In the current discussion about executive remuneration, we want to share with investors the philosophy that’s behind SES executive remuneration. Our philosophy is to support performance and long-term value creation. It’s not about short-term objectives, or changes focusing on the short term.

Our remuneration begins with a benchmarking to the ITC [Information Technology and Communication] sector – all of this discussed by the board and decided by the remuneration committee.

The remuneration is balanced between base salary, cash bonus and long-term equity.

The bonus plan is measured against financial performance, individual business objectives and also a discretionary component for the remuneration committee. I think the most important element is that there is a recurring group EBITDA growth criterion. So in case, for example, the company would not continue to grow or would be on its way back – if group EBITDA decreases by 10 percent or more – the cash bonus would be zero.

It’s the same philosophy for measuring performance against the other financial metrics. If profit and cash flow were to decrease, results from this component would also be zero.

So it’s very much a performance-based bonus scheme. Developments such as the ones in the banking and financial sectors in our case would immediately lead to a zero bonus.

Long-term equity comprises three elements: stock options, restricted shares and performance shares. There has recently been change in the weighting: less stock options and more performance shares. Also important is that vesting can only happen after three years.

Also very important, and showing the long-term nature of our policy, is the fact that the measurement period for the performance shares has been extended from one year to three years, and the measurement criteria applied – the compounded group EVA – has to be positive over a three-year period. [EVA, or economic value added, is calculated by subtracting the cost of capital from the net after-tax operating profit.]

All the elements are oriented toward sustainable development of our business.

The different components are for members of the executive committee – five people. But the philosophy and the components are exactly the same for all the executives, maybe 90 people in the group. They are all remunerated according to the same remuneration philosophy. There is no exception to these principles.


Bausch is chief executive of satellite fleet operator SES of Luxembourg. This commentary is an excerpt from remarks Bausch made during a May 19 presentation to investors in London.