflected in the annual accounts or otherwise disclosed to the general meeting of shareholders prior to the adoption of the annual accounts. Are there any questions? If not. We will move on to the vote. Please press one to vote in favor of discharging the supervisors, press two to vote against, and press three to abstain from the vote. Please cast your vote. The vote is closed, and you will see the outcome projected on the screen. Same figure, 99.3%. The proposal has been adopted. Mr. Chairman, at 3:15, you were going to vote. I remember something about 213 million shares being present at 3:15 when you closed the attendance sheet.
If you look at the votes cast, we are quite a few short. I can explain that. Let me get my sheet, too. Over 213,328,023 shares. The votes, I see 47,196,197 because the preference shares don't carry as many votes. They're aligned with economic value. Excellent observation. That takes us to agenda item 4. There are four proposals. 4A is the proposal to extend the authority of the Executive Board to issue shares. 4B is the proposal to extend the authority of the Executive Board to restrict or exclude the preemptive right to any issue of shares. 4C is the proposal to authorize the Executive Board to repurchase ordinary shares. 4D is the proposal to cancel repurchased ordinary shares. You'll read in the explanatory notes to the convening notice for the meeting. Are there any questions about these four proposals? Mr. Stevense.
Thank you, Mr. Chairman.
We have no objections to 4A, but what does bother us is the revocation of the authority. If there is a rights issue, we want everybody to be able to participate, not just a select group. We're going to vote against that one. Please consider that this serves only for shares issued as part of the performance share plan, it's not intended to fund all kinds of other activities. That's almost telling him how to vote. At the rear. Mr. Chairman, last year, you bought up quite a few companies. Did you pay part of the purchase price in shares, or did you have them invoice you? If you paid with shares, how many shares did you have to give them? As you'll read in our annual report, no shares were issued to finance this.
We did this through the bank financing available to us. Thank you. Jelle. Let's start with agenda item 4A, the proposal to extend the authority of the executive board to issue shares. Press 1 to vote in favor, press 2 to vote against, press 3 to abstain from the vote. Please cast your vote. The vote is closed, you will see the outcome on the screen. 99.2% has voted in favor, the proposal has been adopted. That takes us to agenda item 4B, the proposal to extend the authority of the executive board to restrict or exclude the preemptive right to any issue of shares. Press 1 to vote in favor, press 2 to vote against, press 3 to abstain. Please cast your vote. The vote is closed. You'll see the outcome on the screen. At 98.7% voting in favor, the proposal has been adopted.
That takes us to agenda item 4C, authorization to repurchase ordinary shares. Press 1 to vote in favor of the proposal, press 2 to vote against the proposal, press 3 to abstain. Please cast your vote. The vote is closed. On the screen, you'll see that with 99% of the votes cast in favor, the proposal has been adopted. Finally, on to 4D, the proposal to cancel repurchased ordinary shares. You may cast your vote after I tell you to vote. Press 1 to vote in favor, press 2 to vote against, or press 3 to abstain, I'm sure you know that by now.
I close the statement.
I'm closing the vote. You'll see on the screen that 99.7% has voted in favor. The proposal has been adopted. Thank you, Jelle. That takes us to 5A, the proposal to amend the Executive Board's remuneration policy. I'm handing you over to Giovanna Kampouri Monnas, who chairs our remuneration committee, to elaborate on the proposal. She has a few sheets. She has studied this very extensively in recent months. Giovanna.
Good afternoon, ladies and gentlemen. First of all, I want to apologize because I'll do it in English. I'm trying to learn Dutch, but your excellent English is preventing me from doing it very fast. As Jacques' presentations clearly showed today, the human resources world in which Randstad needs to grow and succeed is vastly different than just a few years ago. It's still rapidly mutating. The Randstad executive team is called to play simultaneously on many different arenas. These arenas are global, driven by concepts and know-how that are being rapidly developed, validated, spread, then revalidated. Within this transforming environment, the focus of the company and the executive team is more than ever on long-term sustainable growth.
In consequence, the Supervisory Board feels that our remuneration policy needs also to evolve so as to help stimulate this focus on the long-term company goals within this permanently shifting environment. We need a policy that strongly encourages focus on the long term, together with flexibility and, what Jacques was mentioning, agility in the short term. After eight months of work with the help of experts and the continuous consultation with all key shareholders and stakeholders, we are presenting here a proposal for your approval. Let me first recap our key objectives from the documents you have already read. As I said, the first objective is to align with the strategic direction for the transformation of Randstad. The second, again, is to strengthen focus on long-term sustainable value creation. Very important, though, is to stay focused on the values and the societal aspirations of Randstad.
I want to repeat that we are grateful and proud of the founding values of the company. Especially to know, to trust, to serve. We want to continue to promote them with our work and behaviors, to include their achievement as well as broader sustainability, again, in our remuneration policy. Finally, we wanted, because of this focus on global not local, because of the need for all of us to learn fast work together, to reward only the team and not individual Executive Board member achievements. These are the objectives and the founding reasons for trying to change remuneration policy. At the start of our work, we looked at where we are actually compared to our targets. You know that we have two benchmarks.
One is the international labor peer group, the other one is the AEX as a sanity check. If we look at the remuneration, the actual remuneration of our board members, compared to that, we are within the target of being between the 50th and 75th percentile, albeit at the lower level. In the case of the CEO, we are in fact below the middle because in Randstad, the CEO has always gotten variable pay at the same levels as the rest of the executive team. Having said that, we are not aiming to change that. Everybody is very happy with being in that level rather than anything higher. Our policy proposal is not aiming to change that. Both our targets and the levels will stay totally unchanged.
We will aim to change the labor peer group because we were only through the various acquisitions of these companies, we had gone to a very small number of peers, and we are enriching it and expanding it with more relevant companies so that we stay within good market practice. We had a check, and it does not at all alter the level and the benchmarking from what we were before. We are maintaining the AEX sanity check. There is no change at all in the base salaries. We are making many changes on the annual bonus, though, and it is totally strategic to further what I said were our objectives. The total bonus opportunity stays at the same level, 70 at target and maximum 100%, we are not changing that at all.
We are eliminating individual bonuses, and we are eliminating discretionary bonus, so that we end up with only joint targets. All our targets will be joint. Because the targets are changing so fast, the company is changing so fast, we are instituting flexibility in target setting and in target weighting. What does it mean? It means that we have a menu of possible targets we can have for a year, and ahead of time, by February, we decide what would be the relevant targets, and the weighting for the year forward. We communicate it to the AGM as we are going to do later on today for 2017. That allows us to be really focused on what we need to achieve in a year and give the executive team the right impetus to focus on the important things.
In order to further the long-term further alignment of the executive team with the shareholders, but also with the growth of the company, we are aiming to institute a mandatory conversion of part of the earned bonus for a year into shares, and that would be 25%. We are aiming to institute share matching to stimulate maximum conversion to the maximum of 50%. This share matching, which will happen three years later than the conversion of cash into shares, would be subject to the company performing sustainably, both in terms of profit, and in terms of dividends, and in terms of making progress in the strategic objectives. Finally, on the long-term incentives, we want to keep the sustainability and the non-financial objectives that meet the values of the company.
In addition, we want to add strategic objectives that will be measuring how we did into the very important global concepts that we think are going to transform the company. As a result, we are rebalancing our targets so that TSR, that was up till now 80% of our targets, will go down to 65%, and 35% of total long-term incentives will be based on non-financial targets. The non-financial targets, as I said before, will include our three, this year, strategic objectives in addition to sustainability measures. When it comes to TSR, we wanted to go also closer to market practice with having a bigger peer group. We've expanded that TSR group to include the super cyclical companies with light assets like Randstad, so that we have a more representative sample.
We have checked it against the past and how payouts would have been, and it would be exactly identical to what we've had with our shorter target. Let us go now to what we are proposing for 2017 based on the new principles. The annual bonus targets are going to be revenue, but validated by market share, so it won't be absolute revenue, but we have to do better than the market for it to count. It would have on target 25%, with a minimum of 15, zero of course, but minimum performance that pays 15 and a maximum of 35%. When it comes to EBITDA and margin that you know from past years, on target, it will award 15% of salary and a maximum of 25%. DSO, that will be on target a 10% reward with a minimum performance of 5% and a maximum of 15.
We are having a strategic target, which we cannot disclose right now to you, but we will disclose it after the event at the end of next year. For the long-term incentives, our non-financial targets will be, they will, by the way, be paid out in 2019. The Net Promoter Score as per this year, employee engagement improvement, again, as per this year. We're going for strategic targets, which will be growth of the professional segment above market, growth of permanent placement above market, and a target related to our digital strategy that we cannot say more about. These are the key elements of the remuneration policy. You have much more in your packs that I hope you have read, and looking forward to your questions.
Thank you, Giovanna.
Thank you, Giovanna, I know that you understand Dutch pretty well because you live in Amsterdam. Thank you. Are there any questions about this proposal? Let's start at the back this time. From the back, from left to right, zigzagging towards the front. Good idea, zigzagging. I hope you don't get dizzy, become drunk
Page four, first column, second paragraph, base salary. Here you have a peer group of 13 companies, I'm wondering what these two companies are doing there. TUI, isn't this a company that sends airplanes to travel around the world and sells tickets, et cetera? Rentokil, what does that pesticide company have to do with Randstad Group? I really don't understand what these two companies are doing in this peer group. We have Michael Page, that only works for CEOs and the likes of them. I don't understand that either. I'd like to ask you, how come you made this selection? Thank you. Giovanna.
These companies you mentioned, correctly, have been part of our peer groups for a very long time. Smaller human resources companies that have either been eaten up or are too small to be relevant. If we mention the first one, which is TUI and Rentokil, these are segments where in terms of labor market, they're not into an investment group, they're into the labor market. We do have very similar profile of workers, and we do have very often exchange between when we get new people, or we lose people to them, or we gain people from them. Also in the travel segment that you will see we are adding, where we have quite a lot of the exchange in terms of labor market exchanges.
In terms of human resources companies, there are so few left that we need in order to stay even within basic good governance to find very relatively similar companies in order to stay even within good practice. We chose what seems to be companies in the service sector with a very broad international base, and we have checked it really very much against a lot of experts. Yeah.
Thank you, Giovanna.
Thank you, Giovanna. We recognize these questions, this is also one of the reasons why we moved from a peer group from 13 to 24. You see that we're doing a second test, a sanity check with the AEX in order to strike those companies that have nothing to do with HR. In part, it's arbitrary, but particularly because we moved to 24, we believe that this peer group is more relevant. This is the answer regarding the peer group for the base salary. Are there other questions? I promised that we would move towards the right. Thank you. Good afternoon, Mr. Chairman. My name is Kees van der Leest. I am speaking and voting on behalf of the Railway Pension Fund, the Pension Fund for Public Transport, Menzis Healthcare Insurance Company, and also BNP Paribas Investment Partners. I have two questions. I do.
This was a bit of a collaboration here. I have two questions regarding this proposal. First of all, the period of notice for a member of the board at Randstad. My colleagues over the past few years also asked this question, and this regarded the period of notice for new members of the board, and that it should be shortened in order to align with other AEX listed companies. Your answer at the time, in answer to those questions, was that you would give it some thought. Question is, could you share the outcome thereof with us, and why you did not decide to adjust accordingly? My second question concerns the matching of shares. The Executive Board has a discretionary power to match the shares. The way the proposal has been written now, even if there's a performance that is not on target, there can be matching of shares.
My question is, could the Supervisory Board impose a condition that for all three years the board must have performed on target at least throughout those three years, all three years?
Let me start with the second question, which is, if you like, more relevant to the policy, and then we'll move to the 12 months. I would say that there is not much discretion in how the supervisory board will reward for the matching shares. What needs to happen first is that the cash bonus of a certain year has been earned. We have this hurdle first to get, and from that, management transforms some of the cash, the mandatory part, up to a maximum of 50% into shares. The matching shares happen three years down the road, only provided the company has good performance. First of all, it's based on an earned bonus already, which is then converted into shares, and then the matching happens after three years of good performance.
Having said that, I would like to highlight that we're talking about a very small amount because the cash is converted after tax into half of the amount into shares. From then on, once they get the shares, they will pay again taxes to approximately another 50%. We're talking a small amount with very little discretion. In terms of the 12 months policy, yes, we are talking about it very often. In fact, it is part of the contract we have with the executive board. Given that there is no legal requirement to limit it, we feel comfortable within the international context of our board that it is the right amount.
Your peer group is also the AEX companies. Those companies, they have a much shorter term. If you compare to those companies, then it's not really in line.
Yes. The sanity check is with the AEX Group, you're right. Our peer group is international labor market. That's where we gain and we lose people too. Yeah. Thank you.
Are there any other questions? Thank you, Mr. Chairman. Mr. van de Kraats was part of the monitoring committee, and in 32.1, in that paragraph, it says, and you did this in your report, that means that you have to ask the board how they feel about their remuneration. Now, you're the first board to change this, so I would like to ask you whether management can point out how they feel about this remuneration and which items they wanted to focus on. The code says something different. That says that the supervisory board will talk to the executive board, not the shareholders. That's true. But they asked you how you felt about your remuneration. I'd like to hear what your answer was. The report only says that you were asked how you felt about it. It could be that you're completely dissatisfied.
Jacques would like to say something, I would also like to say something first. This has been a very intense process in which we asked many stakeholders what their opinion was, and sometimes it became a discussion on principles in which very often we said, in some countries, in Holland, if you have a good societal antenna, then you would have to do this, that, and the other. Lots of shareholders had a very clear opinion, particularly regarding short-term bonuses. You referred to the monitoring committee, we also had a lot of input from the supervisory board that looked at itself, but also at the labor market they operated in, the French labor market, the American labor market, for instance. As you say, we are a global company, that's what I wanted to say.
In general, please don't underestimate how many stakeholders have been asked very specific questions, the answers of which we very often took on board. It's undoubtedly about more long-term focus. Also there were some individual cases of the members of the executive board who said, "Whatever happens, I don't want to increase the fixed salary any further." I must say that the input of the executive board was much appreciated. Jacques, could you answer or make a comment without going into too many details? Yes. In any case, as an executive board, we feel that the supervisory board has followed a very detailed process, they kept coming back to us, we were happy and pleased with our remuneration. We still are. You see a number of things. We are a team-based company, we're very pleased with these joint targets.
There are always things that we could relate to individual countries in our portfolio. We didn't think that had an added value. We work as a team. We have areas of focus, they do change from time to time. We like this team spirit. The company has changed a lot. Because of the size and the complexity of the company and the international position that we have right now, we didn't see as many comparable companies in the peer group, we pointed this out to the supervisory board. As a consequence, the peer group was extended. We're very pleased with that. As you see, we're all shareholders of the company, we all have the possibility to convert part of our bonus in shares, increasing our commitment to the company. We're pleased with that.
We're pleased with these amendments, to a great extent, these are details that are being amended, but we're really pleased with that. Mr. Jorna, thank you very much. That does give me some idea. The problem that we see in remuneration policy and the association of stockholders, the VEB, has a very clear position on this, and that is giving shares away for free, the share matching. If I read this correctly, you get one share. One is allocated, and then if you also convert the 50% of your short-term bonus, then those shares will also be matched. You get quite a considerable amount of matching shares, one to three, which we find very difficult to stomach.
One to one.
One to three?
One to one.
One to one?
Yeah.
Yes, one to one, the matching.
When you buy for your 50% also shares, you are also be matched. One match, and when you buy also 50% of your short bonus, you also become a match. It is a lot of matching.
Jaap, you took a look at this as well. Well, I don't know whether I understand you completely, but the idea is that from your cash bonus, you convert part in shares. This is your bonus. You earn this as a cash bonus. That's not a matching element. After three years, there is a matching of the share that you have converted. It's not one stands to three, but one to one. Where did you find those other two shares? The 50%, 25%, you get shares for that, and they're matched one on one. The first one, you don't get a matching. You get your cash bonus. Cash bonus is then converted into shares. This is a bonus that you've earned. The only matching element comes into play after three years, that these shares that you acquired this way are matched, one stands to one.
You don't get one extra. No, the share that you've converted from your cash bonus after three years will be matched. Okay, that's one thing. For the 50% of the rest of the bonus, you get the cash bonus. For the rest, you buy shares. These shares will be subject to the same matching rules. Well, if that's not the case, then your explanatory note is incorrect in the agenda.
Let me take you through again. You have the obligation to convert 25% of your cash bonus into shares. This is obligatory, mandatory. You have the flexibility to convert up to 50% of your cash bonus into shares. The rest 50%, you have to take it in cash, right? You have to convert a minimum of 25% with the flexibility up to 50%. Whatever you have converted, provided there is a good performance of the company, three years down the road, you will get your matching shares.
It's clear for me.
Yes.
That 50%, you are under the same conditions of matching. When you buy a share from your 50%, you get another share after three years in matching.
If the company does well.
Yes, okay.
Yes.
Giovanna quite rightly said this. There's a cash bonus, short-term bonus. The executive board is obligated to purchase shares for a minimum of 25%. Let's forget about this word convert. With this cash, shares are purchased, a minimum of 25%, a maximum of 50%. At the end of a period of three years, for the number of shares that have been purchased, there is matching. That may be the confusion. I'm adding up 25 to 50. No, you shouldn't add it. It's 25, and then it's 50. The second point is that the peer group has been expanded. The TSR has been expanded to 35% for non-financial targets. It seems to me very difficult to measure this and to determine your position because it's very difficult to do this with non-financial targets.
If you look at the position of the 19, you get 50% in 10th position, which arithmetically is correct. We feel that if you score below half, that you get 50%, that to us is a situation that we don't think is befitting. The old system that we had up to two years ago didn't have this cutoff point. We're on the median in line with recommendations that we received before. You see this below the median, it's zero. You have the distribution moving towards the maximum. We really did a proper benchmark. We looked at how things had to be adjusted. This is how you get the percentages, but it is enormously different from the system that we applied up to two years ago. That's clear, but that is why as VEB, we still have an issue.
We have a problem with this matching. The sustainability targets can be measured very well. We have the Net Promoter Score, and that can be measured, and also the involvement or engagement of employees. We keep track of that, and you can measure that. Professionals growth above the market, that is transparent. You can see this and growing faster in recruitment. You can measure that. We do have a quantitative target in terms of our digital strategy, but that is sensitive information. It's one of the 35% that we're not going to disclose. I understand that. That's on your side. How can you make sure that you compare your Net Promoter Score of Randstad with the Net Promoter Score of TUI or Rentokil? You don't know what the scores are, so you determine your position.
Can I jump in on that? We are comparing it with our key competitors, not with the labor market peer group. We're comparing it with a panel of our key competitors, and we do. It is part of the same questionnaire.
Yeah.
When we say relative to the market, we're talking relative to our competitors. It will be comparable. All these non-financial targets are going to be audited like they have been also by our independent auditor.
Can I perhaps add something about the non-financial targets? We've had in-depth discussions about 65/35 or to move to 50/50. Some stakeholders said 100/0 TSR, that can be measured properly, and this is the performance peer group that Giovanna is pointing to. That's a different peer group. I'm really proud about the 65 and 35, which is in line with the monitoring committee, also in line with the whole debate with stakeholders that we had. I wanted to add that. I'm not saying anything about the percentage of 35 that I don't think is good or whatever. I'm not talking about that.
I'm just saying that if you include non-financial scores in your long-term remuneration, then you want to determine your position in the ranking, how am I performing on the median or below the median, then you can't compare this to the companies that are in the peer group because you don't have that information. You don't have those data. If you'd say that the position in the median is only a TSR, I think Jacques and I were about to say the same thing. We're going to test it. You need to separate these two things. You've got the TSR, vis-à-vis the larger peer group, 65% of our total LTIP comes from there. That's one thing.
Second, we have qualitative measurable targets, which in our sector, which by and large, vis-à-vis the group that we had as a former peer group, not all of them, because professionals are not always in professionals, et cetera. Per measurement criterion, we compare to a little group where we find some of our peers, and this can be measured, and we benchmark it against a group that we can actually compare ourselves with.
Do you have another question? No? Okay. Behind you.
Thank you. I'm also a member of the VEB, and the gentleman behind me also says he's not allowed to talk about Tesla. That aside, what matters to me as a member of the VEB is that companies turn an additional 3% revenue in earnings each year. The revenue was up by 8% last year, and the net earnings were up by 13%, and that is an excellent achievement in all those parameters. It's basically just dotting the I's and crossing the T's, but what matters is that this is a very profitable company. Mr. van de Kraats has been doing excellent job for years. He's covered all his bases. Mr. van den Broek is also doing a stellar job. Mr. Goldschmeding must be extremely proud and delighted that things are going so well.
We're not proposing that they receive additional compensation. I'd be happy to give them a bouquet of flowers. Thank you.
We really appreciate your compliments. Are there any other questions? Jelle, let's open the vote. Please press one to vote in favor of amending the remuneration policy for the Executive Board, press two to vote against, and press three to abstain. Please cast your vote. The vote is closed, and on the screen, you'll see that 98.8% has voted in favor. The proposal has been adopted. That takes us to agenda item 5B, the proposal to approve the performance-related remuneration of the Executive Board in the form of performance shares pursuant to the remuneration policy and in line with its revision as just approved at item 5A.
It is proposed that the performance-related remuneration of the Executive Board be distributed in performance shares vesting after five years. Are there any questions? No. Jelle, please press one to vote in favor of the proposal, press two to vote against, and press three to abstain from the vote. Please cast your vote. The vote is closed. On the screen, you will see that 99.8% has voted in favor. Therefore, the proposal has been adopted. Thank you. Before we move on to item six, I would like to thank Giovanna for the very intensive process that she performed. She did a stellar job and supported everything valiantly. Thank you for the debate. We have adjusted this and believe that we're accommodating a great many stakeholders, and we believe that this is also appropriate for the monitoring committee to consider the long-term better and balance stakeholders more.
Thank you for the debate, thank you for your vote of confidence. On to agenda item six, the proposal to appoint Deloitte as external auditor for the financial year 2018. Pursuant to the law, the general meeting of shareholders assigns an auditor to audit the financial statements. We propose instructing Deloitte to audit the financial statements for the coming financial year 2018. Any questions? Jelle. Please press one to vote in favor of reappointing Deloitte, press two to vote against, and press three to abstain from the vote. You may now cast your vote.
And
The vote is closed, and on your screen you will see that Deloitte has been reappointed with 99.6% of the vote. Peter, see you back next year. That takes us to agenda item seven. Any other business? Who would like the floor? Nobody. That takes us to the end neatly within three hours. We have one more minute. I'm going to use that to close the meeting. I close the meeting, I'd like to thank you for attending and for contributing, I'd like to invite you to enjoy drinks and snacks in the lobby. Have a safe trip home.