REMUNERATION POLICY COMPENSATION COMMITTEE Dutch Corporate Governance Code, the Supervisory Board has subsequently decided to submit the Remuneration Policy, as revised, to the General Meeting of Shareholders for adoption. Upon adoption, the Remuneration Policy will be in effect for a three-year period, starting January 1, 2004. The amendments to the Remuneration Policy have not lead to a higher total direct compensation ‘at target’ performance as compared to the old structure. Even a performance ‘over target’ will not deliver a compensation to the level of the past. In implementing the Dutch Corporate Governance Code, due regard will be given to existing employment agreements with individual members of the Executive Board. The Terms of Reference for the Compensation Committee are outlined in the Supervisory Board Rules and Regulations.  The Compensation Committee is responsible for the design, development, implementation and review of the Remuneration Policy that outlines the terms and conditions of employment of the CEO and the other members of the Executive Board and of the fees of the members of the Supervisory Board. The Committee makes its recommendations to the Supervisory Board. The Remuneration Policy as currently in place will be submitted to the General Meeting of Shareholders to be held on April 22, 2004 for adoption. Any subsequent material changes in the Remuneration Policy will be submitted to the annual General Meeting of Shareholders for adoption. The Supervisory Board appoints at least three of its members to the committee, for a period of four years. The committee currently consists of Messrs. F. J. de Wit (chairman), H. de Ruiter (vice-chairman), W.F.C. Stevens and L.M. van Wijk. Base salary levels are based on the requirements, responsibilities and risks of a position as member of the Executive Board. The committee will ensure that base salary levels are realistic and competitive. POLICY BASE SALARY The secretary to the Supervisory Board also acts as the secretary to the committee, whilst the Group Human Resources manager assists the committee as an internal advisor. The committee may also consult outside advisors for select expert subjects, such as market benchmark information and system validation. The committee will meet at least once a year. It will report its findings and conclusions to the Supervisory Board and these are discussed in the plenary meetings of the Supervisory Board.  In setting the appropriate levels, the committee has taken into account individual roles and responsibilities of the Executive Board members. As a consequence, it will distinguish between the base salary levels for respectively the CEO, CFO and the other members. Annually the committee will review the levels, considering circumstances that would justify adjustment, such as fundamental changes in the business environment or in the individual responsibilities. The committee will also consider benchmark information provided by (outside) advisors. In that regard, the European Insurance Market will serve as the reference for European Executive Board members. For US Board members, the US Insurance Market is used as the appropriate reference. For all, base salary is reflected against the median market level. The individual salaries of the Dutch Executive Board members do follow the standard Dutch Collective Labor Agreement. The Remuneration Policy aims to create a reward structure that will allow the company to attract, retain and reward executives who will lead the continued growth, development and financial success of the company, as well as at providing those executives with a well-balanced and incentive compensation. This reward structure covers five elements: base salary, short-term incentive, long-term incentive, pension and other arrangements. REMUNERATION POLICY 2004 2003 Mr. Shepard’s annual base salary (USD 1,000,000) was not increased when he was appointed chairman of the Executive Board in April 2002, and did not change in 2003 either. The annual base salaries for 2003 of Messrs. Streppel and  Van der Werf were increased as per January 1, 2003, from  EUR 495,000 to EUR 650,000 and from EUR 495,000 to  EUR 550,000 respectively whilst Mr. Wynaendts’ base salary was set at EUR 550,000 per annum as per his appointment to the Executive Board on April 17, 2003. The base salaries of the Executive Board members were not changed on January 1, 2004. In December 2002, the Compensation Committee decided to review the total direct elements (base salary plus STI and LTI) of the Executive Board members’ income, included in the Remuneration Policy, in order to strengthen the interdependence between their income and the results of the activities under their responsibility. This review took place during five meetings of the committee in 2003, having as main objective to revise the Remuneration Policy so as to better support AEGON’s strategy for value creation and shareholder alignment by focusing on performance and business results. At the same time, the Remuneration Policy should continue to offer an incentive through performance-linked pay, reflecting both the members’ individual role as well as their collective responsibilities. In reviewing the Remuneration Policy, the committee also considered recent trends and developments in reference markets. The revisions in the Remuneration Policy took effect on January 1, 2004. In view of the provisions of the AEGON GROUP ANNUAL REPORT 2003 71