Philips 2011 Annual Report Download - page 110

11 Corporate governance 11.2 - 11.2
110 Annual Report 2011
The Supervisory Board is assisted by the General Secretary of the
Company. The General Secretary sees to it that correct procedures
are followed and that the Supervisory Board acts in accordance with
its statutory obligations and its obligations under the articles of
association. Furthermore the General Secretary assists the Chairman
of the Supervisory Board in the actual organization of the affairs of the
Supervisory Board (information, agenda, evaluation, introductory
program) and is the contact person for interested parties who want to
make concerns known to the Supervisory Board. The General
Secretary shall, either on the recommendation of the Supervisory
Board or otherwise, be appointed and may be dismissed by the
Executive Committee, after the approval of the Supervisory Board has
been obtained.
(Term of) Appointment, individual data and conflicts of
interests
The Supervisory Board consists of at least five members (currently
eight), including a Chairman, Vice-Chairman and Secretary. The so-
called Dutch ‘structure regime’ does not apply to the Company itself.
Members are currently elected by the General Meeting of Shareholders
for fixed terms of four years, upon a binding recommendation from the
Supervisory Board. According to the Company’s articles of association,
this binding recommendation may be overruled by a resolution of the
General Meeting of Shareholders adopted by a simple majority of the
votes cast and representing at least one-third of the issued share capital.
If a simple majority of the votes cast is in favor of the resolution to
overrule the binding recommendation, but such majority does not
represent at least one-third of the issued share capital, a new meeting
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
published 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 2011.
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 of the structure
and operation of the internal risk management and control systems, as
well as any significant changes thereto. The members of the Executive
Committee attend meetings of the Supervisory Board except in matters
such as the desired profile, composition and competence of the
Supervisory Board and the Executive Committee, as well as the
remuneration and performance of individual members of the Executive
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 Executive
Committee 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 Executive
Committee have regular contacts with the Chairman and other
members of the Supervisory Board. The Executive Committee 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 Executive Committee 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 Executive Committee
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 deputize 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 2011, nor were any outstanding as per
December 31, 2011.
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 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 Executive Committee; (b) periodically assesses
the size and composition of the Supervisory Board, the Board of
Management and the Executive 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 Executive
Committee, and reports on this to the Supervisory Board. The
Committee also consults with the President/CEO and the Executive
Committee on candidates to fill vacancies on the Supervisory Board,
the Executive Committee, and advises the Supervisory Board on the
candidates for appointment. It further supervises the policy of the
Executive Committee on the selection criteria and appointment
procedures for Philips Executives.