Remuneration report

Introduction

This report sets out the Company’s remuneration policy and how it has been applied for members of the Board of Management and the Supervisory Board for the financial year ended 31 December 2005.

In accordance with article 18 of the Company’s articles of association, determining the remuneration of the Board of Management is the responsibility of the Supervisory Board. In line with the Company’s internal regulations, the individual board remuneration and contractual terms of employment are in line with the Company’s remuneration policy, as adopted by the Annual General Meeting of shareholders held on 7 May 2004. Any material change to the Company’s remuneration policy will be submitted to the general meeting of shareholders for adoption.

In accordance with article 26 of the Company’s articles of association, the remuneration of the Supervisory Board is determined by shareholders in General Meeting.

Remuneration Committee

As referred to on this page, the Supervisory Board has appointed a Remuneration and Appointment Committee (‘Committee’). The Committee has its own regulations which include provisions concerning the Committee’s objectives, composition, duties, responsibilities and working methods.

Board of Management

Members of the Board of Management are appointed for a term of four years. They may be reappointed for successive terms of not more than four years.

To avoid a situation where more than two members of the Board of Management retire at the same time, the following resignation schedule has been drawn up by the Supervisory Board:

	Zach Miles has been employed by the Company since 4 November 1999. He was appointed to the Board of Management on 10 December 1999. He has served as Chairman of the Board of Management and Chief Executive since 25 February 2004. Mr Miles’ initial appointment as Chairman of the Board of Management expires on 28 February 2007. His employment agreement is in force for an indefinite period and can be terminated with six months’ notice given by Mr Miles and twelve months’ notice given by the Company.
	Armin Preisig has been employed by the Company since 4 November 1999. He was appointed to the Board of Management on 2 October 2001. His employment agreement is in force for an indefinite period. Under Swiss law, his employment contract is terminable by either party with twelve months’ notice.
	Philippe Salle has been employed by the Company since 1 July 1999. He was appointed to the Board of Management on 2 May 2003. His employment agreement is in force for an indefinite period and can be terminated with three months’ notice given by Mr Salle and six months’ notice given by the Company.
	Peter Valks has been employed by the Company since 1 January 2000. He was appointed to the Board of Management on 2 May 2003. His employment agreement is in force for an indefinite period and can be terminated with three months’ notice given by Mr Valks and six months’ notice given by the Company.
	Frits Vervoort has been employed by the Company since 1 October 1997. He was appointed to the Board of Management as Chief Financial Officer on 2 October 2001. His employment agreement is in force for an indefinite period and can be terminated with three months’ notice given by Mr Vervoort and six months’ notice given by the Company.
	Brian Wilkinson has been employed by the Company since 4 November 1999. He was appointed to the Board of Management on 2 May 2003. His employment agreement is in force for an indefinite period and can be terminated with three months’ notice given by Mr Wilkinson and six months’ notice given by the Company.

Severance pay
The Company intends in all future contracts to set minimum notice periods for the members of the Board of Management of three months, and for the Company maximum notice periods of six months. Termination payments under employment contracts will be limited to a maximum of 100% of annual base salary. However, in exceptional circumstances, this payment may be increased to 200% of annual base salary during the first four-year term of appointment to the Board of Management.

	Attracting and motivating high level individuals.
	Ensuring that the remuneration package is competitive.
	Focusing on improving the performance of the Company.

To ensure a competitive remuneration package, total compensation is set at a median level (base pay) to upper quartile level (variable pay) relative to a reference group consisting of primarily European companies, which are active in the business services sector, as recommended by an independent remuneration consultant.

In order to encourage continued improvement in the Company’s performance, the remuneration of the members of the Board of Management includes a fixed base salary, annual variable cash bonus and long term stock incentives which are performance based.

Base salary
Base salaries are reviewed annually and are set reflecting the level of experience and responsibility of each individual.

Annual cash bonus
Each year a cash bonus can be earned based on the achievement of targets which are set in advance by the Supervisory Board. The targets for the Chief Executive and the Chief Financial Officer are based on budgeted Group operating income. The targets for the operational members of the Board of Management are based on the budgeted operating income of the companies for which they are responsible. These targets have been chosen as being the most objective measure of performance taking into account business development and variations in market conditions.

If less than 90% of the budget is achieved, no bonus is paid. If 110% or more of the budget is achieved, a bonus is paid equal to 100% of the annual base salary. Between 90% – 110%, a bonus is paid equal to part of the annual base salary interpolated on a straight line. Consequently, a bonus equal to 50% of the annual base salary is paid at budget target performance.

Long term incentive plans
The value of stock options or restricted shares which are granted annually is equal to 100% of base salary for the members of the Board of Management and 110% of base salary for the Chairman of the Board of Management.

As from 2004, all of the awards that are made to the members of the Board of Management are subject to the achievement of predetermined performance targets, which means that the awards will only vest if and to the extent that the performance targets are achieved (‘vesting’). The large majority of awards made prior to 2004 are also subject to performance targets.

Stock options
Stock options may be granted to the members of the Board of Management under the Company’s stock option plan. All grants of options are approved by the Supervisory Board. The most important terms and conditions are as follows:

	An option period of seven years.
	The exercise price equals the Euronext Amsterdam closing price of the Company’s depositary receipt on the grant date.
	Options granted to members of the Board of Management from 2004 onwards only vest if and to the extent that the performance targets are achieved over a rolling three-year measurement period. Options granted to members of the Board of Management before 2004 vest three to six years following the grant date.
	All vesting is subject to continuous employment by a Vedior Group company up to and including the vesting date.
	Neither the exercise price nor the other conditions attached to option grants can be modified during the option period, except to take account of a change in operational management responsibility as a result of which performance targets are no longer appropriate, structural material changes relating to the Vedior (depositary receipts of ordinary) shares or a change of control of the Company (such as a takeover of the Company’s shares) in accordance with established market practice.
	Retesting is not permitted for options issued as from 2004.

	The restricted shares are conditional awards of free depositary receipts of ordinary shares of the Company.
	Awards from 2004 onwards vest three years following the grant date, but only if and to the extent performance targets are achieved over a three-year period. Awards before 2004 also vest three years following the grant date, if and to the extent that performance targets are achieved, but the participants may defer vesting by up to two years by rolling forward the three year measurement period.
	Shares earned from awards made from 2004 onwards should be retained by members of the Board of Management for at least five years after the grant date excepting sales to meet tax liabilities arising on vesting.
	All vesting is subject to continuous employment by a Vedior Group company up to and including the vesting date.
	The conditions attached to grants may not be modified after the grant date, except to take account of a change in operational management responsibility as a result of which performance targets are no longer appropriate, structural material changes relating to the Vedior (depositary receipts of ordinary) shares or a change of control of the Company (such as a takeover of the Company’s shares) in accordance with established market practice.

As an alternative to stock options and restricted shares, the Company in previous years granted interest free loans to finance the purchase of shares at market value. These loans may be partially or fully forgiven depending on the achievement of predetermined specific performance conditions. No loans have been granted since 2004.

The Chief Executive and the Chief Financial Officer of the Group are awarded stock options or restricted shares with real annual EPS growth as the sole performance target. Real annual EPS growth is defined as annual EPS growth of the Company corrected for the weighted average consumer inflation of the most important territories in which the Company operates. No awards vest if real EPS growth is less than or equal to 0%. The awards vest in full if real EPS growth is equal to or greater than 16.7% per annum over the vesting period. Between 0% and 16.7% the awards vest pro-rata on a straight line interpolation. The Company believes that real annual EPS growth is the best criterion to measure the performance of the members of the Board of Management as they may directly influence this important growth figure. It also aligns the Board’s interests with those of the Company’s shareholders.

The members of the Board of Management who have operational responsibilities for a particular part of the Group are awarded stock options or restricted shares with performance targets, of which 50% are linked to real annual EPS growth and 50% are linked to sales growth and return on sales of the group of operating companies for which they are responsible. For the latter performance condition, the sales growth and return on sales each count for 50%. Low and high targets are set and achievement of the targets is measured annually. The actual vesting percentages are based on average annual performance over the vesting period.

Sales growth is defined as the annual sales growth percentage of the relevant group of operating companies, adjusted for acquisitions or disposals as well as currency/exchange rate movements. Return on sales is defined as earnings before interest, taxation, and goodwill amortisation as a percentage of the sales. The Company believes that these are sound criteria to measure the performance of those members of the Board of Management who hold operational responsibility for specific operating companies.

Pensions
Mr Valks and Mr Vervoort participate in the Group’s pension scheme plan for Dutch employees. Due to their appointment to the Board of Management, their retirement age has been changed from 65 to 62. The other Board members have made their own private pension arrangements in line with the local practice in the country of residence of each Board member, to which the Company pays contributions.