Philips 2006 Annual Report Download - page 101

Philips Annual Report 2006 101
During the year the Supervisory Board again devoted
considerable time to discussing the Company’s strategy.
In
particular the separation and sale of the Semiconductors
division was discussed extensively. After thorough evaluation
of all available options the Board of Management and the
Supervisory Board were jointly convinced that a sale of a
majority stake in the Company’s Semiconductors division
to a private equity consortium consisting of Kohlberg
Kravis Roberts & Co., Silver Lake Partners, Bain Capital,
Apax Partners and AlpInvest Partners NV enhanced
shareholder value and was in the best interest of the
Company.
The Supervisory Board also discussed the
capital structure of the Philips Group and approved the
share repurchase programs announced in 2006 as well
as proposals to change the Company’s dividend policy.
The Supervisory Board also evaluated opportunities
for acquisitions and partnerships, reviewed the merger
and acquisition approval policies and approved several
acquisitions, such as Intermagnetics, Avent and Partners
in Lighting.
Other discussion topics included:
fi nancial performance of the Philips Group
and the divisions;
status of merger and acquisition projects;
management Agenda, Board of Management;
the situation at LG.Philips Displays;
geographic performance and growth opportunities
in Emerging Markets;
the Philips Group’s annual budget 2007 and
signifi cant capital expenditures.
Composition and remuneration
of the Supervisory Board
The Supervisory Board aims for an appropriate
combination of knowledge and experience among its
members in relation to the global and multi-product
character of the Company’s businesses. Consequently
the Supervisory Board aims for an appropriate level of
experience in marketing, technological, manufacturing,
fi nancial, economic, social and legal aspects of international
business and government and public administration.
The Supervisory Board further aims to have available
appropriate experience within Philips by having one former
Philips executive as a member. Members are appointed
for fi xed terms of four years and may be re-appointed
for two additional four-year terms.
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The Supervisory Board currently consists of ten members,
who are listed in the chapter Our leadership of this Annual
Report. At the 2006 General Meeting of Shareholders
Mr De Kleuver and Sir Richard Greenbury were re-
appointed to the Supervisory Board. At the 2007
General
Meeting of Shareholders, the present term of
Messrs Hessels, Van Lede and Thompson will end. The
Supervisory Board very much welcomes the fact that
these gentlemen, who have brought valuable experience
and knowledge to our Board, are available for re-
appointment. We shall make a proposal to the 2007
General Meeting of Shareholders to re-appoint Messrs
Hessels, Van Lede and Thompson.
We will also propose to the 2007 General Meeting of
Shareholders to appoint Mr Von Prondzynski as member
of the Supervisory Board as of March 29, 2007. Mr Von
Prondzynski is a former member of the Corporate
Executive Committee of the F.Hoffman-La Roche Group
and former CEO of the Division Diagnostics Roche.
The remuneration of the members of the Supervisory
Board and the additional remuneration for its Chairman
and the members of its committees is determined by the
General Meeting of Shareholders. The 2005 General Meeting
of Shareholders resolved to adjust the fee structure for
the Chairman and members of the Supervisory Board
and its committees. As from January 1, 2005, the annual
remuneration is EUR 41,000 per year for members of the
Supervisory Board and EUR 75,000 for the Chairman. The
annual remuneration for a regular member of a committee
is EUR 4,500, for the chairman of a committee EUR 6,000
and for the chairman of the Audit Committee EUR 7,000;
details are disclosed in note 34 of this Annual Report.
Report of the Corporate Governance and
Nomination & Selection Committee
The Corporate Governance and Nomination & Selection
Committee consists of the Chairman and Vice-Chairman
of the Supervisory Board. In line with the New York
Stock Exchange listing rules and other developments in
the fi eld of corporate governance, 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. In 2006, the committee discussed the further
steps the Company could take to improve its corporate
governance and the way the Dutch Corporate Governance
Code has been implemented. In accordance with its charter,
54 The Philips sectors 86 Risk management 100 Report of the Supervisory Board 110 Financial Statements