13 Other operating expenses

 

 

Other operating expenses that arise directly from or can be allocated to the fulfillment of insurance contracts or investment contracts with discretionary participation features are considered insurance service expenses and recognized in the income statement as services under the contract are provided (see note

Short-term incentive compensation

Certain Aegon employees, including the Executive Director and a small number of senior management, receive short-term incentive (STI) compensation, based on Aegon’s performance, the employee’s unit performance and individual performance against predefined financial and nonfinancial performance metrics and targets, as well as the continued employment of the employee. While most participants are paid in cash after the performance period, selected senior employees will be paid partially in cash and partially in Aegon shares. The grant price of these shares is equal to the volume-weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period from December 15 preceding the plan year and January 15 of the plan year. The shares component of STI is deferred for two years, or for three years when the employee is classified as a Material Risk Taker in accordance with BMA Insurance Code of Conduct or other regulatory directives as applicable to their sector and location. These shares vest after the Board of Directors adopt the Company’s Annual Accounts following the last deferral year. Employees are not eligible to receive a dividend during the deferral period of STI awards. In exceptional cases, the short-term incentive may be adjusted downwards before allocation or (malus) or after (claw back), taking into account the outcomes of an or risk assessment.

Long-term incentive compensation

Beginning in 2024, the Executive Director and select senior management may participate in a long-term incentive (LTI) plan designed to align with shareholder interests. This performance-based restricted stock plan is settled in Aegon shares after a three-year performance period. The grant price of these shares is equal to the volume-weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period between December 15 preceding the plan year and January 15 of the plan year. Dividend equivalents are accumulated and paid after the performance period. The awarded

 

 

 

LTI shares shall vest and be released following the adoption of the company’s Annual Accounts by the Board of Directors, following the last performance year. For the Executive Director, the shares are subject to an additional holding period that continues post-employment, during which time they cannot be sold. In exceptional cases, the long-term incentive may be adjusted downwards before allocation or (malus) or after (claw back), after considering the outcomes of an or risk assessment.

Shares as fixed compensation

Selected Executive Committee members and other senior employees receive part of their fixed compensation in Aegon shares, in addition to cash. The grant price of these shares is equal to the volume-weighted average price (VWAP) on Euronext Amsterdam during the period between December 15 preceding the plan year through January 15 of the plan year. Once allocated, these shares are unconditional and not tied to continued employment. They vest following Board approval of the Annual Accounts for the last financial year in the performance period. In the former case, these shares are subject to an additional holding period of three years, while in the latter case, there is no holding period after payout. During the holding period (if applicable), the employee is not allowed to sell these shares. No dividends are paid during the deferral period.

Shares for Directors

Directors receive around 75% of their annual Board fee in cash and 25% in fixed Aegon shares. The grant price of these shares is equal to the volume-weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period from December 15 preceding the plan year to January 15 of the plan year.

These shares vest after the completion of the calendar year. Dividend equivalents accrued during the calendar year are payable as additional Aegon shares at the time of vesting, with no dependence on any performance condition. Shares are not forfeited when the Board membership of a Director ends before vesting. Shares granted to Directors do not have a holding period or a deferral period.

Shares as part of a arrangement

Employees may receive a package in cash and Aegon shares, in line with the applicable rules and regulations. Allocated shares are conditional on continued employment and typically cliff-vest after one, two, and three years.

Payout occurs only after Board approval of the Annual Accounts following the final deferral year. No dividends are paid during the deferral period.

The overview below shows the cumulative number of shares and their status across long-term and short-term incentive plans, fixed compensation, and arrangements.

 

 

4

The number of allocated shares for 2024 has been updated to reflect the share allocation from the 1-year performance period share plans which became available after the publication date of the annual report 2024. In 2024, the annual report only reflected shares as part of fixed compensation and/or sign-on arrangements for a total of 893,378 shares. 795,239 shares remain conditionally granted for the 2024 plan year; these are scheduled to be allocated in 2027 following completion of the 3-year performance period.

5	The number of allocated shares for 2025 only reflect the shares as part of fixed compensation and/or sign-on arrangements.

 

 

 

Aegon applies a net settlement option for participants in order to meet their income tax obligations when their shares are paid out. This means that Aegon will not sell shares on the market but hold these shares within Aegon and settle directly with the tax authorities in cash.