Philips 2010 Annual Report Download - page 124

11 Supervisory Board report 11.1 - 11.2.1
124 Annual Report 2010
ideal candidate, identifying qualified and available
candidates from inside the Company and externally,
assessing and selecting the best suitable candidate, and
communicating the recommendation. Following the
recommendation of the Committee the Supervisory
Board came to a consensus on the candidate to be
proposed for appointment by the shareholders. The
decision was communicated mid 2010.
11.2 Report of the
Remuneration
Committee
Introduction
The Remuneration Committee, currently consisting of
four members, 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. In performing its duties and
responsibilities the Remuneration Committee is assisted
by an in-house remuneration expert acting on the basis of
a protocol which ensures that he acts on the instructions
of the Remuneration Committee and maintains an
independent position in which conflicts of interest are
avoided. The Remuneration Committee’s tasks are laid
down in the Charter of the Remuneration Committee
that forms part of the Rules of Procedure of the
Supervisory Board. Currently, no member of the
Remuneration Committee is a member of the
management board of another listed company.
11.2.1 General remuneration policy
The objective of the remuneration policy for members of
the Board of Management is in line with that for
executives throughout the Philips Group: to attract,
motivate and retain qualified senior executives of the
highest caliber, with an international mindset and
background essential for the successful leadership and
effective management of a large global company. The
Board of Management remuneration policy is
benchmarked regularly against companies in the general
industry and aims at the median market position.
One of the goals behind the policy is to focus on improving
the performance of the company and enhance the value of
the Philips Group. Consequently, the remuneration
package includes a variable part in the form of an annual
cash incentive and a long-term incentive consisting of
restricted share rights and stock options. Philips has
short-term and long-term incentives, the latter
predominantly linked to Philips’ long-term strategy. The
policy does not encourage inappropriate risk-taking.
The performance targets for the members of the Board of
Management are determined annually at the beginning of
the year. The Supervisory Board determines whether
performance conditions have been met and can adjust the