Philips 2004 Annual Report Download - page 201

line with recommendation III.4.2 of the Dutch Corporate
Governance Code. Under certain circumstances and in view of the
position and responsibilities of the Chairman of the Supervisory
Board, it could be in the best interest of the Company for a
member of the Board of Management, who resigned such position
more than five years ago, to be Chairman of the Supervisory
Board.
The Rules of Procedure of the Supervisory Board are published on
the Company’s website. They include the charters of its
committees, to which the plenary Supervisory Board, while
retaining overall responsibility, has assigned certain tasks: the
Corporate Governance and Nomination & Selection Committee,
the Audit Committee and the Remuneration Committee. A
maximum of one member of each committee need not be
independent as defined by the Dutch Corporate Governance
Code. Each committee reports, and submits its minutes for
information, to the Supervisory Board.
The Supervisory Board is assisted by the General Secretary of the
Company. The General Secretary sees to it that correct
procedures are followed and that the Supervisory Board acts in
accordance with its statutory obligations and its obligations under
the articles of association. Furthermore, the General Secretary
assists the Chairman of the Supervisory Board in the actual
organization of the affairs of the Supervisory Board (information,
agenda, evaluation, introduction program) and is the contact
person for interested parties who want to make concerns known
to the Supervisory Board. The General Secretary shall, either on
the recommendation of the Supervisory Board or otherwise, be
appointed by the Board of Management and may be dismissed by
the Board of Management, after the approval of the Supervisory
Board has been obtained.
(Term of) Appointment, individual data and
conflicts of interests
The Supervisory Board consists of at least three members
(currently nine), including a Chairman, Vice-Chairman and
Secretary. The so-called Dutch ‘structure regime’ does not apply
to the Company itself. Members are currently elected by the
General Meeting of Shareholders for fixed terms of four years,
upon a binding recommendation from the Supervisory Board and
the Meeting of Priority Shareholders (until the Amended Articles
of Association enter into force). According to the Company’s
current articles of association, this binding recommendation may
be overruled by a resolution of the General Meeting of
Shareholders adopted by a majority of at least 2/3 of the votes cast
and representing more than half of the issued share capital.
Pursuant to the Amended Articles of Association members of the
Supervisory Board will be elected by the General Meeting of
Shareholders upon a binding recommendation from the
Supervisory Board. Such binding recommendation shall be drawn
up by the Supervisory Board. Furthermore this binding
recommendation may be overruled by a resolution of the General
Meeting of Shareholders adopted by a simple majority of the votes
cast and representing at least 1/3 of the issued share capital. If a
simple majority of the votes cast is in favor of the resolution to
overrule the binding recommendation, but such majority does not
represent at least 1/3 of the issued share capital, a new meeting
may be convened at which the resolution may be passed by a
simple majority of the votes cast, regardless of the portion of the
issued share capital represented by such majority. In anticipation of
the Amended Articles of Association, the Board of Management
and the Supervisory Board will reconsider the recommendation if
the General Meeting of Shareholders, by simple majority
representing at least 1/3 of the Company’s share capital, does not
adopt the proposed election.
Members may be suspended by the Supervisory Board and the
General Meeting of Shareholders and dismissed by the latter. In
the event of inadequate performance, structural incompatibility of
interests, and in other instances in which resignation is deemed
necessary in the opinion of the Supervisory Board, the Supervisory
Board shall submit to the General Meeting of Shareholders a
proposal to dismiss the respective member of the Supervisory
Board. There is no age limit applicable, and members may be
re-elected twice. The date of expiration of the terms of
Supervisory Board members is put on the Company’s website.
Individual data on the members of the Supervisory Board are
published in the Annual Report, and updated on the Company’s
website.
After their appointment, all members of the Supervisory Board
shall follow an introduction program, which covers general
financial and legal affairs, financial reporting by the Company, any
specific aspects that are unique to the Company and its business
activities, and the responsibilities of a Supervisory Board member.
Any need for further training or education of members will be
reviewed annually, also on the basis of an annual evaluation survey.
In accordance with policies adopted by the Supervisory Board, no
member of the Supervisory Board shall hold more than five
supervisory board memberships of Dutch listed companies, the
chairmanship of a supervisory board counting as two regular
memberships.
200 Philips Annual Report 2004
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