Dear Shareholders,

The year 2016 presented significant challenges for the Oil and Gas services sector due to the low oil price environment. The Management Board focused on cost management while also continuously looking for ways to deliver more value to our customers. Staffing levels were reduced from just over 6,300 at the beginning of the year to around 4,200 by year end. The Management Board voluntarily proposed a 10% reduction of base pay for a period of 12 months starting per September 2016 as well as a 50% reduction to any 2016 Short-Term Incentive awards. The 50% reduction on the Short-Term Incentive has also been applied to the rest of the organization.

SBM Offshore continues to maintain its core capabilities allowing us to benefit quickly from any improvement in the FPSO market. Our strong balance sheet, positive cash flow, the share re-purchase program and the dividend are hallmarks of financial strength that underscore our pre-eminent position in our industry. The award of the FEED contract for the Liza by ExxonMobil and possible subsequent construct, install and operate contracts, at the very end of 2016, appears a vindication of this policy.

The activities of SBM Offshore are linked to the global oil and gas industry. Consequently, our remuneration policies and practices must be competitive with both European and U.S. practices. The Supervisory Board remains committed to being an attractive employer through all market cycles, including the challenges the industry has faced recently and continues to face.

The SBM Offshore Management Board Remuneration Policy 2015 (’RP 2015’) was approved by the General Meeting of Shareholders on April 17, 2014, became effective as of January 1, 2015 and governs all remuneration elements in 2016 with exception of the LTI awards 2014-2016 that vested in 2016. These LTI awards are still governed by the previous Remuneration Policy (’RP2011aa’).

In 2017, the Remuneration Policy 2015 will continue to apply. A new remuneration policy will be proposed for shareholder approval at the 2018 AGM (April 11, 2018), applicable as of January 1, 2018.

There were no changes in 2016 to the fee structure of the Supervisory Board.

Management Board target setting for 2017 for short-term and long-term incentives will continue to focus on the Company’s financial standing, the final solution of remaining legacy problems and securing new contracts in order to ensure long-term wealth creation.

The Supervisory Board remains committed to transparent and clear remuneration and meeting or exceeding the standardized reporting requirements and recommendations defined in the Shareholders’ Rights Directive proposed by the European Commission and the Dutch Corporate Governance Code. I look forward to discussing the remuneration policy, actual remuneration as well as any other questions arising from this report, at the Annual General Meeting on April 13, 2017.

Floris Deckers