Philips 2012 Annual Report Download - page 103

10 Supervisory Board report 10.2.3 - 10.2.7
Annual Report 2012 103
10.2.3 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. The Supervisory Board concluded
that the current policy has proven to function well in
terms of a relationship between the strategic objectives
and the chosen performance criteria and believes that the
proposed changes to the Long-Term Incentive Plan will
further improve this relationship.
10.2.4 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.
The previously granted stock options and restricted share
rights to Mr S.H. Rusckowski have lapsed per April 30,
2012 in accordance with the terms and conditions of the
Long-Term Incentive Plan upon termination.
Remuneration Board of Management 20121)
in euros
Costs in the year2)
annual
base salary base salary
realized
annual incentive
stock
options
restricted
share rights
pension
costs
other
compen-
sation
F.A. van Houten 1,100,000 1,100,000 1,279,520 209,589 315,760 422,845 47,154
R.H. Wirahadiraksa 600,000 600,000 523,440 149,067 217,020 243,438 34,961
P.A.J. Nota 600,000 600,000 556,200 188,029 253,836 247,883 60,754
1) Reference date for board membership is December 31, 2012
2) A one-time crisis tax levy of 16% as imposed by the Dutch government amounts to EUR 413,405 in total . This crisis tax levy is payable by the employer and is charged over
income of employees exceeding a EUR 150,000 threshold in 2012. These expenses do not form part of the remuneration costs mentioned.
10.2.5 Base salary
The salaries of the members of the Board of Management
have not been increased on the yearly review date in April
2012.
10.2.6 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 and for 20%
the team targets comprising sustainability targets as part
of our EcoVision program.
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 CEO, and
the maximum Annual Incentive achievable is 120% of the
annual base salary for members of the Board of
Management and for the CEO it is 160% of the annual base
salary.
To support the new performance culture, the Annual
Incentive plan of 2012 is based on (financial) targets at
‘own level’ and ‘group’ level results (line-of-sight). The
pay-outs are a reflection of above-target realization in
Comparable Sales Growth, Return on Invested Capital
(ROIC) and Team Targets and close to on-target for
EBITA as a percentage of sales, resulting in the pay-out as
presented in the table below.
Pay-out in 20131)
in euros
realized annual
incentive
as a % of base
salary (2012)
F.A. van Houten 1,279,520 116.3%
R.H. Wirahadiraksa 523,440 87.2%
P.A.J. Nota 556,200 92.7%
1) Reference date for board membership is December 31, 2012
10.2.7 Long-Term Incentive Plan
The Long-Term Incentive Plan (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.