Philips 2006 Annual Report Download - page 106

Philips Annual Report 2006106
To further align the interests of the members of the
Board of Management and shareholders, restricted
shares granted to the Board of Management members
shall be retained for a period of at least fi ve years or
until at least the end of their employment, if this period
is shorter. Similarly for other Philips Senior Executives
compulsory share ownership was introduced in 2004.
Total cash pay-out
The total cash pay-out in any year is the sum of the base
salary received in the year concerned and the bonus pay-
out related to the previous year. The total cash pay-out
in 2006 (and in previous two years) for each member of
the Board of Management is presented in the next table.
Total cash pay-out1
)
in euros
2004 2005 2006
G.J. Kleisterlee 1,882,600 2,048,160 2,543,060
3)
P-J. Sivignon
− 259,091
2) 1,087,941 3)
G.H.A. Dutiné 943,138 1,020,040 974,748
T.W.H.P. van Deursen
−
4) −
4) 412,500 5)
R.S. Provoost
−
4) − 4) 393,750 5)
A. Ragnetti
−
4)
−
4) 356,250 5)
1) Reference date for board membership is December 31, 2006
2) Related to period June 15 - December 31, 2005
3) Including a special payment for the sale of the Semiconductors division
4) Before date of appointment as member of the Board of Management (April 1, 2006)
5) Related to period April 1 - December 31, 2006
Percentage variable remuneration
The variable performance-based reward part of the
members of the Board of Management is presented in
the table below.
Variable remuneration as % of total remuneration
1,2)
2004 2005 2006
G.J. Kleisterlee 62.8% 62.1% 65.7%
P-J. Sivignon − − 58.4%
G.H.A. Dutiné 66.4% 64.8% 64.0%
T.W.H.P. van Deursen − − −
3)
R.S. Provoost
− − −
3)
A. Ragnetti
− − −
3)
1) Reference date for board membership is December 31, 2006
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 33
share-based compensation)
3) Due to incomplete year as member of the Board of Management, no variable
remuneration related to Board of Management period is mentioned
Pensions
As of January 1, 2006, a new pension plan is in force
for all Philips executives in the Dutch pension fund
born after January 1, 1950. This includes members of
the Board of Management and other members of the
Group Management Committee. The new plan is based
on a combination of defi ned-benefi ts (career average)
and defi ned-contribution and replaces the previous fi nal
pay plan. The target retirement age under the new plan
is 62.5. The plan does not require employee contributions.
Messrs Kleisterlee and Van Deursen continued to participate
in the old plan till they reached the age of 60. Since then
no further accrual took place under this plan.
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 benefi 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 consequently no loans were
granted to such members in 2006, nor were such loans
outstanding as of December 31, 2006.
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 & Offi cers) for the
persons concerned.
6 Financial highlights 8 Message from the President 14 Our leadership 20 The Philips Group