Philips 2009 Annual Report Download - page 149

and also to do anything related to the above ends or conducive to them.
In the event of (an attempt at) a hostile takeover or other attempt to
obtain (de facto) control of the Company this arrangement will allow
the Company and its Board of Management and Supervisory Board to
determine its position in relation to the third party and its plans, seek
alternatives and defend Philips’ interests and those of its stakeholders
from a position of strength. The members of the self-electing Board of
the Foundation are Messrs S.D. de Bree,F.J.G.M. Cremers and
M.W. den Boogert. No Philips board members or officers are
represented on the board of the Foundation.
The Company does not have any other anti-takeover measures in the
sense of other measures which exclusively or almost exclusively have
the purpose of frustrating future public bids for the shares in the capital
of the Company in case no agreement is reached with the Board of
Management on such public bid. Furthermore the Company does not
have measures which specifically have the purpose of preventing a
bidder who has acquired 75% of the shares in the capital of the
Company from appointing or dismissing members of the Board of
Management and subsequently amending the articles of association of
the Company. It should be noted that also in the event of (an attempt at)
a hostile takeover or other attempt to obtain (de facto) control of the
Company, the Board of Management and the Supervisory Board are
authorized to exercise in the interests of Philips all powers vested in
them.
Audit of the financial reporting and the position of the
external auditor
The annual financial statements are prepared by the Board of
Management and reviewed by the Supervisory Board upon the advice of
its Audit Committee and the external auditor. Upon approval by the
Supervisory Board, the accounts are signed by all members of both the
Board of Management and the Supervisory Board and are published
together with the final opinion of the external auditor. The Board of
Management is responsible, under the supervision of the Supervisory
Board, for the quality and completeness of such publicly disclosed
financial reports. The annual financial statements are presented for
discussion and adoption to the Annual General Meeting of
Shareholders, to be convened subsequently. Philips, under US securities
regulations, separately files its Annual Report on Form 20-F,
incorporating major parts of the Annual Report as prepared under the
requirements of Dutch law.
Internal controls and disclosure policies
Comprehensive internal procedures, compliance with which is
supervised by the Supervisory Board, are in place for the preparation
and publication of the Annual Report, the annual accounts, the quarterly
figures and ad hoc financial information. As from 2003, the internal
assurance process for business risk assessment has been strengthened
and the review frequency has been upgraded to a quarterly review
cycle, in line with emerging best practices in this area.
As part of these procedures, a Disclosure Committee has been
appointed by the Board of Management to oversee the Company’s
disclosure activities and to assist the Board of Management in fulfilling
its responsibilities in this respect. The Committee’s purpose is to
ensure that the Company implements and maintains internal
procedures for the timely collection, evaluation and disclosure, as
appropriate, of information potentially subject to public disclosure
under the legal, regulatory and stock exchange requirements to which
the Company is subject. Such procedures are designed to capture
information that is relevant to an assessment of the need to disclose
developments and risks that pertain to the Company’s various
businesses, and their effectiveness for this purpose will be reviewed
periodically.
Auditor information
In accordance with the procedures laid down in the Philips Policy on
Auditor Independence and as mandatorily required by Dutch law, the
external auditor of the Company is appointed by the General Meeting
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 confirmed
by the Supervisory Board for an additional three years. The 2008
General Meeting of Shareholders 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 firm 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 findings 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 financial
reporting risks and issues that were identified 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 firm 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.
10.6 Investor Relations
Introduction
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 financial
results during (public) conference calls, which are broadly accessible. It
publishes informative annual, semi-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 Philips Capital Market 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. Thus the
Company applies recommendation IV.3.1 of the Dutch Corporate
Governance Code, which in its perception and in view of market
practice does not extend to less important analyst meetings and
presentations. 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, semi-annual and quarterly financial information.
Furthermore, the Company engages in bilateral communications with
investors; an outline policy on such bilateral contacts has been
published on the Company’s website. These communications either
take place at the initiative of the Company or at the initiative of
individual investors. During these communications the Company is
generally represented by its Investor Relations department. However,
on a limited number of occasions the Investor Relations department is
accompanied by one or more members of the Board of Management.
The subject matter of the bilateral communications ranges from single
queries from investors to more elaborate discussions on the back of
disclosures that the Company has made such as its annual and quarterly
reports. Also here, the Company is strict in its compliance with
applicable rules and regulations on fair and non-selective disclosure and
equal treatment of shareholders.
10 Corporate governance 10.5 - 10.6
Philips Annual Report 2009 149