Philips 2007 Annual Report Download - page 251

Philips Annual Report 2007 257
of Shareholders on the proposal of the Supervisory Board, after the
latter has been advised by the Audit Committee and the Board of
Management. Under this Auditor Policy, once every three years the
Supervisory Board and the Audit Committee conduct a thorough
assessment of the functioning of the external auditor. The main
conclusions of this assessment shall be communicated to the General
Meeting of Shareholders for the purposes of assessing the nomination
for the appointment of the external auditor. The current auditor of
the Company, KPMG Accountants N.V., was appointed by the 1995
General Meeting of Shareholders. In 2002, when the Auditor Policy
was adopted, the appointment of KPMG Accountants N.V. was conrmed
by the Supervisory Board for an additional three years. The 2005
General Meeting of Shareholders has resolved to re-appoint KPMG
Accountants N.V. as auditor. Mr M.A. Soeting is the current partner
of KPMG Accountants N.V. in charge of the audit duties for Philips.
In accordance with the rotation schedule determined in accordance
with the Auditor Policy, he will be replaced by another partner of the
auditing rm ultimately in 2012. The external auditor shall attend the
Annual General Meeting of Shareholders. Questions may be put to
him at the meeting about his report. The Board of Management and
the Audit Committee of the Supervisory Board shall report on their
dealings with the external auditor to the Supervisory Board on an
annual basis, particularly with regard to the auditor’s independence.
The Supervisory Board shall take this into account when deciding
upon its nomination for the appointment of an external auditor.
The external auditor attends, in principle, all meetings of the Audit
Committee. The ndings of the external auditor, the audit approach
and the risk analysis are also discussed at these meetings. The external
auditor attends the meeting of the Supervisory Board at which the
report of the external auditor with respect to the audit of the annual
accounts is discussed, and at which the annual accounts are approved.
In its audit report on the annual accounts to the Board of Management
and the Supervisory Board, the external auditor refers to the nancial
reporting risks and issues that were identied during the audit, internal
control matters, and any other matters, as appropriate, requiring
communication under the auditing standards generally accepted in
the Netherlands and the US.
Auditor policy
The Company maintains a policy of auditor independence, and this
policy restricts the use of its auditing rm for non-audit services, in line
with US Securities and Exchange Commission rules under which the
appointed external auditor must be independent of the Company both
in fact and appearance. The policy is laid down in the comprehensive
policy on auditor independence published on the Company’s website.
Investor Relations
General
The Company is continually striving to improve relations with its
shareholders. In addition to communication with its shareholders
at the Annual General Meeting of Shareholders, Philips elaborates
its nancial results during (public) conference calls, which are broadly
accessible. It publishes informative annual and quarterly reports
and press releases, and informs investors via its extensive website.
The Company is strict in its compliance with applicable rules and
regulations on fair and non-selective disclosure and equal treatment
of shareholders. Each year the Company organizes major Philips
divisional analysts days and participates in several broker conferences,
announced in advance on the Company’s website and by means of
press releases. Shareholders can follow in real time, by means of
webcasting or telephone lines, the meetings and presentations organized
by the Company. It is Philips’ policy to post presentations to analysts
and shareholders on the Company’s website. These meetings and
presentations will not take place shortly before the publication of annual
and quarterly nancial information. While strictly complying with the
rules and regulations on fair and non-selective disclosure and equal
treatment of shareholders, in view of the number of meetings with
analysts and presentations to analysts or investors, not all of these
meetings and presentations are announced in advance by means of a
press release and on the Company’s website or can be followed in real
time. For this reason the Company cannot fully apply the literal text
of recommendation IV.3.I. of the Dutch Corporate Governance Code.
The Company shall not, in advance, assess, comment upon or correct,
other than factually, any analyst’s reports and valuations. No fee(s) will
be paid by the Company to parties for the carrying-out of research
for analysts’ reports or for the production or publication of analysts’
reports, with the exception of credit-rating agencies.
Major shareholders and other information for shareholders
As per December 31, 2007, no person is known to the Company to
be the owner of more than 5% of its common shares. The common
shares are held by shareholders worldwide in bearer and registered
form. Outside the United States, common shares are held primarily
in bearer form. As per December 31, 2007, approximately 88% of
the common shares were held in bearer form. In the United States
shares are held primarily in the form of registered shares of New York
Registry (Shares of New York Registry) for which Citibank, N.A., 111
Wall Street, New York, New York 10043 is the transfer agent and
registrar. As per December 31, 2007, approximately 12% of the total
number of outstanding common shares were represented by shares of
New York Registry issued in the name of approximately 1,490 holders
of record, including Cede & Co, acting as nominee for the Depository
Trust Company holding the shares (indirectly) for individual investors
as beneciaries.
Only bearer shares are traded on the stock market of Euronext
Amsterdam. Only shares of New York Registry are traded on the
New York Stock Exchange. Bearer shares and registered shares may
be exchanged for each other. Since certain shares are held by brokers
and other nominees, these numbers may not be representative of
the actual number of United States benecial holders or the number
of Shares of New York Registry benecially held by US residents.
Corporate seat and head ofce
The statutory seat of the Company is Eindhoven, Netherlands, and
the statutory list of all subsidiaries and afliated companies, prepared
in accordance with the relevant legal requirements (Dutch Civil
Code, Book 2, Sections 379 and 414), forms part of the notes to the
consolidated nancial statements and is deposited at the ofce of the
Commercial Register in Eindhoven, Netherlands (le no. 17001910).
The executive ofces of the Company are located at the Breitner
Center, Amstelplein 2, 1096 BC Amsterdam, Netherlands, telephone
31 (0)20 59 77 777.
Compliance with the Dutch Corporate Governance Code
In accordance with the Dutch Order of Council of December 23, 2004,
the Company fully complies with the Dutch Corporate Governance
Code by applying its principles and best practice provisions that are
addressed to the Board of Management and the Supervisory Board
or by explaining why it deviates therefrom. The Company fully applies
such principles and best practice provisions, with the exception of
the following four recommendations that are not fully applied for
the reasons set out above:
recommendation II.2.6 and III.7.3: with effect from January 1, 2005, •
the Company requires a notication to the Philips Compliance
Ofcer of transactions in securities in Dutch listed companies by
members of the Supervisory Board and the Board of Management
on a yearly basis (instead of on a quarterly basis as the Dutch
Corporate Governance Code recommends);
recommendation III.4.2: the Company requires the Chairman of •
the Supervisory Board to be independent under the applicable US
standards and pursuant to the Dutch Corporate Governance Code,
but does not exclude that a former member of the Board of
Management who left the Company more then ve years ago
may be Chairman of the Supervisory Board (as the Dutch Corporate
Governance Code does);
recommendation III.5.11: the Company does not exclude that the •
function of Chairman of the Supervisory Board may be combined
with the function of Chairman of the Remuneration Committee
although this is currently not the case; and
recommendation IV.3.1: while strictly complying with the rules and •
regulations on fair and non-selective disclosure and equal treatment
of shareholders, in view of the number of meetings with analysts
and presentations to analysts or investors, not all of these meetings
and presentations are announced in advance by means of a press
release and on the Company’s website or can be followed in real time.
February 18, 2008
Group nancial statements Company nancial statements 250 Corporate governance246 Reconciliation of
non-US GAAP information 258 The Philips Group in the last ten years 260
Investor information