The Selection and Remuneration Committee of the ARCADIS NV Supervisory Board prepared this remuneration report. For more information on the membership of this committee and activities performed in 2005, please refer to the Report by the Supervisory Board.

In light of the demands imposed by the Dutch Corporate Governance Code, the remuneration policy for the Executive Board was revised in 2005. In the General Meeting of Shareholders on May 11, 2005, the Executive Board's remuneration policy was accepted. The bonuses granted to the Executive Board in 2005 (for the book year 2004) were still based on the criteria in effect in 2004.

Remuneration Executive Board
The Supervisory Board determines compensation for members of the Executive Board based on recommendations by the Selection and Remuneration Committee, and within the boundaries of the remuneration policy as accepted by the General Meeting of Shareholders.

Starting points for the remuneration policy
The policy aims at providing a compensation package to attract, motivate and retain qualified management. In addition, there has to be a direct correlation between remuneration and value creation for all of those involved, whereby the policy supports short-term operational achievements, as well as the long-term goals of the Company.The starting points for the remuneration package are:

• A total compensation package generally commensurate with the average remuneration packages of a selected labor market reference group.
• Variable remuneration is an important component of the total package. Performance criteria are aimed at increasing shareholder value in the short and long term; a direct correlation exists between creating value and remuneration.
• When evaluating individual remuneration packages for Executive Board members, due consideration is given to the differing responsibilities of the various positions.
• In the case of a foreign board member, the remuneration package is also commensurate with the package offered in the member's native country.

The labor market reference group consists of a number of Dutch companies that are comparable in complexity and size and a number of foreign companies active in the same sector as ARCADIS. These companies are: Ballast Nedam (NL), Ten Cate (NL), Boskalis (NL), Draka Holding (NL), Fugro (NL), Grontmij (NL), PinkRoccade (NL), Jaakko Pöyry Group (Fin), Alten (Fr), Tetra Tech (U.S.), Sweco (S) and WSP (U.K.). The remuneration policy is set up in such a way that when all goals are achieved, the flexible remuneration, on average, is expected to make up 45% of total remuneration (excluding pensions and fringe benefits). The Selection and Remuneration Committee will periodically review the remuneration package to verify its market comparability with the labor market reference group. Material policy changes will be presented to the General Meeting of Shareholders.

Fixed annual salary
To reach a level consistent with the current average salary of the reference group, the 2004 salary will be increased in two increments. At July 1, 2005, an increase of 5% was applied. This includes the annual adjustment based on general trends in wage costs, taking into account Company-specific factors and developments in society.

Short-term flexible remuneration, granted in 2005
The bonus granted in 2005, for the book-year 2004, was still based on the criteria that were in effect before the introduction of the new remuneration policy. Prior to and including 2004, the amount of the bonus could vary from 0% to 80% of the fixed annual salary, with 40% (the target bonus) indicating that goals were met. Over 2004, the criteria were:

• Growth of net income from operations per share (including acquisitions, excluding currency effect). This growth amounted to 9.2% in 2004 versus a target of 10%.
• The return on capital invested, as an average over four quarters. This amounted to 17.4% in 2004, versus a goal of 15%.
• Performance in relation to that of companies in the peer group. This was evaluated on a qualitative basis.

Based on these criteria, the bonus granted to members of the Executive Board in 2005, over the year 2004, was 53% of the fixed annual salary.

Short-term flexible remuneration, policy as of 2005
Under the new policy, the annual short-term variable bonus is linked to achievement of financial and non-financial goals. The bonus can vary from 0% to 60% of the fixed annual salary, with 40% (the target bonus) indicating that goals were met. The maximum amount was adjusted from 80% to 60% based on market comparisons and because of the introduction of a long-term flexible remuneration. Financial goals determine 75% of the bonus; non-financial goals the remaining 25%. Financial goals are:

• Earnings per share (EPS) excluding currency effect, which represents 60%;
• Return on capital invested (ROCI) represents the remaining 40%.

The goals are annually preset by the Supervisory Board, considering performance in previous years, as well as expectations for the future. EPS goals are related to the budget for the given year. The basic ROCI goal is 15% but is reviewed annually against the budget. For both goals, minimum and maximum levels have been defined. Under the minimum level, no bonus is granted, while at the maximum level, the maximum bonus is granted. When performance lies between the minimum and maximum levels, a linear fixed bonus is granted. Non-financial goals are benchmarked against individual performance measures. These goals are adjusted to the specific responsibility of the individual board member. Non-financial goals cannot be exceeded; however, partial achievement is possible.

Long-term flexible remuneration: ARCADIS shares and options
In light of the need for long-term value creation, the remuneration package provides for long-term variable remuneration, consisting of performance-related (rights to the acquisition of) ARCADIS shares. This concerns 25,000 options and 10,000 shares per year for the Chairman of the Executive Board and 15,000 options and 7,000 shares for each member. These numbers are valid for three years (2005, 2006 and 2007).
Options and shares granted are conditional in nature and depend on attaining a performance measure after three years. The performance measure is Total Shareholder Return (TSR), defined as share price increase plus dividend. This measure stimulates the creation of shareholder value in the longer term.

Each year, a three-year cycle begins, whereby achievements are measured at the end of the period against a peer group of companies of comparable size and breadth. ARCADIS' position in the peer group (10 companies including ARCADIS) determines whether the (conditional) options and shares granted earlier become unconditional. The following table indicates the number of options and shares that can become unconditional at the end of each three-year period depending on ARCADIS' relative position in comparison to the peer group.

Position against peer group	Number of conditional options and shares that become unconditional
1st	150%
4th	100%
7th	50%
Below 7th	0%
Between 1st and 7th	Determined by interpolation

The maximum number of options and shares per year for which Executive Board members are eligible are 37,500 options and 15,000 shares for the Chairman and 22,500 options and 10,500 shares for each member. This concerns 150% of the referenced conditional numbers of options and shares granted. The General Meeting of Shareholders approved this policy on May 11, 2005 for the years 2005, 2006 and 2007.

The exercise price of options granted is the closing price of the ARCADIS share on the Euronext exchange on the first day of trading after the General Meeting of Shareholders in which Company shares are traded ex-dividend. Options are valid for a 10-year period. Unconditional shares that are received by Executive Board members must be retained for a period of at least two years.

The peer group consists of the following companies: URS Corporation (U.S.), WSP (U.K.), WS Atkins (U.K.), Alten (Fr), Tetra Tech (U.S.), TRC Companies (U.S.), Grontmij (NL), Sweco (S) and Jaako Pöyry Group (Fin).

Members of the Executive Board can participate in the ARCADIS NV 2002 Employee Share Purchase Plan, under which a maximum of € 400 per month of shares in ARCADIS NV can be bought from the Lovinklaan Foundation at a discount.

Compensation and other fringe benefits
Members of the Executive Board receive reimbursement for expenses, as well as other customary fringe benefits such as a company car. The Company has not pledged any loans, guarantees or other benefits to members of the Executive Board. In 2005, at the proposal of the Supervisory Board, indemnification was granted to Executive Board members for costs related to their positions.

Pensions and early retirement
The current members of the Executive Board participate in the pension plan of the Dutch ARCADIS Pension Fund. On January 1, 2004, this plan was changed to a defined contribution plan. The premium is based on the goal of having a pension that, under selective criteria, is comparable to average pay. The recommended retirement age is 63 years. Contribution by the employee in this plan is 6% of the salary at which the pension is calculated.

Employment contracts and severance pay
Mr. Noy and Mr. Jaski have been appointed for an indefinite period. Their contracts do not contain details regarding fixed severance pay. For new members of the Executive Board, a four-year term limit will be applied, while a maximum will be established for severance pay.
Click on the links below to view their contracts:
- employment contract Mr Noy (in Dutch)
- employment contract Mr Jaski (in Dutch)
- employment contract Mr Van der Klift
- employment contract Mr Schneider

Remuneration of Executive Board
In 2005, an amount of € 1,167,000 (2004: € 1,298,000) was charged to the Company for remuneration of Executive Board members including pension charges. As flexible remuneration, 17,000 performance shares and 40,000 performance options were granted. In the schedule below, the different components of the remuneration for each present Executive Board member are provided (amounts in thousands of euros).

	Year	Salary1)	Bonus2)	Pension	Performance shares		Performance options
					Number	Amount3)	Number	Amount3)
Harrie Noy	2005	339	175	79	10,000	113	25,000	93
	2004	331	100	74	-	-	-	-
Michiel Jaski	2005	254	130	30	7,000	79	15,000	56
	2004	248	100	27	-	-	-	-
1) From July 1, 2005, the salaries of the members of the Executive Board were raised by 5% (2004: 0%).
2) The bonus is based on the results achieved in 2004 respectively 2003.
3) This amount will be charged over a three-year period to the Company's profit and loss account

Shares and options held by members of the Executive Board
The interests held in the share capital of ARCADIS NV by those who during 2005 were members of the Executive Board are noted in the table below:

Shares ARCADIS NV	1 January 2005	31 December 2005
Harrie Noy	33,787	34,122
Michiel Jaski	1,436	1,719
Provisional shares ARCADIS NV
Harrie Noy	–	10,000*
Michiel Jaski	–	7,000*
* Amounts based on granting of 100% of the reference amounts

Overview of options outstanding to the members of the Executive Board (year-end 2005)

	Option plan from year	Granted  in year	Granted	Exerciseprice	Exercised	Outstanding	Expiration date
Harrie Noy	2001	2001	30,000	€ 9.20	20,000	10,000	05-22-2011
		2002	15,000	€ 10.79	–	15,000	05-15-2012
		2003	17,500	€ 8.93	–	17,500	05-13-2013
	2005	2005	25,000*	€ 17.94	–	25,000	05-10-2015
Michiel Jaski	2001	2001	17,500	€ 9.20	17,500	0	05-22-2011
		2002	10,000	€ 10.79	–	10,000	05-15-2012
		2003	14,000	€ 8.93	–	14,000	05-13-2013
	2005	2005	15,000*	€ 17.94	–	15,000	05-10-2015
*Amounts based on granting of 100% of the reference amounts

Remuneration Supervisory Board
The remuneration of the individual members of the Supervisory Board is determined by the General Meeting of Shareholders.
In 2004, the General Meeting of Shareholders changed the compensation for Supervisory Board members; additional compensation was granted for membership on board committees. Compensation for a Supervisory Board member is not dependent on Company results. A Supervisory Board member is not eligible to receive (rights to) ARCADIS shares. Possible share ownership of ARCADIS shares by a Supervisory Board member is a long-term investment.

The Company has not pledged any loans, guarantees or other benefits to members of the Supervisory Board. In 2005, ARCADIS NV granted Supervisory Board members indemnification for costs related to their positions. This was approved by the General Meeting of Shareholders in May 2004.

Currently, the Supervisory Board consists of six members. The joint fixed remuneration for 2005 totaled € 216,000 (2004: € 195,000), specified as follows (amounts in thousands of euros).

Remuneration	2005	2004*
Rijnhard W.F. van Tets	50	38
Thomas M. Cohn	30	15
Carlos Espinosa de los Monteros	30	27
George R. Nethercutt (as of May 11, 2005)	13<