Philips 2010 Annual Report Download - page 125

11 Supervisory Board report 11.2.1 - 11.2.3
Annual Report 2010 125
pay-out of the annual cash incentive and the long-term
incentive grant upward or downward if the
predetermined performance criteria were to produce an
“unfair” result in extraordinary circumstances. The
authority for such adjustments exists on the basis of the
ultimum remedium- and claw back clauses (in accordance
with best practice provisions II.2.10 and II.2.11 of the
Dutch Corporate Governance Code). Further
information on the performance targets is given in the
chapters on the Annual Incentive and the Long-Term
Incentive Plan respectively.
11.2.2 Contracts of employment
The main elements of the contracts are made public no
later than the date of the notice convening the General
Meeting of Shareholders at which the appointment of the
member of the Board of Management will be proposed.
Term of appointment
The members of the Board of Management are appointed
for a period of 4 years.
Contract terms for current members1)
end of term
G.J. Kleisterlee April 1, 2011
P-J. Sivignon April 1, 2013
G.H.A. Dutiné April 1, 2014
R.S. Provoost April 1, 2014
S.H. Rusckowski April 1, 2014
1) Reference date for board membership is December 31, 2010
Notice period
Termination of employment by a member of the Board of
Management is subject to three months’ notice. A notice
period of six months will be applicable in the case of
termination by the Company.
Severance payment
The severance payment is set at a maximum of one year’s
salary, or in case this is ‘manifestly unreasonable’ for a
member of the Board of Management in his first
appointment period, the amount is maximized at two
times the annual salary.
Share Ownership
To further align the interests of the members of the Board
of Management and shareholders, restricted share rights
granted to members of the Board of Management shall be
retained for a period of at least five years or until at least
the end of their employment, if this period is shorter.
Scenario analysis
The Remuneration Committee annually conducts
scenario analysis. This includes the calculation of
remuneration under different scenarios, whereby
different Philips performance assumptions and corporate
actions are looked at.
11.2.3 Remuneration costs
The table below gives an overview of the costs incurred by
the Company in the financial year in relation to the
remuneration of the Board of Management. Costs related
to stock option and restricted share right grants are taken
by the Company over a number of years. As a
consequence, the costs mentioned below in the columns
stock options and restricted share rights are the
accounting cost of multi-year grants given to members of
the Board of Management during their board
membership.
Information on the individual remuneration of the
(former) members of the Board of Management is shown
in the tables below as well as in the table in note 31.
The previously granted stock options and restricted share
rights of Mr A. Ragnetti continue to vest in accordance
with the terms and conditions of the Long-Term Incentive
Plan.