Philips 2009 Annual Report Download - page 146

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.
Members may be suspended and dismissed by the General Meeting of
Shareholders. In the event of inadequate performance, structural
incompatibility of interests, and in other instances in which resignation
is deemed necessary in the opinion of the Supervisory Board, the
Supervisory Board shall submit to the General Meeting of Shareholders
a proposal to dismiss the respective member of the Supervisory Board.
There is no age limit applicable, and members may be re-elected twice.
The date of expiration of the terms of Supervisory Board members is
put on the Company’s website. Individual data on the members of the
Supervisory Board are published in the Annual Report, and updated on
the Company’s website.
After their appointment, all members of the Supervisory Board shall
follow an introductory program, which covers general financial and legal
affairs, financial reporting by the Company, any specific aspects that are
unique to the Company and its business activities, and the
responsibilities of a Supervisory Board member. Any need for further
training or education of members will be reviewed annually, also on the
basis of an annual evaluation survey.
In accordance with policies adopted by the Supervisory Board, no
member of the Supervisory Board shall hold more than five supervisory
board memberships of Dutch listed companies, the chairmanship of a
supervisory board counting as two regular memberships.
In compliance with the Dutch Corporate Governance Code, the
Company has formalized strict rules to avoid conflicts of interests
between the Company and members of the Supervisory Board; all
information about a conflict of interests situation is to be provided to
the Chairman of the Supervisory Board. No decisions to enter into
material transactions in which there are conflicts of interest with
members of the Supervisory Board have occurred during the financial
year 2009.
Meetings of the Supervisory Board
The Supervisory Board meets at least six times per year, including a
meeting on strategy. The Supervisory Board, on the advice of its Audit
Committee, also discusses, in any event at least once a year, the main
risks of the business, and the result of the assessment by the Board of
Management of the structure and operation of the internal risk
management and control systems, as well as any significant changes
thereto. The members of the Board of Management attend meetings of
the Supervisory Board except in matters such as the desired profile,
composition and competence of the Supervisory Board, the Board of
Management and the Group Management Committee, as well as the
remuneration and performance of individual members of the Board of
Management and the Group Management Committee and the
conclusions that must be drawn on the basis thereof. In addition to
these items, the Supervisory Board, being responsible for the quality of
its own performance, discusses, at least once a year on its own, without
the members of the Board of Management being present, both its own
functioning and that of the individual members, and the conclusions that
must be drawn on the basis thereof. The President/CEO and other
members of the Board of Management have regular contacts with the
Chairman and other members of the Supervisory Board. The Board of
Management is required to keep the Supervisory Board informed of all
facts and developments concerning Philips that 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 officers
and external advisers of the Company. The Company provides the
necessary means for this purpose. The Supervisory Board may also
require that certain officers 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 sufficient 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. The Vice-
Chairman of the Supervisory Board shall deputise for the Chairman
when the occasion arises. The Vice-Chairman shall act as contact of
individual members of the Supervisory Board or the Board of
Management concerning the functioning of the Chairman of the
Supervisory Board.
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 Supervisory Board 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 2009, nor were any outstanding as per
December 31, 2009.
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 notification) 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.
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 profile 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 fill 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.
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
financial year, as well as an overview of the implementation of the
remuneration policy planned by the Supervisory Board for the next
year(s). The Supervisory Board aims to have appropriate experience
available within the Remuneration Committee. 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 an in-house 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
conflicts of interests are avoided.
The Audit Committee
The Audit Committee meets at least four times a year, before the
publication of the annual, semi-annual and quarterly results. All of the
members of the Audit Committee are considered to be independent
under the applicable US Securities and Exchange Commission rules and
at least one of the members of the Audit Committee, which currently
consists of four members of the Supervisory Board, is a financial expert
10 Corporate governance 10.3 - 10.3
146 Philips Annual Report 2009