Philips 2007 Annual Report Download - page 118

Philips Annual Report 2007124
The proposed changes to the plan can be accommodated
within the current pool size of maximum 17.5 million
shares. The actual number of stock options and restricted
share rights that will be granted in any particular year
will
be determined by the Supervisory Board in accordance
with the terms and conditions of the LTIP.
As the base fee for the Supervisory Board has not
been changed since 1998, a proposal shall be made
to the 2008 General Meeting of Shareholders to adjust
the fee structure for the chairman and members of
the Supervisory Board with effect from January 1, 2008.
The above-mentioned proposals will be submitted to
the 2008 General Meeting of Shareholders for approval.
Report of the Audit Committee
The Audit Committee, currently consisting of four
members of the Supervisory Board, who are listed in
the chapter Our leadership, assists the Supervisory
Board in fullling its supervisory responsibilities for
the integrity of the Company’s nancial statements,
the nancial reporting process, the system of internal
business controls and risk management, the internal and
external audit process, the internal and external auditor’s
qualications, independence and performance, as well as
the Company’s process for monitoring compliance with
laws and regulations and the General Business
Principles (GBP).
The Audit Committee met 10 times in 2007
and reported its ndings periodically to the plenary
Supervisory Board. The President, the Chief Financial
Ofcer, the Internal Auditor, the Group Controller
and the External Auditor attended all regular meetings.
Furthermore, the Audit Committee met each quarter
separately with each of the President, the Chief Financial
Ofcer, the Internal Auditor and the External Auditor.
In accordance with its charter, which is part of the
Rules of Procedure of the Supervisory Board, the Audit
Committee in 2007 reviewed the Company’s annual
and interim nancial statements, including non-nancial
information, prior to publication thereof. It also
assessed in its quarterly meetings the adequacy
and appropriateness of internal control policies and
internal audit programs and their ndings.
In its 2007 meetings, the Audit Committee reviewed
periodically matters relating to accounting policies
and compliance with accounting standards. Compliance
with statutory and legal requirements and regulations,
particularly in the nancial domain, was also reviewed.
Important ndings and identied risks were examined
thoroughly in order to allow appropriate measures to
be taken. With regard to the internal audit, the Audit
Committee reviewed, and if required approved, the
internal audit charter, audit plan, audit scope and its
coverage in relation to the scope of the external audit,
as well as the stafng, independence and organizational
structure of the internal audit function. With regard
to the external audit, the Audit Committee reviewed
the proposed audit scope, approach and fees, the
independence of the external auditors, non-audit
services provided by the external auditors in conformity
with the Philips Policy on Auditor Independence, as
well as any changes to this policy. Within the framework
of the Philips policy on auditor independence, the
evaluation of the performance of the external auditor
takes place every three years and the Audit Committee
has discussed the detailed evaluation report and has
presented the conclusions to the Supervisory Board.
After assessing the performance of the external auditors
in accordance with the Philips Policy on Auditor
Independence, the Audit Committee has advised the
Supervisory Board to propose to the General Meeting
of Shareholders to re-appoint KPMG Accountants N.V.
for another three-year term. The Audit Committee also
considered the report of the external auditors with
respect to the annual nancial statements and advised
on the Supervisory Board’s statement to shareholders
in the annual accounts.
The aggregate fees billed by KPMG for professional
services rendered for the scal years 2005, 2006 and
2007 were as follows:
Aggregate fees KPMG
in millions of euros
2005 2006 2007
Audit fees 14.4 20.6 17.6
Audit-related fees 5.0 9.8 3.9
Tax fees 1.3 0.9 1.2
Other fees 2.9 2.4 2.3
23.6 33.7 25.0
8 Financial highlights 10 Message from the President 16 The Philips Group 62 The Philips sectors