Corporate Governance Statement

Transcription

1 Corporate Governance Statement The Hague, March 2016 aegon.com

2 1. Dutch Corporate Governance Code - comply or explain As a company based in the Netherlands, Aegon N.V. (also being referred to as the Company ) adheres to the Dutch Corporate Governance Code. The complete text of the Code can be found on Aegon endorses the Code and strongly supports its principles for sound and responsible corporate governance. Aegon regards the Code as an effective means of helping ensure that the interests of all stakeholders are duly represented and taken into account. The Code also promotes transparency in decision-making and helps strengthen the principles of good governance. It is the responsibility of both the Supervisory Board and the Executive Board to oversee Aegon s overall corporate governance structure. Any substantial change to this structure is submitted to the General Meeting of Shareholders for discussion. Generally, Aegon applies the best practice provisions set out in the Code. A detailed explanation is given below for those instances where Aegon does not fully apply the best practice provisions of the Code. In these few instances, Aegon adheres, as far as possible, to the spirit of the Code. Code II.3.3: The Code recommends that a member of the Executive Board should not take part in discussions or decision-making related to a subject or a transaction in which he or she has a conflict of interest. Aegon s position In line with Dutch law, members of the Executive Board do not take part in discussions or decision-making related to a subject or transaction in which he or she has a personal conflict of interest. Aegon s CEO and CFO are members of the Executive Committee of the Company s largest shareholder, Vereniging Aegon. This may be construed as a business related conflict of interest. However, under Vereniging Aegon s Articles of Association, Aegon s CEO and CFO are specifically excluded from voting on issues directly related to Aegon or their position within it. Aegon s Supervisory Board holds the view that, given the historic relationship between Aegon and Vereniging Aegon, it would not be in the Company s best interests to prevent their participation in discussions and decision-making related to Vereniging Aegon. For this reason, a protocol has been drawn up authorizing the CEO and CFO to continue their existing practice with respect to their dealings with Vereniging Aegon. The text of this protocol is available on Aegon s website. Code IV.1.1: The Dutch Corporate Governance Code recommends that the General Meeting of Shareholders may cancel the binding nature of nominations for appointments of members of the Executive Board and Supervisory Board with an absolute majority of votes and a limited quorum. Aegon s position Aegon s Articles of Association provide for a larger majority and a higher quorum than those advocated by the Code. Given that the Company has no specific anti-takeover measures, the current system is deemed appropriate within the context of the 1983 Merger Agreement under which Aegon was formed. However, to mitigate any possible negative effects from this, the Supervisory Board has decided that, in the absence of any hostile action, it will only make nominations for appointment of members to the Executive and Supervisory Boards that are non-binding in nature. 1

3 2. Management and control systems relating to the process of financial reporting Internal control The Executive Board of Aegon N.V. is responsible for establishing and maintaining adequate internal control over financial reporting. On an ongoing basis, Aegon reviews its internal procedures relating to the composition, preparation, and publication of its financial reporting. The Executive Board has instituted procedures aimed at ensuring that material financial information is delivered to the Executive Board in an orderly and timely fashion. The Executive Board receives the financial information from the country units directly. The Supervisory Board, acting primarily through the Audit Committee, oversees the compliance with these internal procedures. Specific regulations dealing with the audit function have been documented in the Audit Committee Charter and accompanying attachments. Aegon s internal control over financial reporting is a process designed under the supervision of Aegon s principal executive and financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its published financial statements. Internal control over financial reporting includes policies and procedures that: Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; Provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with the generally accepted accounting principles; Provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorizations of management and directors of the Company; Provide reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on the Company s financial statements would be prevented or detected in a timely manner. Aegon s internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of its published financial statements. However, because of its inherent limitations, internal control over financial reporting might not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Internal auditor The Executive Board, under supervision of the Supervisory Board and its Audit Committee, is responsible for determining the overall internal audit work and for monitoring the integrity of the financial statements of Aegon N.V. Aegon Group s Internal auditor reports directly to the Executive Board and the Audit Committee. In addition to the Group Internal Auditor function there are also internal auditors on the level of Aegon s country units who functionally report to the Group Internal Auditor. The work schedule for the Group Internal Auditor is determined with the involvement of the Audit Committee and the external auditor. The findings of the Group Internal Auditor are made available to the Executive Board, the Audit Committee as well as the external auditor. 2

4 Aegon s internal audit function assists the Executive Board in maintaining effective controls by independently and objectively evaluating the adequacy and effectiveness of the organization s internal control and risk management systems. Criteria established under Internal Control Integrated Framework, the Treadway Commission s Committee of Sponsoring Organizations ( COSO ), as periodically updated, are used by Aegon s internal audit to analyze and make recommendations to the Executive Board concerning the effectiveness of internal controls over Aegon s financial reporting process and the Company s internal control framework. External auditor Based on its Charter, the Audit Committee of the Supervisory Board has determined the extent of the involvement of the external auditor in the audit and review of the financial reports (other than the annual accounts). In line with the Act on Accountancy Profession the external auditor will not provide any other services to the Company. Any agreements with the External Auditor to render non-audit services entered into prior to December 31, 2013, were entered into in line with the Pre-approval Policy for additional (non audit) services. The external auditor is appointed by the shareholders at the annual General Meeting of Shareholders. The shareholders will be given the opportunity to question the external auditor at the General Meeting of Shareholders in relation to his or her statement on the fairness of the annual accounts. The Executive Board and the Audit Committee report annually to the Supervisory Board on their dealings with the external auditor, particularly with regard to assessing its independence. At least every four years the Audit Committee and the Supervisory Board conduct a thorough assessment of the functioning of the external auditor. The findings of this assessment will be shared with the General Meeting of Shareholders for the purposes of its deliberations on the annual appointment of the external auditor. The Supervisory Board meets with the external auditor at least once a year on the occasion of the discussion of the annual accounts that are to be submitted for adoption to the General Meeting of Shareholders. As part of standing procedures, the external auditor also receives the information underlying the quarterly figures and other interim financial reports and is given ample opportunity to respond to all information. Reports by the external auditor of his findings in relation to the audit of the annual accounts are made to the Supervisory Board and the Executive Board simultaneously. The external auditor may request the chairman of the Audit Committee to call a meeting of the Audit Committee. The external auditor customarily attends the meetings of the Audit Committee. In accordance with applicable laws, the external auditor reports on his activities to the Executive Board and the Supervisory Board, raising issues in relation to his audit that require the attention of management. Pursuant to the Audit Committee Charter such issues include significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including the quality of earnings, the selection or application of accounting principles (including any significant changes with respect thereto), any major issues as to the adequacy of its internal controls, and any special steps adopted in light of material control deficiencies. 3

5 3. Shareholders' meeting A General Meeting of Shareholders is held at least once a year. Its main function is to decide matters such as the adoption of annual accounts, the approval of dividend payments and appointments to Aegon s Supervisory and Executive Boards. According to the Articles of Association resolutions of the Executive Board entailing significant changes to the identity or character of Aegon or its business are also subject to approval of the General Meeting of Shareholders. Meetings are convened by the Executive Board by means of a public notice. When deemed necessary, the Supervisory or Executive Board has the authority to convene an extraordinary General Meeting of Shareholders. In accordance with Dutch law, the record date will be set twenty-eight days before the date of the General Meeting of Shareholders. The Record Date is used to determine shareholders entitlements with regard to their participation and voting rights. Agenda The Executive Board and the Supervisory Board shall provide the General Meeting of Shareholders with all requested information forty-two days prior to the General Meeting, unless overriding interests of Aegon are better served by not providing the requested information. If such overriding interests are invoked, those reasons will be substantiated. All information which is relevant to shareholders and which must be published pursuant to the provisions of company and securities law is made available on Aegon s website. Aegon uses shareholders circulars to inform the shareholders about the facts and circumstances relevant to upcoming proposals. Shareholders circulars may take the form of an appropriate written explanation in the agenda of the General Meeting of Shareholders. The agenda of the General Meeting lists which items are for discussion and which items are to be voted upon. Resolutions for approval or authorization to be passed by the General Meeting are explained in writing. Material amendments to the Articles of Association and resolutions for appointment of Executive and Supervisory Board members are submitted separately to the General Meeting. Any changes to Aegon s policy on profit appropriation (additions to reserves and dividends) as well as a resolution to pay a dividend shall be dealt with and discussed as a separate agenda item at the General Meeting of Shareholders. Release from liability of the members of the Executive Board for their management and of the members of the Supervisory Board for their supervision is separately voted upon in the annual General Meeting of Shareholders. Only those shareholders who alone, or jointly, represent at least 1% of Aegon s issued capital or a block of shares worth at least EUR 100 million may request items be added to the agenda of these meetings. In accordance with Aegon s Articles of Association, such requests will be granted, providing they are received in writing at least 60 days before the meeting and unless important interests of the Company dictate otherwise. Upon a shareholder s request that an item be put on the agenda of the General Meeting that may result in a change in the Company s strategy, the Executive Board may invoke a response time of at most 180 days for further eliberation and constructive consultation. Attendance Every shareholder is entitled to attend the General Meeting, to speak and vote, either in person or by proxy granted in writing. This includes electronically submitted proxies. All shareholders wishing to take part must, however, provide proof of their identity and shareholding, and must notify the Company ahead of time of their intention to attend the meeting. Aegon also solicits proxies from New York registry shareholders in line with common practice in the United States (where Aegon has a significant shareholder base). 4

6 Voting At the General Meeting, each share carries one vote. However, under normal circumstances, i.e. in absence of a Special Cause, and in line with the Voting Rights Agreement, Vereniging Aegon may cast 1 vote for every common share and 1 vote for every 40 common shares B it holds. All resolutions are adopted by an absolute majority of valid votes cast, unless Dutch law or Aegon s Articles of Association stipulate otherwise. Minutes General Meeting of Shareholders As a general rule, the draft-minutes of the General Meeting of Shareholders shall be made available to the shareholders via Aegon s corporate website (aegon.com) no later than three months after the meeting. Shareholders are given three months to react to the report prior to its adoption in accordance with the Articles of Association. Such reaction is channelled through the Chairman of the General Meeting of Shareholders and the Secretary appointed by the Chairman for that purpose. The minutes are posted on Aegon s website. In line with the Dutch Civil Code, the voting results of the General Meeting of Shareholders will be published on Aegon s website within two weeks after this shareholders meeting. Information for Investors outside meetings Aegon attaches high importance to fair disclosure of information to its stakeholders and the financial markets in all relevant jurisdictions. The Company applies the rules and regulations dealing with disclosure set by the various regulators and the stock exchanges on which Aegon is listed. Aegon s policy on bilateral communication with shareholders is posted on Aegon s website. Meetings with analysts, presentations to analysts, presentations to investors and press conferences shall be announced in advance on the Company s website and by means of press releases. All presentations made on these occasions are posted on Aegon s website. In accordance with market practice, the Company uses various press information services to distribute its press releases. All communications and filings are supervised by the Disclosure Committee instituted by Aegon in compliance with the United States Sarbanes-Oxley legislation. These communications and filings are made available on Aegon s website. Aegon refrains from any actions that may jeopardize the independence of analysts in relation to the Company. Other than factually, analysts reports and valuations (including earnings estimates) are not assessed, commented upon or corrected by Aegon in advance of their publication and Aegon pays no remuneration of any kind to analysts in the context of preparing such reports or their publication. 5

7 4. Executive Board Composition Aegon s Executive Board consists of two members: Alexander R. Wynaendts, Chief Executive Officer and Chairman of the Executive Board Darryl Button, Chief Financial Officer and member of the Executive Board Executive Board role and procedure The Executive Board is charged with the overall management of the Company and, as such, is responsible for achieving the Company s aims, strategy and associated risk profile, as well as overseeing any relevant corporate social responsibility issues and the development of the Company s earnings. Each member of the Board has duties related to his or her specific area of expertise. For certain decisions, specified in Aegon s Articles of Association and the Charter of the Executive Board, the Executive Board must seek prior approval from the Supervisory Board. In addition, the Supervisory Board may also choose to subject other Executive Board decisions to its prior approval. In accordance with Aegon past practice, the Executive Board shall submit the Company s operational and financial objectives along with the strategy to achieve the objectives and the relevant corporate social responsibility issues to the Supervisory Board for its consideration and approval. The outlined strategy includes detailed parameters to be applied in relation to the strategy, such as the Company s financial ratios and capital adequacy levels. The main elements of this will continue to form part of Aegon s annual reports. Aegon s Executive Board is assisted by the Aegon s Management Board, which in 2015 comprised seven members, including the members of the Executive Board. Appointment and other important functions The number of Executive Board members is determined by the Company s Supervisory Board. Executive Board members are appointed by the General Meeting of Shareholders following nomination by the Supervisory Board. The Supervisory Board has agreed with the Executive Board and its individual members on a reappointment and retirement schedule for Executive Board members, which is available on the Company s website The principle of appointments to the Executive Board for a four-year term with possible reappointment is duly reflected in the Articles of Association. None of the members of Aegon s Executive Board is a member of the supervisory board of a listed Company. The Executive Board Charter, as posted on Aegon s website, provides that any prospective appointment of an Aegon Executive Board member to a supervisory or non-executive director role in a listed Company is subject to prior approval from Aegon s Supervisory Board. The Executive Board Charter further determines that an Executive Board member may not be a member of the supervisory board of more than two listed companies and an Executive Board member may not concurrently serve as chairman of the supervisory board of a listed company. Membership of the supervisory board of affiliates of the Company does not count for this purpose. Moreover, the Executive Board Charter states that Executive Board members shall not without prior permission of the CEO (following consultation with the Chairman of the Supervisory Board) or, in the case of the CEO, prior permission of the Chairman of the Supervisory Board, accept any other employment position, including in an advisory or supervisory capacity. 6

8 Risk and control Aegon closely pays attention to risk management and control in each of its country and group units. For detailed information about Aegon s risk management and control system as well as the in control statement please refer to the most recent annual report. Aegon s Annual Report includes information about the most important external factors and variables influencing the Company s performance. These analyses include Aegon s long-term market projections and Company sensitivity to interest rate and underwriting risk fluctuations, impact of credit risk and operational risk losses, changes in equity, real estate, and currency markets. The Executive and Supervisory Boards will consider the publication of additional analyses if or when appropriate. Code of Conduct Aegon has adopted a Code of Conduct at group level. The Code of Conduct is implemented and monitored by a global team that reports to the Executive Board. The Code of Conduct includes whistleblower provisions that give all stakeholders the possibility to report on alleged irregularities without endangering their own position. Violations of the Code of Conduct, as well as any alleged irregularities concerning the functioning of Executive Board members, are reported directly to the Chairman of the Supervisory Board. The Code of Conduct is available on Aegon s website. Responsibility of institutional investors In addition to Aegon s responsibility to its shareholders and other stakeholders, Aegon also is an institutional investor. As such, in deciding how to exercise its rights as a shareholder of other listed companies, Aegon acts primarily in the interest of its policyholders and other ultimate beneficiaries of its products while also honoring the responsibility to the ultimate beneficiaries and investors in the companies in which it has invested. In compliance with local codes applicable to institutional investors, Aegon s country units in the United States and the United Kingdom have detailed policies in place in relation to their exercise of the voting rights attaching to the shares held by them. Aegon Nederland N.V. has published on its Dutch website, its existing policies regarding the exercise of the voting rights attaching to the shares held by Aegon Asset Management Nederland in Dutch-listed companies. In addition, a report on how this policy was implemented is published on the website of Aegon Nederland N.V. A record of whether, and if so, how Aegon Asset Management Nederland has voted as shareholder in General Meetings of Shareholders of Dutch listed companies is also published on its website. Remuneration At the annual General Meeting of Shareholders of May 12, 2011, a Remuneration Policy for the Executive Board, effective retroactively as of January 1, 2011, has been adopted by the shareholders. The Remuneration Policy can be found on Aegon s website. Aegon places a high importance on attracting and retaining qualified directors and personnel, while at the same time safeguarding and promoting the Company s medium and long-term interests. The Remuneration Policy for members of the Executive Board is reflective of these objectives. It has been designed to support Aegon s strategy of value creation and shareholder alignment, in addition to establishing standards for evaluating performance and business results. For each member of the Executive Board, Aegon s Supervisory Board determines a maximum total compensation, reflecting the specific roles and responsibilities of the individual. Each year, the Supervisory Board will review total compensation levels to ensure they remain competitive and provide proper, risk-based incentives to members of Aegon s Executive Board. As per the Executive Board remuneration policy, the Total Compensation for Executive Board members will consist of two elements with a maximum weight of: Fixed compensation 50% Variable compensation, both up front and deferred 50% 7

9 It is the responsibility of the Supervisory Board to determine fixed compensation for members of the Executive Board based on their qualifications, experience and expertise. Variable compensation is based on a number of performance indicators, regularly evaluated by experts in the Company s Finance, Risk, Audit, Human Resources and Compliance departments. The variable compensation is based on both Company and individual performance. This performance is determined using a mix of financial and non-financial indicators. Performance is assessed by Aegon s Compensation Committee and validated by the Audit Committee. The performance period for variable compensation is one year. At the beginning of each performance period, variable compensation is granted conditionally consisting of both cash and shares. The number of conditionally granted shares is calculated using the fair value of one Aegon share at the beginning of that financial year. This fair value is equal to the average price on the New York and Amsterdam stock exchanges for the period December 15 through January 15. After the performance year the Company shall assess the realized performance on the performance indicators and a comparison will be made between the minimum, target and maximum levels of the performance indicators and the realized performance. Subsequently, the amount of conditional variable compensation that can be allocated will be established. Variable compensation will only be allocated once accounts for the financial year in question have been adopted by the Company s shareholders and after an ex-ante assessment. The allocated variable compensation consists of 40% which will be paid out up front at the end of the performance year, and 60% which will be deferred. This deferred portion will remain conditional until it vests. The deferred part will vest in equal parts (i.e. cash and shares) over a three year period. After an ex-post assessment, which may lower the vesting parts, the parts will be paid 50% in cash and 50% in shares. For the vested shares an additional three year mandatory holding period applies. For more details on the compensation of the Executive Board members, please refer to the chapter on remuneration in the Annual Report. Engagement Agreements between the members of the Executive Board and Aegon N.V. include a maximum severance payment in the event of termination, limited to the fixed component of the particular member s fixed salary for one year. As disclosed in Aegon s annual reports, members of the Executive Board of Aegon are entitled to mortgage loans provided by Aegon in the normal course of its business and on terms applicable to all employees in the Netherlands. Such loans to Executive Board members are subject to the prior approval of the Supervisory Board. The remuneration of the individual members of the Executive Board is determined by the Supervisory Board within the scope of the Remuneration Policy adopted by the General Meeting of Shareholders. The Remuneration Report of the Supervisory Board, as included in the Annual Report and available on the Company s website, explains the manner in which the Remuneration Policy pertaining to the members of the Executive Board has been pursued in the year under review and presents the full remuneration of the individual members in accordance with the detailed provisions of the Code. The principal points of the Remuneration Report are also dealt with in the Report of the Supervisory Board. Upon conclusion of a contract with a new member of the Executive Board, the main elements of the member s employment contract are forthwith made public. Any particular payment to a (former) member of the Executive Board is recorded and explained in the Remuneration Report. 8

10 Conflicts of interest The Code of Conduct addresses conflicts of interest that may occur between Aegon and its employees, including the members of the Executive Board. More detailed regulations regarding conflicts of interest between members of the Executive Board and Aegon are included in the Executive Board Charter. Both documents are available on Aegon s website. Any transactions in which there are conflicts of interest shall be agreed on terms customary in the industry and are published in the Annual Report. In line with Dutch law, members of the Executive Board do not take part in discussions or decision-making related to a subject or transaction in which he or she has a personal conflict of interest. Aegon s CEO and CFO are members of the Executive Committee of the Company s largest shareholder, Vereniging Aegon. This may be construed as a business related conflict of interest. However, the Articles of Association of Vereniging Aegon provide that Messrs. Wynaendts and Button are excluded from voting on certain issues relating directly to Aegon (including the adoption of annual accounts, discharge of members of the Executive Board and appointments to the Executive Board and Supervisory Board of Aegon). The Supervisory and Executive Boards have drawn up a protocol that provides that the members of the Executive Board who also serve on the Executive committee of Vereniging Aegon shall continue to participate in discussions and decision-making relating to possible transactions with Vereniging Aegon. The Supervisory Board is confident that by adhering to this protocol any possible conflicts of interest with Vereniging Aegon are adequately dealt with and that the best practice provisions of the Code have been complied with in all material respects. The protocol is posted on Aegon s website. 5. Supervisory Board Composition At present, Aegon s Supervisory Board consists of nine non-executive members: Robert J. Routs, Chairman of the Supervisory Board, Chairman of the Nomination and Governance Committee, Member of the Compensation Committee Irving W. Bailey II, Vice-Chairman of the Supervisory Board, Member of the Audit Committee, Member of the Compensation Committee Robert W. Dineen, member of the Audit Committee, Member of the Risk Committee Shemaya Levy, Chairman of the Risk Committee, Member of the Nomination and Governance Committee Ben Noteboom, Chairman of the Compensation Committee and Member of the Audit Committee Ben van der Veer, Chairman of the Audit Committee, Member of the Nomination and Governance Committee Dirk P.M. Verbeek, member of the Audit Committee, Member of the Risk Committee, Member of the Nomination and Governance Committee Corien M. Wortmann-Kool, Member of the Risk Committee, Member of the Compensation Committee Dona D. Young, Member of the Audit Committee, Member of the Risk Committee Members are appointed by the General Meeting of Shareholders following nomination by the Supervisory Board. A profile, which is published at the website of the Company, has been drawn up outlining the required qualifications of its members. Supervisory Board members are no longer eligible for appointment after the age of 70, unless the Board itself decides to make an exception. 9

11 Supervisory Board role and procedure The supervision of the management of the Executive Board and of the Company s business and general course of affairs is entrusted to the Supervisory Board, acting as a body with collective responsibility and accountability. The Supervisory Board also assists the Executive Board by giving advice. In performing their duties, the members of the Supervisory Board are required to act in accordance with the interests of the Company and its business with due regard for sustainability issues. The Supervisory Board is responsible for decisions relating to the resolution of conflicts of interest between members of the Executive Board, members of the Supervisory Board, major shareholders, and the external auditor on the one hand, and Aegon on the other. Annually, the Supervisory Board evaluates its own performance and that of its individual members, as well as the performance of the Executive Board and that of the individual Executive Board members. Such meetings take place without Executive Board participation. Moreover, the Supervisory Board Rules provide that a member of the Supervisory Board shall resign in the event of inadequate performance, structural incompatibility of interests, or other impeding circumstances. Pursuant to Aegon s Articles of Association and the Supervisory Board Rules, the Supervisory Board members are empowered to obtain all information they deem necessary for the performance of their duties, including the right to acquire information from Company officers and external experts. The Supervisory Board Rules contain provisions regarding the division of duties within the Supervisory Board, its internal procedures and its relations with the Executive Board and with the General Meeting of Shareholders. These regulations are posted on Aegon s website The Supervisory Board consistently provides a detailed report of its activities during the financial year in each annual report. The activity report includes the information prescribed in the Dutch Corporate Governance Code and addresses the topics discussed within the Supervisory Board meetings during the year. Independence The current composition of the Supervisory Board is in compliance with the best practice provisions of the Dutch Corporate Governance Code that relate to the independence of supervisory board members. Expertise and composition The members of the Supervisory Board are appointed by the General Meeting of Shareholders. For the purpose of making nominations to the Supervisory Board, including any nominations for reappointment, the Supervisory Board has drawn up a profile that specifies requirements for individual members as well as the intended and existing composition and competences of the Supervisory Board as a whole. This profile also reflects the detailed composition and diversity requirements of the Dutch Corporate Governance Code. Under the Code s composition profile, each member of the Supervisory Board is expected to be capable of assessing the broad outline of the overall policy, in addition to having the specific expertise required to fulfil his or her designated role. The profile also takes into account the nature of Aegon s business, the activities of the Supervisory Board, and the background of the Supervisory Board members. It is designed to ensure that the Supervisory Board as a whole is capable of the proper performance of its duties. The composition profile is available on Aegon s website, as is the prescribed information about each member of the Supervisory Board and the applicable retirement schedule. Aegon offers its newly appointed members of the Supervisory Board an orientation program that provides general and specific information about Aegon s financial affairs and facts regarding the insurance industry, Aegon s business within the industry, and social and legal affairs of the Group. The Supervisory Board regularly discusses whether there are any areas in which its members require further training or education. 10

12 Several members of the Supervisory Board also serve as members of supervisory boards of other Dutch-listed companies. The Supervisory Board has concluded that none of these memberships unduly or negatively impacts the respective individual s performance of his or her duties as a member of Aegon s Supervisory Board. In accordance with the Dutch Corporate Governance Code, the Supervisory Board Rules state that no member can serve on Aegon s Supervisory Board for more than three four-year terms. Role of the Chairman of the Supervisory Board and the Company Secretary According to the Supervisory Board Rules, the chairman is responsible for overseeing the day-to-day functions of the Supervisory Board and its committees, for keeping close track of the flow of information to the Supervisory Board, and for overseeing the consultation and decision-making processes within the Supervisory Board. The Chairman is also responsible for initiating the performance evaluation of the individual members of the Supervisory and Executive Boards and for maintaining appropriate contact with the Executive Board and the Dutch Central Works Council. The duties of the Company Secretary include assisting the Supervisory Board. In particular, the Company Secretary is responsible for the correct application of statutory obligations and obligations under the Articles of Association and the Supervisory Board Rules. The appointment and dismissal of the Company Secretary is subject to the approval of the Supervisory Board. Composition and role of the key committees of the Supervisory Board In compliance with the applicable provisions of the United States Sarbanes-Oxley Act 2002 and the Dutch Corporate Governance Code, the Supervisory Board maintains four standing committees that are comprised of its members. These committees are: the Audit Committee, the Compensation Committee, the Nomination and Governance Committee, and the Risk Committee. Each Committee reports its findings to the Supervisory Board and these findings are discussed in the plenary meetings of the Supervisory Board. Each of the Committees of the Supervisory Board has a charter in which the composition, duties, and internal procedures are defined. The Committee Charters are available on Aegon s website. The Supervisory Board s yearly report, which is included in the Annual Report, provides information on the activities of each its Committees. This report also lists the members of each Committee. Audit Committee The Audit Committee is appointed by the Supervisory Board to assist the Supervisory Board in monitoring (1) the integrity of Aegon s financial statements, (2) the external auditor s qualifications and independence, (3) the performance of Aegon s internal audit performance and that of the external auditor, (4) Aegon s compliance with legal and regulatory requirements, and (5) Aegon s finances and Company finance related strategies. The Audit Committee is chaired by Mr. van der Veer. The Audit Committee has determined that its group, which includes at least one financial expert, satisfies the criteria of independence specified by the New York Stock Exchange, the provisions of the Dutch Corporate Governance Code, and the United States Sarbanes-Oxley Act. The Executive Board members, the Internal Auditor and the external auditor periodically attend the meetings of the Audit Committee. Regularly, the Audit Committee meets with each of the external auditor and Internal Auditor without the presence of the Executive Board members. 11

13 Compensation Committee The purpose of the Compensation Committee is to design, develop, implement, and review the Executive Board members compensation and terms of employment and the Supervisory Board members compensation to be adopted by the General Meeting of Shareholders. The Compensation Committee makes its recommendations to the Supervisory Board. The Compensation Committee is chaired by Mr. Noteboom. Nomination and Governance Committee The Nomination and Governance Committee advises the Supervisory Board on first-appointment candidates to fill Supervisory Board vacancies and member reappointments after each four-year term. The advice of the Nomination and Governance Committee shall be based on the profile for the Supervisory Board. In addition, the Nomination and Governance Committee advises on and proposes to the Supervisory Board candidates to be nominated for appointments as members or as chairman of the Executive Board. The Nomination and Governance Committee on a regular basis reviews the individual performance of Executive Board and Supervisory Board members, as well as the selection criteria for senior management within the Aegon Group. The Nomination and Governance Committee also oversees the corporate governance structure of the Company, compliance with the Dutch Corporate Governance Code and any other applicable corporate governance legislation and regulations. The Nomination and Governance Committee procures that each substantial change to the corporate governance structure of the Company will be submitted to the General Meeting of Shareholders for discussion under a separate agenda item. The Nomination and Governance Committee is chaired by Mr. Routs. Risk Committee The Risk Committee focuses on the effectiveness and appropriateness of the enterprise risk management framework, including but not limited to risk strategy, risk tolerance and risk governance. The Risk Committee also reviews the Aegon s risk exposures as it relates to capital, earnings and market consistent value at risk and compliance with the Company s risk policies covering all material risks. The Risk Committee is chaired by Mr. Levy. Remuneration members Supervisory Board The remuneration of Supervisory Board members is determined by the General Meeting of Shareholders and is not dependent on Aegon s profit. The members of the Supervisory Board do not receive any shares or rights to shares by way of remuneration. Members of the Supervisory Board are not eligible to receive any personal loans, guarantees, or similar benefits. Conflicts of interest Rules regarding conflicts of interest applicable to members of the Supervisory Board are included in the Supervisory Board Charter. These Rules are compliant with the relevant provisions of the Dutch Corporate Governance Code and have been posted on Aegon s website. Moreover, regulations have been drawn up governing ownership of and transactions in securities by Executive or Supervisory Board members, other than securities issued by Aegon. 12

14 6. Information on sharecapital and major shareholders On December 31, 2015, Aegon had an authorized capital of EUR million, divided into 6 billion common shares, each with a par value of EUR 0.12, and 3 billion common shares B, each with a par value of EUR 0.12 per share. At the end of 2015, a total of common shares and 585,022,160 common shares B shares had been issued. These represented respectively % and 21.41% of Aegon s total issued and fully paid-up capital. The financial rights attached to a common share B are one-fortieth (1/40th) of the financial rights attached to a common share. The rights attached to the shares of both classes are otherwise identical. The 1983 Merger Agreement (as amended) provides that additional common shares B are to be issued by Aegon to Vereniging Aegon at the option of Vereniging Aegon in order to keep or restore its total stake at 32.6% irrespective of the circumstances which caused the total shareholding to be or become lower than 32.6%. In addition, Aegon and Vereniging Aegon have entered into a Voting Rights Agreement. As a matter of Dutch corporate law, the shares of both classes offer equal full voting rights, as they have equal nominal values (EUR 0.12). The Voting Rights Agreement provides that under normal circumstances, i.e. except in the event of a Special Cause (As defined in the Voting Rights Agreement), Vereniging Aegon is not allowed to exercise more votes than is proportionate to the financial rights represented by its shares. This means that in absence of a Special Cause, Vereniging Aegon may cast 1 vote for every common share it holds and only 1 vote for every 40 common shares B it holds. As Special Cause qualifies the acquisition of a 15% interest in Aegon N.V., a tender offer for Aegon N.V. shares or a proposed business combination by any person or group of persons whether individually or as a group, other than in a transaction approved by the Executive Board and the Supervisory Board. If, in its sole discretion, Vereniging Aegon determines that a Special Cause has occurred, Vereniging Aegon will notify the General Meeting of Shareholders and retain its right to exercise the full voting power of one vote per common share B for a limited period of six months. As a result of the foregoing and certain qualified majorities specified in Aegon s Articles of Association, in the event of a Special Cause (as referred to above), for a period of six months Vereniging Aegon may effectively be in a position to temporarily block unfriendly actions by a hostile bidder or others. The Voting Rights Agreement entered into between Aegon and Vereniging Aegon, as published on Aegon s website, clearly sets out those circumstances in which the protection may be invoked and a special cause may be declared. The Supervisory and Executive Board take the view that this arrangement is appropriate in the context of the 1983 Merger Agreement. On December 31, 2015 Vereniging Aegon, Aegon s largest shareholder, held 292,687,444 Common Shares and all issued common shares B. Accordingly, under normal circumstance the voting power of Vereniging Aegon at December 31, 2015 amounts to approximately 14.50%. In the event of a Special Cause, Vereniging Aegon s voting rights will increase, currently to 32.64%, for up to six months per special cause. Aegon s Articles of Association provide that the General Meeting of Shareholders may cancel the binding character of nominations for the appointment of new members to the Supervisory Board and the Executive Board with a majority of two-thirds of the votes cast representing at least one-half of the issued capital. In addition, members of the Executive Board and members of the Supervisory Board can only be dismissed by the General Meeting of Shareholders with the same qualified majority, except if proposed by the Supervisory Board. These provisions were included at the time of the overall review of Aegon s corporate governance and were adopted at the extraordinary General Meeting of Shareholders on May 9, The qualified majority requirement was included in order to give Aegon a temporary protection against unfriendly actions by a hostile bidder, for example. Effectively, Vereniging Aegon may for a period of six months block unfriendly attempts to replace the Supervisory Board and the Executive Board. 13

15 The Supervisory Board and the Executive Board have evaluated the provisions in Aegon s Articles of Association containing the qualified majority requirements in light of the provisions of the Dutch Corporate Governance Code. Given the absence of anti-takeover protection, they concluded that the qualified majority requirements (in light of the voting rights of Vereniging Aegon) are an integral part of Aegon s protection against unfriendly actions. Taken together, the qualified majority requirements and the voting rights of Vereniging Aegon constitute the only protection Aegon currently has in place. The protection thus accorded is in line with accepted market practice. For the purpose of further mitigating the possible negative effects of the qualified majority requirements in the ordinary course of business, the Supervisory Board has decided that, absent unfriendly actions, it shall make nominations to the Executive Board and the Supervisory Board only on a non-binding basis. This will provide the shareholders the opportunity to decide on the nomination with a simple majority. Thus, for all practical purposes, Aegon complies with the relevant principle and the relevant best practice provision. To Aegon s knowledge based on the filings made with the Netherlands Authority for Financial Markets, the AFM, the US based investment management firm Dodge & Cox holds a capital and voting interest in Aegon of 3%. Based on its last filing with the Dutch Autoriteit Financiële Markten on July 1, 2013 the Dodge & Cox International Stock Fund stated to hold 83,320,454 common shares and voting rights which represents 3.0% of the capital issued as at December 31, On February 12, 2016, Dodge & Cox s filing with the United States Securities and Exchange Commission (SEC) shows that Dodge & Cox holds 252,801,195 common shares, representing 9.3% of the issued capital, and has voting rights for 246,721,656 shares, representing 9.0% of the votes as at December 31,2015. The SEC filing also shows that of this number of shares Dodge & Cox International Stock Fund holds 130,337,763 common shares, which represents 4.8% of the issued capital as at December 31, The remainder of the common shares registered in name of Dodge & Cox with the SEC are held by Dodge & Cox on behalf of its other clients, including investment companies registered under the Investment Company Act of 1940 and other managed accounts. The filing of Franklin Resources, Inc. (FRI), a US-based investment management firm, with the SEC on February 3, 2016, shows that FRI holds 135,002,163 common shares, representing 4.9% of the issued capital as at December 31, The SEC filing also shows that the commons shares are held by various entities to whom they provide asset management services. Each of these entities hold less than 3% of the issued capital as at December 31, In the event of a serious private bid for a business unit or a participating interest in excess of the threshold as referred to in article 2:107a.1 under c of the Netherlands Civil Code, the Executive Board will make public its position on the bid and its reasons for its position. For further information as regards exercise of control (EU Directive on mergers and acquisitions) reference is made to the corporate governance section of the Annual Report. 14

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