Philips 2007 Annual Report Download - page 248

Philips Annual Report 2007254
the Supervisory Board may need in order to function as required and
to properly carry out its duties, to consult it on important matters
and to submit certain important decisions to it for its prior approval.
The Supervisory Board and its individual members each have their
own responsibility to request from the Board of Management and
the external auditor all information that the Supervisory Board needs
in order to be able to carry out its duties properly as a supervisory
body. If the Supervisory Board considers it necessary, it may obtain
information from ofcers and external advisers of the Company.
The Company provides the necessary means for this purpose. The
Supervisory Board may also require that certain ofcers and external
advisers attend its meetings.
The Chairman of the Supervisory Board
The Supervisory Board’s Chairman will see to it that: (a) the members
of the Supervisory Board follow their introductory program, (b) the
members of the Supervisory Board receive in good time all information
which is necessary for the proper performance of their duties,
(c) there is sufcient time for consultation and decision-making by
the Supervisory Board, (d) the committees of the Supervisory Board
function properly, (e) the performance of the Board of Management
members and Supervisory Board members is assessed at least once
a year, and (f) the Supervisory Board elects a Vice-Chairman.
Remuneration of the Supervisory Board and share ownership
The remuneration of the individual members of the Supervisory Board,
as well as the additional remuneration for its Chairman and the
members of its committees is determined by the General Meeting
of Shareholders. The remuneration of a Supervisory Board member
is not dependent on the results of the Company. Further details are
published in the chapter Report of the Supervisory Board of this
Annual Report. The Company shall not grant its Supervisory Board
members any personal loans, guarantees or similar arrangements.
No such (remissions of) loans and guarantees were granted to such
members in 2007, nor were any outstanding as per December 31, 2007.
Shares or rights to shares shall not be granted to a Supervisory
Board member. In accordance with the Rules of Procedure of the
Supervisory Board, any shares in the Company held by a Supervisory
Board member are long-term investments. The Supervisory Board has
adopted a policy on ownership (and notication) of transactions in
non-Philips securities by members of the Supervisory Board. This
policy is included in the Rules of Procedure of the Supervisory Board.
In order to avoid the impression that the Company should or could
take corrective action in respect of a certain transaction in securities
in another company by a member of the Supervisory Board and the
unnecessary administrative burden, the Supervisory Board considers
an annual notication of changes in a member’s holdings of securities
related to Dutch listed companies to the Philips Compliance Ofcer
to be in line with best practices and sufcient to reach an adequate
level of transparency; however, it is not fully in compliance with the
Dutch Corporate Governance Code, recommendation III.7.3, which
requires notication on a quarterly basis.
The Corporate Governance and
Nomination & Selection Committee
The Corporate Governance and Nomination & Selection Committee
consists of at least the Chairman and Vice-Chairman of the Supervisory
Board. 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. It also (a) draws up selection criteria and appointment
procedures for members of the Supervisory Board, the Board of
Management and the Group Management Committee; (b) periodically
assesses the size and composition of the Supervisory Board, the Board
of Management and the Group Management Committee, and makes
the proposals for a composition prole of the Supervisory Board,
if appropriate; (c) periodically assesses the functioning of individual
members of the Supervisory Board, the Board of Management and the
Group Management Committee, and reports on this to the Supervisory
Board. The Committee also consults with the President/CEO and
the Board of Management on candidates to ll vacancies on the
Supervisory Board, the Board of Management and the Group Management
Committee, and advises the Supervisory Board on the candidates for
appointment. It further supervises the policy of the Board of Management
on the selection criteria and appointment procedures for Philips Executives.
The Remuneration Committee
The Remuneration Committee meets at least twice a year and is
responsible for preparing decisions of the Supervisory Board on the
remuneration of individual members of the Board of Management
and the Group Management Committee. It drafts the proposal for
the remuneration policy to be adopted by the Supervisory Board
for the remuneration of the members of the Board of Management
and the Group Management Committee.
The Remuneration Committee prepares an annual remuneration
report. The remuneration report contains an account of the manner
in which the remuneration policy has been implemented in the past
nancial year, as well as an overview of the implementation of the
remuneration policy planned by the Supervisory Board for the next
years. The Supervisory Board aims to have appropriate experience
available within the Remuneration Committee. Although currently
these functions are not combined, the Supervisory Board is of the
opinion that, considering the functions and tasks of the Chairman
of the Remuneration Committee and the position and responsibilities
of the Chairman of the Supervisory Board, it could be desirable that
these functions may be combined in view of the role of the Chairman
of the Remuneration Committee towards the President/CEO and
other members of the Board of Management in the procedures
for determining the remuneration policy and the remuneration of
the individual members of the Board of Management. No more than
one member of the Remuneration Committee shall be an executive
board member of another Dutch listed company.
In performing its duties and responsibilities the Remuneration
Committee is assisted by a remuneration expert acting on the basis
of a protocol ensuring that the expert acts on the instructions of the
Remuneration Committee and on an independent basis in which
conicts of interests are avoided.
The Audit Committee
The Audit Committee meets at least four times a year, before the
publication of the annual and quarterly results. At least one of the
members of the Audit Committee, which currently consists of four
members of the Supervisory Board, is a nancial expert as set out
in the Dutch Corporate Governance Code and each member is
nancially literate. In accordance with this code, a nancial expert
has relevant knowledge and experience of nancial administration
and accounting at the company in question. The Supervisory Board
considers the fact of being compliant with the Dutch Corporate
Governance Code, in combination with the knowledge and experience
available in the Audit Committee as well as the possibility to take advice
from internal and external experts and advisors, to be sufcient for
the fulllment of the tasks and responsibilities of the Audit Committee.
The Supervisory Board has determined that none of the members of
the Audit Committee is designated as an Audit Committee nancial
expert as dened under the regulations of the US Securities and
Exchange Commission. The Audit Committee may not be chaired
by the Chairman of the Supervisory Board or by a (former) member
of the Board of Management.
The tasks and functions of the Audit Committee, as described in its
charter, which is published on the Company’s website as part of the
Rules of Procedure of the Supervisory Board, include the duties
recommended in the Dutch Corporate Governance Code. More
specically, the Audit Committee assists the Supervisory Board
in fullling its oversight 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, its independence and its performance, as well as
the Company’s process for monitoring compliance with laws and
regulations and the General Business Principles (GBP). It reviews
the Company’s annual and interim nancial statements, including
non-nancial information, prior to publication and advises the
Supervisory Board on the adequacy and appropriateness of internal
control policies and internal audit programs and their ndings.
In reviewing the Company’s annual and interim statements, including
non-nancial information, and advising the Supervisory Board on
internal control policies and internal audit programs, the Audit
Committee reviews matters relating to accounting policies and
128 Group nancial statements 188 IFRS information 240 Company nancial statements