Loyalty dividend A boost for Investor Relations Jos Op Heij VP Corporate Treasury DSM National IR Event Amstelveen, 14 November 2006
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Disclaimer
This presentation regarding our proposed loyalty dividend system is offered for your convenience and has been carefully checked by DSM. However, DSM makes no representations or warranties as to the completeness, timelines or accuracy of any information or products described or promoted. The proposed loyalty dividend system has not yet been finalised, therefore amendments may be made to it which can affect the correctness of the information provided herein. DSM accepts no liability or responsibility for any errors, omissions or possible obsolescence in the content of the information provided. The information does not constitute legal advice and no rights can be derived thereof.
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DSM at a Glance ¾ Globally active “multi-specialty” chemical company • More than 200 locations, ca. 22,000 employees ¾ Leadership positions, in ~75% of the portfolio ¾ Innovation driven, R&D spend ~ € 300 million ¾ Financially sound, solid balance sheet • Single A credit rating
Performance Materials
Key data 2005
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er
Sales : € 8 billion EBITDA: € 1.3 billion EBIT: € 0.8 billion
Ph
Oth
Industrial Chemicals
Nutrition
Sales 2005 2
Concrete 5 year Strategy plans
VISION 2005
¾ Accelerated expansion specialties portfolio • 80% specialties • Divestment petrochemicals • More stable profits • Organic growth 2x GDP • Better appreciation of DSM’s shares
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VISION 2010, Building on Strengths ¾ New strategy announced in October 2005
Building on Strengths Market-driven Growth and Innovation
Increased Presence Emerging Economies
Value Creation Loyalty dividend
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Operational Excellence
Vision 2010: Company targets
What:
¾ Specialty leadership: ¾ Sales growth: ¾ Sustainability:
How:
¾ ¾ ¾ ¾
Realigned clusters: Boost innovation: Emerging economies: Operational Excellence:
¾ Value creation: Financials: ¾ Cluster targets: ¾ Financial position:
Increase to 50-60% of portfolio On average 3-5% p.a., underlying Retain top position in rankings Focus on value creation Up to € 1 bn sales Double sales in China to $ 1 bn Extend programs CFROI 50 bp ≥ WACC EBITDA margins per cluster Retain single A credit rating
Total shareholder return to exceed peer group average Loyalty dividend
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International Shareholder Base
Belgium 3.47%
France 2.92%
Rest of Europe 1.72%
Luxembourg 1.22%
Switzerland 4.48%
Norway 1.13%
Asia Pacific/Mid East 1.11% Denmark 1.00%
Germany 6.68%
United Kingdom 15.04%
Netherlands 43.21%
North America 18.02%
Based on shareholder tracking survey September 2006
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Loyaliteit dividend – novelty – a lot of reactions DSM ook innovatief met financiën
DSM idee verdient navolging
Telegraaf, 27 september 2006
DFT, 28 september 2006
DSM wil trouwe belegger belonen Volkskrant, 28 september 2006
Symbolisch verzet; DSM bevecht het Angelsaksische model FD, 2 oktober 2006
DSM’s handelsboete Effect, 3 oktober 2006
DSM wil lange termijn aandeelhouder aan zich binden
Airmiles bij DSM
Beleggingsexpres, 6 oktober 2006
FD, 6 oktober 2006
Loyalty prize exposes different views Financial Times, 16 oktober 2006
Dividend centraal
Wanted: devotion, will pay
FD, 21 oktober 2006
Financial Times, 3 november 2006
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Morris Tabaksblat :
“Aandeelhoudersactivisme en de gevolgen voor het Nederlandse bestuursmodel”, “Ondernemingen zouden zich moeten afvragen of zij hun
strategie en doelstellingen wel voldoende transparant over het voetlicht brengen. En of zij hun dividendbeleid zouden moeten aanpassen om díe aandeelhouders te “lokken” die bij haar passen, à la DSM bijvoorbeeld. Zijn ondernemingen hier wel voldoende mee bezig?” Eumedion Symposium, 18 oktober 2006, Rotterdam Loyalty dividend
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Morris Tabaksblat (cont’d)
“Om de kenbaarheid en benaderbaarheid van aandeelhouders te vergroten, ben ik nog steeds voorstander van een verplichting voor banken om de NAW-gegevens van de aandeelhouders door te zenden aan de vennootschap, uitgezonderd de gegevens van die aandeelhouders die hier uitdrukkelijk op tegen zijn. Op deze manier wordt de anonimiteit van de aandeelhouder voor de vennootschap voor een groot deel opgeheven en wordt het inzichtelijker wie de aandeelhouders zijn. Dit was één van de aanbevelingen van onze commissie aan de wetgever. Helaas heb ik drie jaar na dato nog geen voorstel voor wetgeving op dit punt gezien.” Eumedion Symposium, 18 oktober 2006, Rotterdam Loyalty dividend
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Poll Financieel Dagblad Bron: FD, 5 oktober 2006
Ja Trouwe aandeelhouders
Nee
52%
40%
extra belonen
Dat houdt durf-
Waarde creëren met goed ondernemerschap
4%
4%
investeerders op
Daghandel mag niet worden verstoord
afstand
Uitslag: DSM is met loyaliteitsdividend op de goede weg DSM wil zowel trouwe aandeelhouders belonen als waarde creëren met goed ondernemerschap Loyalty dividend
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Loyalty dividend ¾ Objectives • Enable improved communication with LT shareholders • Incentive for LT shareholding in line with LT focus DSM
¾ Proposal • Voluntary registration of DSM shares • No restrictions to de-registration • De-registration possible on a daily basis • Dividend bonus of 10%/year, after 3 years of registration • First pay-out (30 %) with final dividend 2009
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Loyalty Dividend - timing ex Div. 2009 1/1/07 Jan’07 Feb.’07
1/1/08
2007
1/1/09
2008
1/1/10
2009
Loyalty Dividend Bonus
Loyalty dividend
1/1/11
2010
30%
continuous holding period
ex Div. 2010
12
ex Div. 2011 1/1/12
2011
ex Div. 201X 1/1/1X
201X
10%
10%
10%
30%
10%
10%
Loyalty Dividend – decision process ¾ Process • Discuss proposal with shareholders before decision on final implementation of this novel instrument • (Pre-)registration open in January – February 2007 • Amendment of the Articles of Association to be approved by AGM in March 2007
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Loyalty Dividend – what it is NOT ¾ Loyalty Dividend is: • Not a defense mechanism – all shareholders remain free to buy or sell their DSM shares, to decide to register and/or to deregister any time, and to vote at the AGM the way they want • No infringement on the principle of equal treatment of shareholders; shareholders whose circumstances are equal will all be treated the same manner • Not impacting the normal dividend to be paid to all shareholders – DSM remains committed to the current basic dividend pay-out ratio • Not leading to an additional share class • Not affecting the position in indexation on Euronext nor the option series/prices Loyalty dividend
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Loyalty Dividend – what it is ¾ Loyalty Dividend is: • Open for all shareholders world-wide • An extra option for LT shareholders, without prior commitments • Allowed under Dutch company law and fully in line with the Dutch Corporate Governance Code • Creating more value than lending out of shares • Easy to execute based on the input of several parties, such as legal adviser, banks, trust office as well as the Dutch Tax Authority
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Loyalty Dividend – advantages ¾ Advantages for shareholder • Additional dividend • A more direct communication line with DSM. The shareholder register will enable DSM to reach out to registered shareholders directly • No custody fee and other administrative costs (regarding e.g. dividend payments) during registration • Easy join and easy to step out
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Loyalty Dividend – advantages (cont’d) ¾ Advantages for DSM • To enable direct communication with the shareholders in the framework of the Investor Relations policy. • Create a level playing field for DSM compared to the situation in many countries abroad. In the Anglo-Saxon world e.g. registration of shareholders and changes in their holdings are common practice.
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Questions
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