: Linking Corporate Performance and Valuation to Management Incentives March 2014 Michel Lerner Head of EMEA 44 207 883 3649 michel.lerner@credit-suisse.com credit-suisse.com/holtmethodology Analysis
SUMMARY Principles of the Management Incentives Scorecard State of the European and US landscape Thematic focuses: - EPS-focused plans - Return-on-Capital measures and its risks - The Good, the questionable and the bad of focusing on sales growth - Plans that incorporate non-operational items - What constitutes a long-term focus? - Companies with changes being introduced 1
Management should be incentivized by metrics and goals that drive incremental shareholder value creation Reward CFROI = Margins X Op. Profit Turns = X Sales Sales IAGI Measure & Evaluate 2
Management Incentive Scorecard Construction 3
The Remuneration Scorecard allows for quick sector benchmarking to see whether management is incentivised to manage its business for value Positive flags Carlsberg L'Oreal Beiersdorf Nestle Pernod Overall Score 1 1 2 2 2 2 3 3 3 3 4 4 4 5 5 6 Financial criteria include operational drivers (eg Sales, Margins, cash flows, ROE) but not returnbased x x x x x x x x x x x x x x measures (1) ROIC, ROCE, EVA, CFROI are mentioned as a criteria (2) xx xx xx TSR relative to a sector peer group is used (1) x x x x x x x x x Long term plan which includes financial criteria to determine payout (1) x x x x x x x x x x x x Long term plan vesting period. Score 1 if above 4 years (1) x x x x Top 2 quintiles of the Scorecard on Operations (1) x x x x x x x x x x Clawbacks in comp structure x x x x x x x Financial Criteria have improved? x x P&G Reckitt SAB BAT Coca Cola Unilever Henkel Colgate Diageo Pepsi Heineken Financial Criteria have worsened? No Disclosure (7) No numerical financial targets at all are disclosed (1) x x x x x x x x x Negative flags EPS is the only financial criteria in EITHER the short or long term plans AND EPS is a poor proxy for Gross Cash Flows (<50% 3 year median) (1) In addition to traditional accounting multiples, the company also uses non operational financial criteria (e.g. net debt, dividends) (1) Option expense as a % of sales FY0> europe median (1) (Europe median is 0.22%) x x x x x No long term plan or long term plan based only on TSR with no financial criteria (1) x x TSR peer group is too broad i.e. not sector peers x 4
Management incentive plans state of the landscape 5
Only 1/3 of firms have a balance sheet focus, only 8% have performance measurement periods longer than 3 years in Europe, 1% in the US Europe US Measure Frequency % Financial criteria include operating drivers (sales, margins, earnings, cash flows, Roe) 246 82% Return on Capital Measures 105 35% TSR relative to a sector peer group 99 33% Long term plan with Financial criteria 189 63% Long term plan performance>3 years 24 8% Clawbacks 87 29% 6
Disclosure is generally lower in Europe than in the US Measure Frequency % No disclosure 4 1% No numerical financial targets 164 55% EPS as the only criteria in the short or long term plan 32 11% Non operating criteria used to determine pay 22 7% No long term plan 56 19% TSR peer group is broad 41 14% Frequency of Use Measure in S&P 500 % No Disclosure 2 0% Numerical financial targets not disclosed 32 6% EPS is the only financial criteria in EITHER the short of long term plans AND EPS is a poor proxy for Gross Cash Flow (<50% 3 24 5% year median) In addition to traditional accounting multiples, the company also uses non operational financial criteria (e.g. net debt, 0 0% dividends) Option expense as % of sales FY0>US median (US median is 0.38%) 54 11% No Long Term Plan or LT Plan Performance Period is less than 3 years 190 38% Source: 7 Europe US
Management Incentive Scores 120 100 Number of Companies 80 60 40 US Europe 20 0-8 -7-6 -5-4 -3-2 -1 0 1 2 3 4 5 6 7 Score 8
UK, Netherlands, Switzerland have higher standards, Spain fares worst 9
Retailers fare best at a sector level (but beware of off-balance-sheet growth see page 19) 10
Stocks with top scoring remuneration plans and top operational quality Ops Remuneration Accounting Risk Com pany Nam e Ticker Quintile Quintile Quintile SHIRE PLC SHP 5 4 Good EASYJET PLC EZJ 5 4 Good ROTORK P.L.C. ROR 5 4 Good SYMRISE AG SY1G 5 5 Above Average HALMA P.L.C. HLMA 5 4 Above Average JOHNSON MATTHEY PUBLIC LIMITED COMPANY JMAT 4 4 Above Average GEBERIT AG GEBN 4 4 Good NOVOZYMES A/S NZYMb 4 4 Good TECHNIP TECF 5 4 Above Average SULZER AG SUN 4 5 Good 11
Firms heavily incentivized by EPS 12
EPS is widely used across pay plans, yet it is the easiest accounting ratio to distort through accounting choices 70% 60% 50% 40% 30% 20% 10% 0% Top 10 Performance Measurement Criteria In Europe P/E Ratio (FY1) 40 35 30 25 20 15 10 5 0-100% -50% 0% 50% 100% Earnings Growth (FY0 to FY1) R 2 = 0.00 13
Pressure to deliver short-term results is institutionalized 14
EPS is the only financial criteria in EITHER the short or long term plans AND EPS is a poor proxy for Gross Cash Flows (<50% 3 year median) Company Remuneration Score Accounting Quality Net Income % of Gross Cash Flow REGUS PLC 1 Below Average 12.0 TALKTALK TELECOM GROUP PLC 1 Poor 24.9 FRESENIUS MEDICAL CARE AG & CO. KGAA 0 Below Average 30.1 WOLSELEY PLC 0 Poor 32.6 BAE SYSTEMS PLC 1 Poor 46.6 G4S PLC 1 Below Average 7.1 SHANKS GROUP PLC 1 Poor 34.5 GKN PLC 2 Below Average 49.4 INTERNATIONAL CONSOLIDATED AIRLINES G2 Below Average 51.4 LINDE AKTIENGESELLSCHAFT 2 Below Average 33.6 WOLTERS KLUWER NV 2 Below Average 37.5 BUNZL PUBLIC LIMITED COMPANY 3 Below Average 51.3 RIO TINTO PLC 4 Poor 14.4 COBHAM PLC 5 Below Average 43.1 15
Pernod Ricard: EPS growth trending upwards since 2003 5.00 4.50 Basic Earnings Per Share (excl. extra) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2010: the level of profit from recurring operations compared with budget projections and the net debt ratio were sufficient to offset [ ] the absence of a variable portion linked to change in net earnings per share. 16
Pernod Ricard: CFROI including goodwill shows a different story 10.00 CFROI (Transaction), % 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 17
Pernod Ricard: Multiple items flattering the EPS 18
Pernod Ricard: Deep dive into the Accounting Risk 19
Return on Capital Measures 20
The framework and CFROI metric are well suited to measuring shareholder value creation Asset Life and Mix CFROI Accounting Operating Return and Net Invested Capital Cash and Gross Invested Capital ROIC Inflation Adjustments CROGI CROIGI whereas these metrics are more consistent with building shareholder wealth ROE EPS difficult to measure shareholder wealth creation and easy to manipulate 21
A focus on return-based measures should theoretically signal a superior focus on wealth-creation principles. In practice, only 1 in 3 show an improving CFROI trend vs. the longer-term Name Country Market Cap (bil) 22 CFROI 2012 CFROI 2013e CFROI Ratio of 2013 less CFROI 3 3 yr Year to 7 CFROI Year Median Median REED ELSEVIER NV NLD 31.0 30.8 28.4 2.9 1.08 NOVO NORDISK AS DNK 95.1 19.8 22.1 5.6 1.13 RTL GROUP BEL 18.6 17.8 18.5 2.5 1.07 LEGRAND S.A. FRA 14.6 16.4 17.1 0.9 1.00 IMI PLC GBR 7.7 17.9 16.7 1.1 1.18 HENKEL KGAA DEU 48.0 16.4 16.3 0.0 1.10 SPIRAX-SARCO ENGINEERING PLC GBR 3.5 15.2 14.7 0.9 1.22 KERRY GROUP PLC IRL 11.2 14.6 14.4 0.4 1.05 ASHTEAD GROUP PLC GBR 5.4 11.6 13.7 3.8 1.10 CONTINENTAL AG DEU 40.1 11.8 13.3 2.3 1.23 BERENDSEN PLC GBR 2.6 10.5 13.2 3.1 1.29 SANDVIK AB SWE 17.5 12.6 13.2 1.4 1.00 ROCHE HOLDING CHE 238.2 12.1 13.1 0.7 1.00 EASYJET PLC GBR 8.0 8.8 12.7 5.0 1.04 GEA GROUP AG DEU 8.7 13.2 12.6 1.9 1.00 CENTRICA PLC GBR 28.8 11.0 12.4 0.3 1.00 JOHNSON MATTHEY PUBLIC LIMITED CGBR 10.1 11.6 12.3 0.6 1.08 KONINKLIJKE PHILIPS NV NLD 34.2 7.4 10.3 3.3 1.24 NOVOZYMES A/S DNK 12.1 9.1 9.3 0.4 1.05 AKZO NOBEL N.V. NLD 18.0 7.9 9.1 1.9 1.16 AHOLD NV NLD 18.5 9.7 8.8 0.9 1.00 BAYER AG DEU 105.5 9.2 8.2 1.0 1.00 WHITBREAD PLC GBR 9.9 7.3 8.2 1.4 1.18 MONDI PLC GBR 8.0 6.5 8.1 1.8 1.58 TATE & LYLE PLC GBR 6.2 8.0 8.1 0.6 1.17 LINDE AKTIENGESELLSCHAFT DEU 36.5 8.3 8.1 0.9 1.00 BODYCOTE PLC GBR 2.0 7.7 7.4 1.0 1.00 PIRELLI & C SPA ITA 7.3 7.1 7.3 1.6 1.27 ELECTROLUX AB SWE 6.7 6.8 6.2 0.2 1.00 ARKEMA GROUP FRA 7.0 5.8 5.4 0.3 4.57 SAINSBURY (J) PLC GBR 12.6 4.0 4.4 0.6 1.00 FRAPORT AG FRANKFURT AIRPORT S DEU 6.7 3.8 4.1 0.6 1.00 STMICROELECTRONICS NV FRA 6.8-5.4-4.2 0.3 1.00
Novo Nordisk s long term incentive plan is one of the few to explicitly look at R&D efficiency Novo Nordisk A/S: Relative Wealth Chart 23
Significant amounts of capital are off-balance sheet how good are the return metrics that are even used? ROCE may be less meaningful for Pharma stocks ROCE may be less meaningful for Retailers Beware of asset sweating Accounting assets typically used for ROC metrics 24
Return-based metrics are part of comp plans potential questions Name Country Market Capitaliz ation (bil) [Local] CFROI 2012 CFROI Median - Three Year Accounting Quality - Asset Quality Accounting Quality - Depreciation Accounting Quality - Special Items Capitalized R&D / Assets (%) - 2012 Leased Property / Assets (%) 2012 ADECCO SA CHE 12.72 13.80 15.0 Above Average Above Average Average 42 AGGREKO PLC GBR 4.18 16.84 19.9 Above Average Good Below Average 16 ARCELORMITTAL NLD 19.27 1.19 3.3 Below Average Below Average Below Average 1 ASML HOLDING NV NLD 27.81 17.28 18.4 Below Average Good Below Average 25 4 BABCOCK INTERNATIONAL GROUP PL GBR 4.65 43.34 46.9 Poor Above Average Poor 1 40 BASF SE DEU 71.36 8.16 8.6 Average Average Below Average 11 4 BG GROUP PLC GBR 42.79 5.12 6.8 Below Average Below Average Below Average 7 COCA COLA HBC AG GBR 6.38 6.09 6.5 Above Average Below Average Poor 14 CRH PLC IRL 13.71 4.46 4.6 Average Below Average Below Average 18 DEUTSCHE LUFTHANSA AG DEU 7.39 2.56 3.2 Good Average Poor 4 EXPERIAN PLC GBR 11.61 31.25 36.2 Average Good Poor 14 FUGRO NV NLD 3.73 8.21 8.4 Poor Below Average Below Average 41 KALI & SALTZ AG DEU 3.68 9.22 11.2 Average Average Poor 1 6 KINGFISHER PLC GBR 9.26 7.34 7.8 Above Average Average Below Average 44 MAN SE DEU 13.17 6.12 7.0 Below Average Good Poor 17 8 MARKS AND SPENCER GROUP PLC GBR 8.05 6.98 7.7 Above Average Below Average Below Average 25 MILLICOM INTERNATIONAL CELLULAR SWE 59.38 13.04 18.3 Average Average Below Average 9 MORRISON (W M) SUPERMARKETS GBR 6.26 5.08 6.3 Good Average Below Average 6 NOVARTIS AG CHE 176.10 11.49 12.3 Poor Good Below Average 44 3 PEARSON PLC GBR 10.82 13.34 14.0 Poor Good Below Average 28 REXAM PLC GBR 3.90 8.15 8.8 Below Average Average Poor 1 5 ROCHE HOLDING AKTIENGESELLSCHACHE 215.17 12.13 12.3 Poor Good Poor 52 3 SAINT GOBAIN FRA 20.55 5.16 5.3 Average Below Average Poor 3 19 SANOFI S.A. FRA 103.95 8.67 9.8 Poor Good Poor 43 2 SKF AB SWE 80.82 9.93 11.2 Average Good Poor 8 9 STMICROELECTRONICS NV FRA 5.23-5.40-0.3 Below Average Poor Poor 24 3 TESCO PLC GBR 28.53 7.79 7.8 Good Above Average Poor 29 TOTAL SA FRA 101.09 4.39 4.9 Below Average Below Average Below Average 2 4 TRAVIS PERKINS PLC GBR 4.32 12.16 12.4 Good Above Average Below Average 56 VIVENDI SA FRA 24.80 10.90 14.0 Poor Above Average Below Average 6 10 WEIR GROUP PLC (THE) GBR 4.55 22.36 24.6 Average Above Average Below Average 4 19 Asset quality: this is determined based on region relative rankings for yoy changes in asset utilization, aging assets, large exposure to goodwill Depreciation: the rating is determined based on yoy changes and materiality of depreciation expense and asset life Special items: the rating is determined based on frequency and materiality of one-off items 25
Tesco: ROCE vs. CFROI trends don t match because of off-balance sheet growth 100 80 60 40 20 0 Off balance sheet stores % Assets PP&E % Assets 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Variable pay: trading profit (i.e. internet sales, UK lfl sales, working capital), working capital (prev. UK ROCE) Long-term: EPS growth ex property profits, ROCE 26
Saint-Gobain: ROCE flattered by asset sweating and impairments? ROCE represents 60% of variable pay defined as Operating Income/Total Assets. Total assets include net PP&E, working capital, net goodwill and other intangibles but excludes deferred tax assets from nonamortizable brands and land 27
The good, the questionable and the bad of focusing on top line growth 28
The good: Unilever added a top line growth component to its comp plan in 2010 29
High growth/value creating firms with sales growth in their compensation plan Name Symbol Country Market Capitaliz CFROI ation Transacti (bil) on LFY [EUR] CFROI 2012 Transaction CFROI / CFROI Sales Growth (5-year) Remuneration Score RANDGOLD RESOURCES LIMITED RRS GBR 5.4 20.9 20.9 0% 36 3 ARM HOLDINGS PLC ARM GBR 16.7 13.8 18.4-25% 17 2 HERMES INTERNATIONAL SCA HRMS FRA 24.0 25.7 27.2-5% 16 1 RIGHTMOVE PLC RMV GBR 3.3 333.8 346.5-4% 16 1 SHIRE PLC SHP GBR 23.5 13.5 16.1-16% 15 0 RICHEMONT (COMPAGNIE FINANCIERECFR CHE 39.4 13.5 14.2-5% 14 1 VOLKSWAGEN AG VOWG_p DEU 85.4 6.6 6.7-2% 13 1 ESSILOR INTERNATIONAL COMPAGNIEESSI FRA 15.4 10.2 14.6-30% 12 1 SERCO GROUP PLC SRP GBR 2.9 10.4 16.3-36% 12 2 LVMH MOET HENNESSY LOUIS VUITTOLVMH FRA 65.8 9.1 13.3-32% 11 0 DASSAULT SYSTEMES SA DAST FRA 10.4 12.2 16.0-24% 10 0 ATOS SE ATOS FRA 6.0 8.7 12.3-29% 9 1 KABEL DEUTSCHLAND HOLDING AG KD8Gn DEU 8.9 13.5 14.8-9% 9 1 KONE OYJ KNEBV FIN 15.1 20.9 30.5-32% 9 1 ADIDAS AG ADSGn DEU 16.8 9.3 11.9-22% 8 1 SONOVA HOLDING AG SOON CHE 6.8 12.8 18.9-32% 8 0 ABB LIMITED ABBN CHE 42.2 9.8 12.9-24% 7 0 DRAX GROUP PLC DRX GBR 3.9 6.5 7.9-18% 7 0 GEMALTO N.V. GTO NLD 6.9 9.3 12.0-23% 7 1 NOVARTIS AG NOVN CHE 145.2 8.4 10.2-18% 7 4 SEB SA SEBF FRA 2.8 7.0 8.6-19% 7 2 SWATCH GROUP AG UHR CHE 25.4 11.3 11.7-4% 7 0 30
The questionable: Sainsbury s like-for-like sales growth focus = possible incentive that will negatively impact margins and/or asset efficiency Key issues: - impact of refurbished stores/extended stores on sales vs. margins - impact of inc. VAT in sales growth given change of mix from food to non-food - inflation 31 - discount and vouchers
Value-destroying companies that include sales growth as a pay criteria Name Symbol Country Market Cap CFROI 2012 OCADO GROUP PLC OCDO GBR 3.9-6.0 No STMICROELECTRONICS NV STM FRA 6.0-5.4 Yes VESTAS WIND SYSTEMS AS VWS DNK 5.5-4.9 No NOKIA CORPORATION NOK1V FIN 21.0-3.2 No UNITED UTILITIES GROUP PLC UU GBR 6.5 2.7 No NESTE OIL OYJ NES1V FIN 4.0 3.0 No SAINSBURY (J) PLC SBRY GBR 7.7 4.0 Yes BT GROUP PLC BT GBR 38.1 4.1 No MORRISON (W M) SUPERMARKETS MRW GBR 6.7 4.5 Yes DSM N.V. DSMN NLD 8.3 5.4 Yes DEUTSCHE TELEKOM AG DTEGn DEU 51.3 5.5 Yes VALLOUREC VLLP FRA 4.7 5.7 Yes Returnbased Comp 32
The bad (WPP): acquired growth becomes organic within 12 months CFROI inc. goodwill is significantly lower 33
Companies that include top line as a pay criteria and where acquisitions have generated material goodwill Name Symbol Country Market Capitaliz CFROI ation Transacti (bil) on LFY [EUR] CFROI(L FY) Ratio Transaction CFROI / CFROI IMPERIAL TOBACCO GROUP PLC IMT GBR 28.9 11.4 45.98-75% RECKITT BENCKISER GROUP PLC RB GBR 41.8 16.1 51.87-69% WPP WPP GBR 19.4 9.9 27.34-64% PUBLICIS GROUPE SA PUBP FRA 13.1 11.9 28.75-59% CAPGEMINI S.A. CAPP FRA 9.0 5.2 12.00-57% REED ELSEVIER PLC REL GBR 25.0 13.2 30.30-56% SODEXO EXHO FRA 11.8 11.1 23.92-54% SAGE GROUP PLC (THE) SGE GBR 5.5 11.0 23.37-53% CARLSBERG AS CARLb DNK 11.1 6.2 13.04-52% BRITISH AMERICAN TOBACCO P.L.C. BATS GBR 76.6 18.7 38.65-52% REXEL S.A. RXL FRA 5.0 7.2 14.87-52% PANDORA A/S PNDORA DNK 6.3 17.6 36.23-51% DANONE SA DANO FRA 30.0 8.7 17.88-51% PEARSON PLC PSON GBR 10.3 6.6 13.27-50% HALMA P.L.C. HLMA GBR 2.7 13.8 25.03-45% SAP AG SAPG DEU 67.2 15.8 28.37-44% WOLTERS KLUWER NV WLSNc NLD 6.1 9.9 17.69-44% DIAGEO PLC DGE GBR 55.7 14.1 24.89-43% SOFTWARE AG SOWG DEU 2.5 13.2 23.14-43% LEGRAND S.A. LEGD FRA 11.7 9.5 16.63-43% UNILEVER PLC ULVR GBR 82.6 13.5 23.31-42% SCHNEIDER ELECTRIC SA SCHN FRA 35.7 8.3 13.98-41% 34
Incentive Plans based on non-operating items 35
Companies that include non-operating items in their pay structure 5 4 Remuneration Score 3 2 1 0 1 2 3 4 SUEDZUCKER ASTRAZENECA VOLKSWAGEN PIRELLI H&M GALP BMW PERNOD RICARD BAE SYSTEMS THYSSENKRUPP 36
Astrazeneca fares OK on dividends 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00-5.00-10.00 Dividend Growth (5-Year) 37
The CFROI trend shows a significant need to replenish the product pipeline 38
Are the dividend payouts coming at the expense of reinvestment? 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% R&D % sales 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 30.00 25.00 20.00 15.00 10.00 5.00 0.00 R&D % Sales (2012) 39
Long-Term Incentive Plans (LTIP) 40
Long-term Incentive Period (LTIP) 81% of European firms have a LTIP that include financial criteria, but only 10% of these have a measurement period > 3 years. Vesting period vs. long term measurement period. The former incentivizes management to stick around until pay day, the latter ensures that pay is based on long-term wealth creation. Why does this matter? Governance should be focused on creating long-term shareholder value. Short-termism emerges and quarterly or annual accounting metrics become the focus. Companies that have a long-term plan that exceeds 3 years and has more than TSR as a measure ( Remuneration Score) 7 6 5 4 3 2 1 0 1 2 3 DASSAULT SYSTEMES NOVOZYMES A/S H & M HENNES & ANHEUSER BUSCH BHP BILLITON PLC L'OREAL LUNDIN PETROLEUM BOUYGUES SA RWE AG DEUTSCHE TELEKOM PUBLICIS GROUPE SA SODEXO BASF SE FRESENIUS SE INFINEON JOHN WOOD GROUP SANOFI S.A. MAN SE RIO TINTO PLC Lufthansa HEINEKEN NV E.ON SE 41
Ladbrokes has a long-term incentive plans based on the share price performance in the 30 days following publication of FY results 240 230 220 End of 30 day period following 2012 preliminary results Profit warning issued 210 200 190 180 170 160 150 LAD LN Equity 140 the committee will retain responsibility to amend the targets if necessary to take into account exceptional factors [ ] which would otherwise render the targets inappropriate 42
61 European firms have no long-term incentive schemes or a plan based only on TSR and 14 of these rank in the bottom 2 quintiles in Europe on Operational Quality Overall Ops Mom Val Com pany Nam e Ticker Quintile Quintile Quintile Overall Quintile VOEST-ALPINE AG VOES 2 4 5 5 INFINEON TECHNOLOGIES AG IFXGn 2 5 3 4 SUEDZUCKER AG SZUG 2 3 5 4 GLENCORE XSTRATA PLC GLEN 2 4 3 3 SVENSKA CELLULOSA AKTIEBOLAGET SCAb 1 5 2 3 RANDSTAD HOLDING NV RAND 1 4 4 3 ADECCO SA ADEN 1 5 2 3 TULLOW OIL PLC TLW 2 1 5 2 KONINKLIJKE PHILIPS NV PHG 2 2 5 2 RHOEN-KLINIKUM AG RHKG 1 5 2 2 METRO AG MEOG 2 3 2 2 LINDT & SPRUENGLI AG LISP 2 5 1 2 RENTOKIL INITIAL PLC RTO 1 4 2 1 BG GROUP PLC BG 2 1 1 1 43
Firms with negative changes to their incentive plans 44
41 firms introduced positive changes to their pay plan in 2013 45
8 others introduced changes that represent a step back in terms of alignment with shareholder interests Name CFROI LFY in Lowest Quintile? CFROI Change is Negative Managing for Value is Negative ENRC 2.3 12.8 12.2 NEXANS SA 2.4 1.6 9.4 MICHELIN SCA 6.3 0.4 1.3 E.ON SE 1.1 1.0 31.4 RED ELECTRICA CORPORACI A. 7.1 0.3 8.6 SCHINDLER HOLDING AG 15.9 1.4 12.4 APR ENERGY PLC 8.5 3.9 39.5 NOVOZYMES A/S 9.1 0.3 22.3 ENRC: TSR benchmark is now 100% based on the FTSE 350. Mining benchmark removed. Michelin: long-term remuneration plan removed Schindler: criteria used in the long-term plan no longer disclosed Novozyme: unclear whether or not ROIC as a criteria has been removed Nexans: ROCE replaced with FCF as a criteria E.ON: removal of value add as a critera APR Energy: Adjusted EBITDA criteria dropped. EPS kept as the sole criteria 46
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