Philips 2010 Annual Report Download - page 126

11 Supervisory Board report 11.2.3 - 11.2.6
126 Annual Report 2010
Remuneration costs Board of Management 20101)
in euros
base salary realized annual incentive2) stock options restricted share rights pension costs other compensation
G.J. Kleisterlee 1,100,000 962,720 328,485 444,005 (255,757)3) 321,778
P-J. Sivignon 711,250 459,480 187,763 255,398 240,051 28,122
G.H.A. Dutiné 643,750 410,250 185,364 252,057 203,404 135,459
R.S. Provoost 646,250 416,814 185,364 251,225 193,194 30,919
S.H. Rusckowski 646,250 416,814 187,763 255,228 216,814 76,713
1) Reference date for board membership is December 31, 2010
2) Annual incentive amount paid relates to performance in 2009
3) No further accrual of pension benefits after having reached the age of 60 in September 2006, leading to a negative cost
11.2.4 Base salary
The salaries of the members of the Board of Management
have been increased in a moderate way on the yearly
review date in April 2010, in line with the policy for other
employees.
11.2.5 Annual Incentive
Each year, a variable cash incentive (Annual Incentive) can
be earned, based on the achievement of specific and
challenging targets. The Annual Incentive criteria are for
80% the financial indicators of the Company (net income,
comparable sales growth and free cash flow). In 2010 the
highest weighting was for comparable sales growth. The
comparable sales growth calculation focuses on organic
growth of the businesses and excludes currency
translation effects and impact of acquisitions/divestments.
The 20% team targets comprise the major elements of the
management agenda, including sustainability elements
such as Employee Engagement Score and Green Product
sales.
The on-target Annual Incentive percentage is set at 60% of
the base salary for members of the Board of Management
and 80% of the base salary for the President/CEO, and the
maximum Annual Incentive achievable is 120% of the
annual base salary for members of the Board of
Management and for the President/CEO it is 160% of the
annual base salary.
The Annual Incentive pay-out in any year relates to the
achievements of the preceding financial year in relation to
agreed targets. As a result, Annual Incentives paid in 2011
relate to the salary levels and the performance in the year
2010. The amounts in the table below will be paid to the
members of the Board of Management in April 2011.
Pay-out in 20111)
in euros
realized annual
incentive as a % of base salary (2010)
G.J. Kleisterlee 962,720 87.5%
P-J. Sivignon 469,326 65.6%
G.H.A. Dutiné 426,660 65.6%
R.S. Provoost 426,660 65.6%
S.H Rusckowski 426,660 65.6%
1) Reference date for board membership is December 31, 2010
11.2.6 Long-Term Incentive Plan
The LTIP consists of a mix of stock options and restricted
share rights. It aims to align the interests of the
participating employees with the shareholders’ interests
and to attract, motivate and retain participating
employees.
The stock option plan vests three years after grant,
dependent upon employment on the vesting date. The
exercise price is the share price upon grant, and the total
option term is 10 years.
A restricted share right is a right to receive a share,
subject to being employed with Philips on the vesting date.
Vesting occurs in three equal tranches 1, 2 and 3 years
respectively after grant. An additional 20% of the
restricted share rights grant is deferred, subject to the
condition that released shares are held for three years
after vesting, and employment with Philips is continued
during this period.
The actual number of stock options and restricted share
rights to be granted to the board members is
performance-related and depends on the ranking of
Philips in the Total Shareholder Return (TSR) peer group
and the realization of the team targets of the Board of
Management. The peer group comprises the following
companies: Electrolux, Emerson Electric, General