Philips 2012 Annual Report Download - page 102

10 Supervisory Board report 10.2 - 10.2.2
102 Annual Report 2012
10.2 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 Executive
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. In line with applicable statutory and other
regulations this report focuses on the employment and
remuneration of the members of the Board of
Management.
10.2.1 Remuneration policy
The objective of the remuneration policy for members of
the Board of Management, as adopted by the General
Meeting of Shareholders, 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. 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
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
inappropriate 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.
10.2.2 Contracts
The main elements of the contracts of the members of
the Board of Management 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
F.A. van Houten March 31, 2015
R.H. Wirahadiraksa March 31, 2015
P.A.J. Nota March 31, 2015
1) Reference date for board membership is December 31, 2012
Notice period
Termination of the contract 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.
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.