Philips 2004 Annual Report Download - page 203

recommendation III.7.3 which requires notification on a quarterly
basis.
The Corporate Governance and Nomination &
Selection Committee
The Corporate Governance and Nomination & Selection
Committee consists of at least the Chairman and Vice-Chairman
of the Supervisory Board. The Committee reviews the corporate
governance principles applicable to the Company at least once a
year, and advises the Supervisory Board on any changes to these
principles as it deems appropriate. It also (a) draws up selection
criteria and appointment procedures for members of the
Supervisory Board, the Board of Management and the Group
Management Committee; (b) periodically assesses the size and
composition of the Supervisory Board, the Board of Management
and the Group Management Committee, and makes any proposals
for a composition profile of the Supervisory Board, if appropriate;
(c) periodically assesses the functioning of individual members of
the Supervisory Board, the Board of Management and the Group
Management Committee, and reports on this to the Supervisory
Board. The Committee also consults with the President/CEO and
the Board of Management on candidates to fill vacancies on the
Supervisory Board, the Board of Management and the Group
Management Committee, and advises, at present together with the
Meeting of Priority Shareholders (pursuant to the Amended
Articles of Association the priority shares will be cancelled), the
Supervisory Board on the candidates for appointment. It further
supervises the policy of the Board of Management on the selection
criteria and appointment procedures for Philips Executives.
The Remuneration Committee
The Remuneration Committee meets at least twice a year and is
responsible for preparing decisions of the Supervisory Board on
the remuneration of individual members of the Board of
Management and the Group Management Committee. It drafts the
proposal for the remuneration policy to be pursued for the
remuneration of the members of the Board of Management and
the Group Management Committee to be adopted by the
Supervisory Board.
The Remuneration Committee prepares an annual remuneration
report. The remuneration report contains an account of the
manner in which the remuneration policy has been implemented in
the past financial year, as well as an overview of the
implementation of the remuneration policy planned by the
Supervisory Board for the next years. The Supervisory Board aims
to have available appropriate experience within the Remuneration
Committee. Currently, the Chairman of the Supervisory Board is
also Chairman of the Remuneration Committee; considering the
functions and tasks of the chairman of the Remuneration
Committee and the position and responsibilities of the Chairman
of the Supervisory Board, the Supervisory Board is of the opinion
that – while not applying recommendation III.5.11 of the Dutch
Corporate Governance Code – it is desirable that these functions
may be combined as they currently are, also in view of the role of
the chairman of the Remuneration Committee towards the
President /CEO and other members of the Board of Management
in the procedures for determining the remuneration policy and the
remuneration of the individual members of the Board of
Management. No more than one member of the Remuneration
Committee shall be an executive board member of another Dutch
listed company.
The Audit Committee
The Audit Committee meets at least four times a year, before the
publication of the annual and quarterly results. At least one of the
members of the Audit Committee, which currently consists of
three members of the Supervisory Board, is a financial expert as
set out in the Dutch Corporate Governance Code and each
member is financially literate. In accordance with this code, a
financial expert has relevant knowledge and experience of financial
administration and accounting at the company in question. The
Supervisory Board considers the fact of being compliant with the
Dutch Corporate Governance Code, in combination with the
knowledge and experience available in the Audit Committee as
well as the possibility to take advice from internal and external
experts and advisors, to be sufficient for the fulfillment of the tasks
and responsibilities of the Audit Committee. Therefore, the
Supervisory Board has determined that none of the members of
the Audit Committee qualify as an Audit Committee financial
expert as defined under the regulations of the US Securities and
Exchange Commission. The Supervisory Board will reconsider this
decision if the composition of the Audit Committee changes. The
Audit Committee may not be chaired by the Chairman of the
Supervisory Board or by a (former) member of the Board of
Management.
The tasks and functions of the Audit Committee, as described in
its charter, which is published on the Company’s website as part of
the Rules of Procedure of the Supervisory Board, include the
duties recommended in the Dutch Corporate Governance Code.
More specifically, the Audit Committee assists the Supervisory
Board in fulfilling its oversight responsibilities for the integrity of
the Company’s financial statements, the financial reporting
process, the system of internal business controls and risk
management, the internal and external audit process, the internal
and external auditor’s qualifications, its independence and its
performance as well as the Company’s process for monitoring
202 Philips Annual Report 2004
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