Philips 2004 Annual Report Download - page 202

In compliance with the Dutch Corporate Governance Code, the
Company has formalized strict rules to avoid conflicts of interests
between the Company and members of the Supervisory Board; all
information about a conflict of interests situation is to be provided
to the Chairman of the Supervisory Board. No conflicts of
interests were reported in 2004.
Meetings of the Supervisory Board
The Supervisory Board meets at least six times per year, including
a meeting on strategy. The Supervisory Board, on the advice of its
Audit Committee, also discusses, in any event at least once a year,
the risks of the business, and the result of the assessment by the
Board of Management of the structure and operation of the
internal risk management and control systems, as well as any
significant changes thereto. In 2004 each member of the
Supervisory Board participated in four or more of the meetings of
the Supervisory Board. The members of the Board of Management
attend meetings of the Supervisory Board except in matters such
as the desired profile, composition and competence of the
Supervisory Board, the Board of Management and the Group
Management Committee, as well as the remuneration and
performance of individual members of the Board of Management
and the Group Management Committee and the conclusions that
must be drawn on the basis thereof. In addition to these items, the
Supervisory Board, being responsible for the quality of its own
performance, discusses, at least once a year on its own, without
the members of the Board of Management being present, both its
own functioning and that of the individual members, and the
conclusions that must be drawn on the basis thereof. The
Chairman and other members of the Board of Management have
regular contacts with the Chairman and other members of the
Supervisory Board. The Board of Management is required to keep
the Supervisory Board informed of all facts and developments
concerning Philips that the Supervisory Board may need in order
to function as required and to properly carry out its duties, to
consult it on important matters and to submit certain important
decisions to it for its prior approval. The Supervisory Board and its
individual members each have their own responsibility to request
from the Board of Management and the external auditor all
information that the Supervisory Board needs in order to be able
to carry out its duties properly as a supervisory body. If the
Supervisory Board considers it necessary, it may obtain
information from officers and external advisers of the Company.
The Company provides the necessary means for this purpose. The
Supervisory Board may also require that certain officers and
external advisers attend its meetings.
The Chairman of the Supervisory Board
The Supervisory Board’s Chairman will see to it that: (a) the
members of the Supervisory Board follow their introduction
program, (b) the members of the Supervisory Board receive in
good time all information which is necessary for the proper
performance of their duties, (c) there is sufficient time for
consultation and decision-making by the Supervisory Board, (d)
the committees of the Supervisory Board function properly, (e)
the performance of the Board of Management members and
Supervisory Board members will be assessed at least once a year,
and (f) the Supervisory Board elects a Vice-Chairman.
Remuneration of the Supervisory Board and share
ownership
The remuneration of the individual members of the Supervisory
Board is determined by the General Meeting of Shareholders. In
accordance with the current articles of association of the
Company, the Supervisory Board has determined the additional
remuneration for its Chairman and the members of its
committees.
The remuneration of a Supervisory Board member is not
dependent on the results of the Company. Further details are
published in the Annual Report. Pursuant to the Amended Articles
of Association, any additional remuneration of the members of its
committees and its Chairman is determined by the General
Meeting of Shareholders. The Company shall not grant its
Supervisory Board members any personal loans, guarantees or
similar arrangements. No such (remissions of) loans and
guarantees were granted to such members in 2004, nor were any
outstanding as per December 31, 2004.
Shares or rights to shares shall not be granted to a Supervisory
Board member. In accordance with the Rules of Procedure of the
Supervisory Board, any shares in the Company held by a
Supervisory Board member are long-term investments. The
Supervisory Board has adopted a policy on ownership of and
(notification of) transactions in non-Philips securities by members
of the Supervisory Board. This policy is included in the Rules of
Procedure of the Supervisory Board. In order to avoid the
impression that the Company should or could take corrective
action in respect of a certain transaction in securities in another
company by a member of the Supervisory Board and the
unnecessary administrative burden, the Supervisory Board
considers an annual notification of changes in a member’s holding
of securities related to Dutch listed companies to the Philips
Compliance Officer to be in line with best practices and sufficient
to reach an adequate level of transparency; however, it is not fully
in compliance with the Dutch Corporate Governance Code,
201Philips Annual Report 2004