Philips 2007 Annual Report Download - page 113

Philips Annual Report 2007 119
ensuring that the expert acts on the instructions of the
Remuneration Committee and on an independent basis in
which conicts of interest are avoided. The Remuneration
Committee’s tasks are laid down in the Charter of the
Remuneration Committee that forms part of the Rules
of Procedure of the Supervisory Board. Currently, no
member of the Remuneration Committee is a member
of the management board of another listed company.
General remuneration policy
The objective of the remuneration policy for members of
the Board of Management, approved by the 2004 General
Meeting of Shareholders, lastly amended by
the 2007 General Meeting of Shareholders and published
on the Company’s website, is in line with that for Philips
executives throughout the Philips Group: to focus
on improving the performance of the Company and
enhancing the value of the Philips Group, to motivate
and retain them, and to be able to attract highly qualied
executives, when required.
In order to link executive remuneration to the
Company’s performance, the remuneration package
includes a signicant variable part in the form of an
annual cash incentive and a long-term incentive in
the form of restricted share rights and stock options.
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. In case 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.
The contract of employment of the President/CEO
was renewed as of April 1, 2007 for another 4 years.
For the duration of the contract, the base salary is xed
at EUR 1,100,000. It was decided to grant an increased
number of Long Term Incentives. No further accrual
of pension entitlements will take place. The contract
terms for current members of the Board of Management
are presented in the table below.
Contract terms for current members1)
end of term
G.J. Kleisterlee April 1, 2011
P-J. Sivignon June 15, 2009
G.H.A. Dutiné April 1, 2011
T.W.H.P. van Deursen April 1, 2008
R.S. Provoost April 1, 2010
A. Ragnetti April 1, 2010
S.H. Rusckowski April 1, 2011
1) Reference date for board membership is December 31, 2007
Base salary1)
in euros
2005 2006 2007
G.J. Kleisterlee 1,020,000 1,042,500 1,087,500
P-J. Sivignon − 568,750 637,500
G.H.A. Dutiné 511,000 540,750 587,500
T.W.H.P. van Deursen − 412,500 587,500
R.S. Provoost − 393,750 562,500
A. Ragnetti − 356,250 531,250
S.H. Rusckowski − − 431,250
1) Annual review date is April 1, therefore amounts shown are partly (3 months)
based on salary level before April 1 and partly (9 months) on salary level after
April 1. Reference date for board membership is December 31, 2007.
In line with market developments shown by benchmark
research and additional market studies, the salary levels
in 2007 have been increased. The annual review date for
the base salary is April 1. Information on the individual
remuneration of the members of the Board of
Management is shown in the table in note 34.
Annual Incentive
Each year, a variable cash incentive (Annual Incentive)
can be earned, based on the achievement of specic
and challenging targets.
The Annual Incentive criteria are for 80% the nancial
indicators of the Company and for 20% team targets
in the areas of responsibility monitored by the individual
members of the Board of Management. The related
targets for the individual members of the Board of
Management are determined annually at the beginning
of the year by the Remuneration Committee on behalf
98 Risk management 112 Our leadership 116 Report of the Supervisory Board 126 Financial Statements