Remuneration models and succession planning
Our remuneration models provide incentives for employees and managers to perform and to align their work practices with our guiding principles. Our systematic succession planning enables our skilled employees and managers to develop attractive careers within our company.
Performance-based remuneration for executives
Our Perform & Reward remuneration system comprises a fixed monthly base salary as well as 1-year and multi-year variable remuneration components that are essentially tied to our company’s business performance. Additionally, the 1-year variable remuneration considers our executives’ individual achievements, generation of additional value for customers as well as their implementation of our guiding principles in their daily work. Among other things, the multi-year variable compensation incorporates a sustainability component.
Remuneration principles
The remuneration model for the approximately 350 top executives of METRO worldwide is based on the following 4 principles:
- Fair and internally consistent compensation
- Performance-based pay
- Market-driven and appropriate salaries
- Encouragement of role model behaviour
During the reporting year, we used the sustainable development of the wholesale and retail segments as a basis of assessment for the 1-year and multi-year variable remuneration. This means that the managers are directly involved in the success of their respective units.
For both business segments, the 1-year variable remuneration is based on sales and profits. In the wholesale segment, customer satisfaction is an additional relevant key performance indicator. As part of the multi-year variable remuneration (long-term incentive, LTI), a specific plan has been developed for each top managers of the group These plans focus on the value generation of each business segment. The key indicator of sustainability is used as a key figure in both plans.
Within the framework of METRO’s Green Car Policy, the carbon emission limits are specified in a bonus-malus system, while plug-in, hybrid and electric vehicles are allowed as company cars. Furthermore, the unused leasing budget for cars can continue to be converted into post-employment benefits plans in Germany. In addition, we offer our executives a company pension scheme that includes both contribution-based and performance-based components. The compensation principles described above are applied in all national subsidiaries. Local (labour) legislation is taken into consideration in all cases.
Performance reviews and succession planning
The systematic development of executives is a core responsibility of the general management teams of the respective group companies, as well as of the strategic management holding company METRO AG. By taking this approach, we ensure that the skills and abilities of our managers are consistently aligned with the requirements and strategic objectives of our company. It also allows us to offer suitable international career opportunities to our executives – independent of the sales line or company they are employed with. Our career-planning processes also allow us to identify and support suitable candidates for key positions in the company. This ensures that we can fill vacancies from our own ranks. The in-house succession rate for the senior executives – in particular the general managers and section heads at METRO – was 76.4% in the reporting period.
Individual performance reviews
We conduct annual individual performance reviews for all our sales lines as part of the Results & Growth process. The objective of these reviews is to better measure progress and abilities and to create a culture of feedback that focuses on individual job performance and personal development. We define the corresponding priorities at the beginning of each financial year; a mid-year performance review allows for these priorities to be re-examined and adjusted as necessary. The performance review is then conducted at the end of each financial year and also incorporates a feedback session. The review focuses on attaining the priorities and adherence to guiding principles, but also takes the respective employee’s role-specific performance into account.
Systematic succession planning
As part of the Leadership Talent Review (LTR) process, succession planning for our key positions is conducted once a year. When performing the LTR, we examine the expertise, abilities and experience of every potential succession candidate and rate these individuals according to the particular responsibilities of their respective positions. This ensures that we identify and support suitable candidates for key positions at an early stage. The employee and his/her line manager then create a career development plan and determine targeted measures. The Leadership Talent Review serves as a long-term-oriented development process for candidates who can potentially fill top positions in our company. This process is complemented by additional methods, such as 360-degree feedback meetings.
Executive development
We are convinced that growth can only be generated if the people working for our company are given opportunities for their personal development. To bolster our management capabilities and to achieve sustainable growth, METRO Cash & Carry launched an executive development initiative in financial year 2016/17. More than 15,000 executives across 25 METRO countries are taking part in the Lead & Win programme. This integrated learning concept is broken down into 3 learning pathways of 6 to 8 months and offers executives an opportunity to explore the issues relating to their respective management level in learning groups. The objective is for all executives to have completed the programme by the end of 2019.
Financial year 2016/17 saw more than 150 level–2 executives participating in the programme. More than 60 internal trainers have already been trained to teach the Lead & Win programme to executives on lower levels in their countries.
Pushing ahead with the group-wide focus on sustainability, METRO conducted the second “METRO Sustainable Leadership Programme” for young executives in financial year 2016/17. This programme saw 27 international participants completing an 18-month programme focusing on the development of in-house sustainability projects. The current project line-up, which covers the topics of packaging, humans and mobility, is proposed to be implemented by mid‑2018.