Philips 2005 Annual Report Download - page 65

Philips Annual Report 2005 65
For those members of the Board of Management
who were also members of the Board of Management
on December 31, 2005, the variable performance-based
reward part is presented in the table below.
variable remuneration as % of
total remuneration2)
members Board of Management1) 2003 2004 2005
G.J. Kleisterlee 49.1% 62.8% 62.1%
P-J. Sivignon − − −3)
G.H.A. Dutiné 55.2%4) 66.4% 64.8%
A. Huijser 53.3%4) 64.9% 62.6%
1) Reference date for Board membership is December 31, 2005
2)
Restricted shares based upon actual grant price and stock options based upon
Black & Scholes value of the actual grant price in a particular year (see Note 35
share-based compensation)
3) Due to incomplete calendar year as member of the Board of Management, no
variable remuneration related to Board of Management period is mentioned
4) Including 9 months Annual Incentive related to period as member of
the Board of Management (date of appointment April 1, 2002)
Pensions
Thenal-paypensionsofmembersoftheBoardof
Management were also funded by the Stichting Philips
Pensioenfonds (the ‘Philips Pension Fund’) of the Netherlands
forthenancialyear2005.Theconditionscontainedin
the by-laws and the regulations of the Philips Pension Fund
apply, with the proviso that the pensionable age – from the
point of view of pension accrual – has been set at 60. If
the contract of employment of a member of the Board of
Management continues after the age of 60, the pension
payments are postponed accordingly, as provided for in
the Philips Pension Fund by-laws and regulations. As the
retirement age is different from the date of commencement
of the state pension, the pension plan provides for a
bridging payment in order to compensate for the adverse
effect. The Board of Management members’ own contribution
comprises 4% of EUR 64,788 and 6% of the difference
between the gross pensionable salary minus the franchise
and the above-mentioned amount of EUR 64,788. A different
arrangementresultinginadditionalpensionbenetsmay
apply in some cases as a result of past policies.
Additional arrangements
In addition to the main conditions of employment, a
number of additional arrangements apply to members of
the Board of Management. These additional arrangements,
such as expense and relocation allowances, medical insurance,
accident insurance and company car arrangements, are
broadly in line with those for Philips executives in the
Netherlands. In the event of disablement, members of the
BoardofManagementareentitledtobenetsinlinewith
those for other Philips executives in the Netherlands.
In line with regulatory requirements, the Company’s
policy forbids personal loans to members of the Board of
Management as well as to other members of the Group
Management Committee, and no loans were granted to
such members in 2005, nor were such loans outstanding
as of December 31, 2005.
Unless the law provides otherwise, the members of the
Board of Management and of the Supervisory Board shall
be reimbursed by the Company for various costs and
expenses, like reasonable costs of defending claims, as
formalized in the articles of association. Under certain
circumstances, described in the articles of association,
such as an act or failure to act by a member of the Board
of Management or a member of the Supervisory Board
that can be characterized as intentional (“opzettelijk”),
intentionally reckless (“bewust roekeloos”) or seriously
culpable (“ernstig verwijtbaar”), there will be no entitlement
to this reimbursement. The Company has also taken out
liabilityinsurance(D&O–Directors&Ofcers)forthe
persons concerned.
Contracts of employment
Members of the Board of Management have a contract of
employment with the Company. The form of contract
used for members of the Board of Management is in line
with the standard form used for other Philips executives.
As from August 1, 2003 for newly appointed members of
the Board of Management and the other members of the
Group Management Committee, the term of the contract
is set at four years; and if the Company terminates the
contract of employment, the maximum severance payment
is in principle limited to one year of base salary in line
with the Dutch Corporate Governance Code but subject
to mandatory Dutch law, to the extent applicable. If the
maximum of one year’s salary would be manifestly
unreasonable for a member of the Board of Management
whoisdismissedduringhisrsttermofofce,themember
of the Board of Management shall be eligible for a severance
payment not exceeding twice the annual salary.