Philips 2008 Annual Report Download - page 254

Also in connection with the implementation of the Dutch Corporate
Governance Code and new Dutch legislation, the 2005 General
Meeting of Shareholders resolved to amend the articles of association
of the Company. Pursuant to the amendment of the articles of
association, the Company’s priority shares have been withdrawn
and the thresholds for overruling the binding recommendation for
appointments of members of the Board of Management and the
Supervisory Board have been changed. Furthermore the articles of
association now also contain detailed provisions on dealing with
conflicts of interests of members of the Board of Management and
stipulate that resolutions that are so far-reaching that they would
significantly change the identity or nature of the Company or the
enterprise shall be subject to the approval of the General Meeting
of Shareholders. The articles of association were amended in 2008 to
address legislative changes such as the implementation of the Dutch
Act on Electronic Means of Communications and the Transparancy
Directive and new legislation in the area of share repurchases.
Board of Management
Introduction
The executive management of Philips is entrusted to its Board of
Management under the chairmanship of the President/Chief Executive
Officer and consists of at least three members (currently six). The
members of the Board of Management have collective powers and
responsibilities. They share responsibility for the management of
the Company, the deployment of its strategy and policies, and the
achievement of its objectives and results. The Board of Management
has, for practical purposes, adopted a division of responsibilities
indicating the functional and business areas monitored and reviewed
by the individual members. According to the Company’s corporate
objectives and Dutch law, the Board of Management is guided by the
interests of the Company and its affiliated enterprises within the
Group, taking into consideration the interests of the Company’s
stakeholders, and is accountable for the performance of its assignment
to the Supervisory Board and the General Meeting of Shareholders.
The Board of Management follows its own Rules of Procedure, which
set forth procedures for meetings, resolutions, minutes and (vice)
chairmanship. These Rules of Procedure are published on the
Company’s website.
(Term of) Appointment, individual data and conflicts
of interests
Members of the Board of Management and the President/CEO are
elected by the General Meeting of Shareholders upon a binding
recommendation drawn up by the Supervisory Board after consultation
with the President/CEO. This binding recommendation may be
overruled by a resolution of the General Meeting of Shareholders
adopted by a simple majority of the votes cast and representing at
least one-third of the issued share capital. If a simple majority of
the votes cast is in favor of the resolution to overrule the binding
recommendation, but such majority does not represent at least
one-third of the issued share capital, a new meeting may be convened
at which the resolution may be passed by a simple majority of the
votes cast, regardless of the portion of the issued share capital
represented by such majority.
Board members and the President are
appointed by the Shareholders Meeting
Members of the Board of Management and the President/CEO are
appointed for a maximum term of four years, it being understood
that this maximum term expires at the end of the General Meeting
of Shareholders to be held in the fourth year after the year of their
appointment. Reappointment is possible for consecutive maximum
terms of four years or, if applicable, until a later retirement date or
other contractual termination date in the fourth year, unless the
General Meeting of Shareholders resolves otherwise. Members may
be suspended by the Supervisory Board and the General Meeting
of Shareholders and dismissed by the latter.
Individual data on the members of the Board of Management are
published in the chapter Our leadership that begins on page 110
of this Annual Report. The acceptance by a member of the Board
of Management of membership of the supervisory board of another
company requires the approval of the Supervisory Board. The
Supervisory Board is required to be notified of other important
positions (to be) held by a member of the Board of Management.
No member of the Board of Management holds more than two
supervisory board memberships of listed companies, or is a chairman
of such supervisory board, other than of a Group company or
participating interest of the Company.
Corporate governance of the Philips Group
Introduction
Koninklijke Philips Electronics N.V., a company organized under Dutch
law (the ‘Company’), is the parent company of the Philips Group
(‘Philips’ or the ‘Group’). The Company, which started as a limited
partnership with the name Philips & Co in 1891, was converted into
the company with limited liability N.V. Philips’ Gloeilampenfabrieken
on September 11, 1912. On May 6, 1994, the name was changed to
Philips Electronics N.V., and on April 1, 1998, the name was changed
to Koninklijke Philips Electronics N.V. Its shares have been listed on
the Amsterdam Stock Exchange, Euronext Amsterdam, since 1913.
The shares have been traded in the United States since 1962 and
have been listed on the New York Stock Exchange since 1987.
Over the last decades the Company has pursued a consistent policy
to enhance and improve its corporate governance in line with US,
Dutch and international (codes of) best practices. The Company has
incorporated a fair disclosure practice in its investor relations policy,
has strengthened the accountability of its executive management and
its independent supervisory directors, and has increased the rights
and powers of shareholders and the communication with investors.
The Company is required to comply with, inter alia, Dutch Corporate
Governance rules, the US Sarbanes-Oxley Act, New York Stock
Exchange rules and related regulations, insofar as applicable to the
Company. A summary of significant differences between the Company’s
corporate governance structure and the New York Stock Exchange
corporate governance standards is published on the Company’s
website (www.philips.com/investor).
Philips pursues a consistent policy to enhance
and improve its corporate governance in line
with US, Dutch and international (codes of)
best practice
In this report, the Company addresses its overall corporate governance
structure and states to what extent it applies the provisions of the
Dutch Corporate Governance Code of December 9, 2003 (the ‘Dutch
Corporate Governance Code’). This report also includes the information
which the Company is required to disclose pursuant to the Royal
Decree Article 10 Takeover Directive. The Supervisory Board and
the Board of Management, which are responsible for the corporate
governance structure of the Company, are of the opinion that the vast
majority of the principles and best practice provisions of the Dutch
Corporate Governance Code that are addressed to the Board of
Management and the Supervisory Board, interpreted and implemented
in line with the best practices followed by the Company, are being
applied. Some recommendations are not (fully) applied, and the reasons
for these deviations are set out hereinafter. Deviations from aspects
of the corporate governance structure of the Company that are
described in this report, when deemed necessary in the interests
of the Company, will be disclosed in the Annual Report. Substantial
changes in the Company’s corporate governance structure - including
substantial amendments to the Rules of Procedure of the Supervisory
Board and the Board of Management respectively - and in the
Company’s compliance with the Dutch Corporate Governance Code
are submitted to the General Meeting of Shareholders for discussion
under a separate agenda item.
Corporate
governance
Philips Annual Report 2008254
180
Sustainability performance
192
IFRS financial statements
244
Company financial statements
124
US GAAP financial statements