Succession planning and remuneration models
Our systematic succession planning enables our skilled employees and managers to develop attractive careers within our company. Our remuneration models also provide incentives for employees to perform and to align their work practices with our guiding principles.
The systematic development of executives is a core responsibility of all general management teams of the respective METRO group companies. 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. At the same time, we establish specific international career paths for our executives in collaboration with the METRO country organisations, subsidiaries and METRO AG. Our career-planning processes also allow us to identify and support internal candidates for key positions in the company. This way, vacant positions can be filled from our own ranks. In financial year 2018/19, the internal succession rate for the country boards of METRO Wholesale was 70.8%.
To bolster our management capabilities and to achieve sustainable growth, we launched the Lead & Win programme at METRO in financial year 2016/17. The integrated learning concept is used to develop approximately 11,500 executives and is divided into 3 to 4 modules for different management levels. The participants learn about group-specific topics. The objective is for all executives to have completed the programme by the end of 2022. 5,003 executives started the programme in financial year 2018/19. In the coming years, the focus will increasingly be on levels 3 and 4 in the stores, namely the business, operations and department managers.
Furthermore, our young talents and top executives – employees who have highly complex tasks with special significance to the success of our company – are asked to define their own individual development plan based on a structured self-assessment of their personality focused on the management competencies relevant to the position.
For further support, we introduced the METRO competencies in financial year 2018/19 and defined 5 leadership dimensions as the basis for management training and talent programmes at METRO. The 43 METRO competencies are allocated to the following 5 dimensions of leadership:
- Lead Self
- Develop Culture
- Build Momentum
- Deliver Results
This highlights that all employees are responsible for their own development and also business success.
In another major initiative, the METRO Sustainable Leadership Programme (MSLP) supports approximately 30 international executives each year over a period of 1.5 years to improve their self-management and proactive change management and to implement an individual sustainability project. The projects address environmental and social matters such as e-mobility, waste reduction and sustainability in the supply chain.
Individual job performance reviews
As part of our Results & Growth process, we conduct individual performance reviews for the entire group once a year. This allows us to better assess progress and skills and establish a strong feedback and development culture. We define the corresponding priorities at the beginning of each financial year, which are then examined and adjusted as necessary through mid-year reviews. The final performance review is then conducted at the end of each financial year in a feedback session, in which compliance with the group-wide guiding principles is also addressed.
Systematic succession planning
With the Leadership Talent Review, we have established a long-term process to identify and support talented employees at an early stage with the goal to fill top positions. Once a year, we use this review to discuss succession planning for key positions with the various METRO national subsidiaries. The competencies, skills and experience of each candidate are assessed and compared with the updated job specifications of the corresponding positions. These interviews form the basis for filling all top positions. In financial year 2018/19, we focused in particular on identifying young talent and we managed to find the top 500 junior managers worldwide. We now take specific measures and set up programmes to promote the development of young employees.
Performance-based remuneration for executives (with the exception of members of the Management Board)6See chapter 6 remuneration report
Our remuneration system ‘Perform & Reward’ comprises a monthly fixed salary as well as 1-year and multi-year variable remuneration components whose payment amounts are essentially linked 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. The multi-year variable compensation components include a sustainability component and allow executives to participate in METRO’s share price development.
The remuneration model for top executives is based on the following 4 principles:
- Fair and internally consistent remuneration
- Performance-based pay
- Market-driven and appropriate salaries
- Encouragement of role model behaviour
With the 1-year and multi-year variable remuneration, top executives participate directly in the success of their respective units.
The 1-year variable remuneration is based on sales, profit (EBITDA) and cash flow. In addition, customer satisfaction is a relevant key performance indicator.
As part of the multi-year variable remuneration (long-term incentive, LTI), a specific plan has been created for top executives of the group with focus on the increase in value of METRO. The LTI is based on the relative total shareholder return (TSR) of the METRO AG share compared to a benchmark (MDAX and a group of selected benchmark companies7BidCorp; Bizim Toptan; Marr; Eurocash Group; Performance Food Group; US Foods Sysco; Sligro). The economic success of each company during the performance period of the plan is another indicator. Furthermore, sustainability is measured by the rank METRO achieves in the Dow Jones Sustainability Index.
Additionally, a mid-term incentive (MTI) was set up for top executives to support the transformation at METRO over a period of 2 years. The plan allows participants to join in on METRO’s success and rewards the achievement of important internal transformation goals, such as customer satisfaction and the quality of our master data.
Top executive remuneration is complemented by benefits, such as an attractive pension model, promotion of health care and a mobility budget that can be used for a vehicle or train rides as part of METRO’s ‘Green Car Policy’.
6 See chapter 6 remuneration report
7 BidCorp; Bizim Toptan; Marr; Eurocash Group; Performance Food Group; US Foods Sysco; Sligro