corporate governance

Deviations from the Dutch corporate governance code

Randstad applies all relevant provisions of the Dutch corporate governance code, with the following deviations.

II.1.1 A management board member is appointed for a maximum period of four years.

The members of the executive board appointed before 2005 were appointed for an indefinite period. The members of the executive board appointed since 2005 have been appointed for a period of four years.

II.2.3 Shares granted to management board members without financial consideration shall be retained for a period of at least five years [...].

Since 2005, the three-year medium-term bonus has been paid out in performance shares. These shares vest after three years and are retained for at least two years. We believe this five-year term sufficiently enhances shareholder alignment and is in line with the medium-term nature of the bonus plan. However, we also believe that share sales should be allowed earlier to the extent necessary to settle related tax liabilities. As referred to in the remuneration report, a one-time additional grant of conditional shares was made in 2007. These shares will vest in three tranches after three subsequent years. Vested shares should be held for an additional period of two years from the moment of vesting, with the exception of the sale of shares to cover income taxes due in relation to the award.

II.2.7 The maximum remuneration in the event of dismissal is one year’s salary.

Given Randstad’s shareholder structure, with its strong concentration of shares within the shareholder group, and to do justice to the seniority of board members, severance for members of the executive board is fixed at two annual base salaries plus one-twelfth of the same annual salary per year of service to a maximum of three annual salaries. This severance arrangement applies only to early termination of the employment contract when the cause of termination does not lie with the board member concerned, or in the case of a change in control.

III.5 If the supervisory board comprises more than four members, it should designate […], a remuneration committee and a selection & appointment committee.

Because it was felt that the selection, appointment and remuneration related issues are interlinked, the supervisory board decided to combine these activities in one committee: the nomination and compensation committee.

III.5.11 The remuneration committee shall not be chaired by the chairman of the supervisory board [...].

Given the strategic importance of the selection and retention of senior management for the long-term success of the company, Randstad has opted for a combined nomination & compensation committee. Randstad considers it vital that the chairman of the supervisory board is also closely involved in the attraction and retention of current and future senior management, as well as the longer-term succession planning for the executive board, which is reflected through his appointment as chairman of the nomination & compensation committee.

Legal transparency obligations

Most of the information that needs to be disclosed under the Article 10 Takeover Directive Decree and section 391, sub-section 5, book 2 of the Dutch Civil Code is available in various sections of our annual report. In this particular section, we provide additional information or indicate where the information can be found.

a Capital structure and attached rights and duties
An overview of the company’s capital structure, voting rights and dividend policy is included on the section investor relations & Randstad shares of this annual report.

b Statutory or contractual restrictions on share transfers
About 16.9% of the total share capital (4.0% ordinary shares and 12.9% Type-B preferred shares) is converted into depository receipts (see Voting rights). The transfer of depositary receipts of preference B shares requires the approval of the executive board and supervisory board.

c Major shareholders
The list of major shareholders can be found in the section on major shareholders.

d Special rights of control
The company has not issued special rights of control to specific shares or shareholders. Preference A shares can be issued, but solely as approved by general meetings of shareholders.

e Control mechanisms relating to option plans and share purchase plans
Within the Group, the following share-based payment arrangements are in effect: a performance stock option plan for the executive board, two performance share plans (one for the executive board members and one for senior management) and a share purchase plan for all corporate employees. The relevant characteristics of these plans can be found in the remuneration section and notes to share-based payments.
The maximum number of options and shares to be granted is fixed; the actual granted number is linked to predetermined performance targets. The number of options and shares to be granted may not lead to a dilution per year of more than 1% of issued ordinary shares. The share purchase plan for all corporate employees does not affect the share capital of the company.

f Voting limitations
Holders of ordinary share depository receipts and Type-B preferred share depository receipts have no voting rights.

g Agreements with shareholders that can limit the transfer of shares or voting rights
In 2007, the company finalized an agreement with Mr. Frits Goldschmeding, Randstad founder and leading shareholder, and his inheritors, on their shareholding. Frits Goldschmeding’s objective remains explicitly to continue his position as a long-term shareholder through direct ownership or eventually through his inheritors.

The leading ambition for all parties involved is to secure the company’s continuity, strategic position and development, now and in the future. Such commitment justifies assigning one seat as member of the supervisory board. The main points of the agreement are as follows:

• Lock-up: in the event of Mr. Goldschmeding’s passing, his inheritors will be bound to a lock-up of at least 12 months, implying that during that year they will carry out no actions concerning their direct or indirect interests in Randstad Holding, nor will any changes take place in the strategy as it is pursued by Randstad Holding.
• Grace period: if the inheritors intend to divest all or part of the shares after the lock-up period, they shall give written notice of this intended divestment to the executive and supervisory boards six months in advance.
• Consultations: after receiving such notice, the boards will enter into consultation with the inheritors, and they can propose candidates or alternative candidates while taking account of the interests of the inheritors and the continuity of Randstad Holding nv. Such a proposal should be made within four months after receipt of the notification from the inheritors. This ruling only applies as long as the total interest of the inheritors amounts to more than 33 1/3% of all issued and outstanding ordinary shares Randstad Holding nv.
• Supervisory board seat: Randstad Beheer (the investment vehicle through which the majority of family shares is held) has the right to nominate one member of the supervisory board after Mr. Goldschmeding’s third term in the supervisory board, or at an earlier stage in case his membership of the supervisory board is terminated before the Annual General Meeting of Shareholders in 2011. The person to be nominated should fulfill the qualities that are required of a supervisory executive of an international company and the nomination shall be submitted to the AGM. These rights and obligations will cease to be applicable as soon as the interests of the inheritors fall below 25% of the issued and outstanding ordinary shares Randstad Holding nv.

As far as the company is aware, this is the sole arrangement with a shareholder that can limit the transfer of (depository receipts of) shares or of voting rights.

h Regulations concerning appointment and dismissal of executive board members and supervisory board members
Members of the executive board and supervisory board are appointed and may at any time be suspended or dismissed by the Annual General Meeting of Shareholders. A super¬visory board member is eligible for reappointment twice. Resolutions with respect to appointment and dismissal are passed by an absolute majority of the votes cast.

When a proposal for the amendment of the Articles of Association is made to the Annual General Meeting of Shareholders, this is always stated in the convening notice for that meeting. A copy of the proposal, containing the verbatim text of the proposed amendment, is simultaneously deposited at the office of the company, for perusal by every shareholder and holder of depository receipts, until the end of the meeting. Copies are made available free of charge. Amendments to the Articles of Association involving changes to the special rights accruing to the holders of preference shares require the approval of the holders of preference shares concerned at the meeting.

i Authority of the executive board, especially to issue of shares in the company and the acquisition of company shares by the company
The executive board is authorized, subject to the approval of the supervisory board, to issue shares, grant subscription rights and restrict or exclude pre-emptive rights for holders of ordinary shares until May 8, 2012 for an annual maximum of 1% of the issued ordinary share capital of the company. The Annual General Meeting of Shareholders held on May 7, 2008 authorized the executive board to have the company acquire its own shares, also subject to the approval of the supervisory board, for a maximum of 10% of the total number of issued ordinary shares. This authorization has been limited to a maximum of 18 months and the aim is to renew it each year.

j Change of control arrangements
Change of control provisions have been included in the company’s syndicated facility as well as the company’s performance share and options plans for senior management and the share purchase plan for corporate employees.

k Agreements with board members or employees
In the event that a board member’s employment contract is terminated because of a public offer, they will receive severance pay of two annual base salaries plus one-twelfth of the same annual salary per year of service to a maximum of three annual salaries.

Corporate website

The full text of the above mentioned by-laws and Articles of Association is available at the company’s offices and is posted on the corporate website.