Governance  Remuneration policy and report 104 In addition, to monitor alignment with the general industry  in the Netherlands, a reference group has been established,  comprising the twelve leading companies listed on NYSE  Euronext Amsterdam, excluding financial services providers. The  Supervisory Board will regularly review the composition of these  two groups to ensure that they continue to provide a reliable  basis for comparison. 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. At present,  the Executive Board Target Direct Compensation (defined as base  salary plus variable compensation) is below the median of the  international market. To ensure Executive Board members are  compensated in accordance with the desired market positioning,  the alignment to the desired market position needs to be  addressed over time, in accordance with applicable rules and  regulations and codes. Consistent with the Executive Board Remuneration Policy, the  total compensation for Executive Board members will consist of  fixed compensation and variable compensation. The Supervisory Board conducts regular scenario analyses  to determine the long-term effect of level and structure of  compensation granted to members of the Executive Board. The  Supervisory Board (Compensation Committee) has discussed and  endorsed the 2013 total compensation for the Executive Board. 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. Aegon believes that variable compensation strengthens  Executive Board members´ commitment to the company´s  objectives and strengthens the Executive Board members´  commitment to the company´s business strategy, risk tolerance  and long-term performance. Variable compensation is based on a  number of individual and company performance indicators,  regularly evaluated by experts in the company´s Finance, Risk,  Audit, Human Resources and Compliance departments This performance is determined using a mix of financial and  non-financial indicators. Aegon believes these indicators provide  an accurate and reliable reflection of both company and  individual performance. The type of performance indicators are  selected in accordance with the long-term goals of the company.  The level of the indicators should be challenging but achievable.  The targets and levels are agreed by the Supervisory Board.  Performance is assessed by Aegon´s Compensation Committee  and validated by the full Supervisory Board. For 2013, the performance period for variable compensation was  one year. By implementing deferral and additional holding  periods, Aegon believes that the long-term interests of Executive  Board members are aligned with the interests of Aegon and its  stakeholders Variable compensation, comprising both cash and shares, is  conditionally granted at the beginning of each performance  period. The number of conditionally granted shares is calculated  using the fair value of one Aegon share at the beginning of that  period. This fair value is equal to the average price on the NYSE  Euronext Amsterdam stock exchange for the period December  15 through January 15. After the performance year, the company  will assess the realized performance against the performance  indicators and compare the minimum, target and maximum levels  of the performance indicators with the realized performance.  The amount of conditional variable compensation that can be  allocated will then be established. Variable compensation will 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 equal parts of  cash and shares, of which 40% will be paid out (or vest)  following the performance year, and 60% will be deferred.  This deferred portion will remain conditional until it vests. The deferred part will vest in equal parts (that is, 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 vesting. Vested shares are restricted for  a further period of three years (with the exception of shares sold  to meet income tax obligations). The payout of the variable compensation can be illustrated with  an example as follows. For every 1,000 variable compensation,  400 will be paid out/vest following the performance year. This  part will be paid 50% in cash (=200) and 50% in shares vesting  immediately (=200 /  1  = 40 shares). The remaining 600 will be  deferred. The deferred part will vest in three equal parts, after  the end of each of the following performance periods. The three  deferred parts will each be paid 50% in cash (=100) and 50% in  shares vesting (=100 / 4.917 = 20 shares). For all vested shares  there is an additional holding period of three years after vesting.  The compensation schedule can be illustrated by the  following overview. Annual Report 2013 Total compensation Fixed compensation Variable compensation 1 Based on VWAP December 15, 2012 - January 15, 2013.