Philips 2006 Annual Report Download - page 100

Philips Annual Report 2006100
General
The supervision of the policies and actions of the
executive management (the ‘Board of Management’)
of Koninklijke Philips Electronics N.V. (the ‘Company’)
is entrusted to the Supervisory Board, which, in the two-
tier corporate structure under Dutch law, is a separate
body and fully independent of the Board of Management.
This independence is also refl ected in the requirement
that members of the Supervisory Board be neither
a member of the Board of Management nor an employee
of the Company. The Supervisory Board considers all
its members to be independent under the applicable
US standards and pursuant to the Dutch Corporate
Governance Code of December 9, 2003 (the ‘Dutch
Corporate Governance Code’). The Supervisory Board,
acting in the interests of the Company and the Philips
Group, supervises and advises the Board of Management
in performing its management tasks and setting the
direction of the Philips Group’s business. It is empowered
to recommend to the General Meeting of Shareholders
persons to be appointed as members of the Supervisory
Board or the Board of Management. Major management
decisions, including the Philips Group strategy, require
the approval of the Supervisory Board. The Supervisory
Board further supervises the structure and management
of systems of internal business controls and the fi nancial
reporting process. It determines the remuneration of the
individual members of the Board of Management within
the remuneration policy adopted by the General Meeting
of Shareholders. While retaining overall responsibility, the
Supervisory Board assigns certain of its tasks to three
permanent committees: the Corporate Governance and
Nomination & Selection Committee, the Remuneration
Committee and the Audit Committee. The separate
reports of these committees are part of this report
and are published below.
As in prior years, the Supervisory Board discussed
developments in the area of corporate governance in
2006. Furthermore, the Supervisory Board discussed the
implementation of section 404 of the US Sarbanes-
Oxley
Act and its requirements regarding assessment, review
and
monitoring of internal controls over fi nancial reporting.
As in 2005, Philips addresses its overall corporate
governance structure in the chapter Corporate
governance of this Annual Report.
Meetings and activities of the Supervisory Board
The Supervisory Board met 10 times in the course of
2006, including meetings by telephone conference; all
of its members who were in offi ce during the full year
participated in 7 or more of these meetings. The members
of the Board of Management were present at the meetings
of the Supervisory Board except when they discussed the
composition and functioning of 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. Extensive evaluation of the functioning of
the Supervisory Board and its members has taken place,
resulting in several suggestions, which will be given further
consideration. Furthermore, the training program for
members of the Supervisory Board was continued and
members of the Supervisory Board visited (head) offi ces
of three divisions to further familiarize themselves with
the business and the respective management teams. An
evaluation of the Board of Management and its members
has also taken place, resulting in several suggestions. In
addition to the scheduled meetings, the Chairman and
other members of the Supervisory Board had regular
contact with the President/Chief Executive Offi cer and
other members of the Board of Management as well as
senior executives of the Company throughout the year.
Report of the Supervisory Board
6 Financial highlights 8 Message from the President 14 Our leadership 20 The Philips Group