Philips 2012 Annual Report Download - page 106

10 Supervisory Board report 10.2.11 - 10.3
106 Annual Report 2012
years cliff vesting, performance criteria based on EPS
Growth and relative TSR, grants expressed as a
percentage of base salary and higher mandatory share
ownership.
As mentioned already in the 2011 Annual Report, a one-
time special Long-Term Incentive grant was made to a
group of key employees below the level of Board of
Management in January 2012 and the Supervisory Board
contemplated introducing the Accelerate! Grant for the
members of the Board of Management. The Supervisory
Board feels that this grant supports the change in the
performance culture and is a good bridge between the
current LTIP and the new LTIP. As the performance
elements of the Accelerate! Grant (CSG%, EBITA% and
ROIC%) are measured over the year 2013 the
Supervisory Board has decided to make the grant at the
start of the performance period in January 2013. The grant
is conditional, subject to shareholders consent.
The explanatory notes of the Agenda for the 2013
General Shareholders Meeting give more detailed
information regarding the new LTIP and the Accelerate!
Grant.
10.3 Report of the
Audit Committee
The Audit Committee, currently consisting of four
members, assists the Supervisory Board in fulfilling its
supervisory responsibilities for the integrity of the
Company’s financial statements, the financial reporting
process, the system of internal business controls and risk
management, the internal and external audit process, the
internal and external auditor’s findings and
recommendations, independence and performance, as
well as the Company’s process for monitoring compliance
with laws and regulations and the General Business
Principles (GBP). Moreover, the Audit Committee
evaluates the performance of the external auditor every
3 years, in accordance with the Philips Policy on Auditor
Independence.
The Audit Committee met five times in 2012 and
reported its findings to the plenary Supervisory Board.
The President/CEO, the Chief Financial Officer, the
internal auditor, the Group Controller and the external
auditor attended all regular meetings. Furthermore, the
Audit Committee met each quarter separately with each
of the President/CEO, the Chief Financial Officer, the
internal auditor and the external auditor.
In accordance with its charter, which is part of the Rules
of Procedure of the Supervisory Board, the Audit
Committee in 2012 reviewed the Company’s annual and
interim financial statements, including non-financial
information, prior to publication thereof. It also assessed
in its quarterly meetings the adequacy and
appropriateness of internal control policies and internal
audit programs and their findings.
In its 2012 meetings, the Audit Committee periodically
reviewed matters relating to accounting policies, financial
risks and compliance with accounting standards.
Compliance with statutory and legal requirements and
regulations, particularly in the financial domain, was also
reviewed. Important findings, identified risks and follow-
up actions were examined thoroughly in order to allow
appropriate measures to be taken.
With regard to the internal audit, the Audit Committee
reviewed, and if required approved, the internal audit
charter, audit plan, audit scope and its coverage in relation
to the scope of the external audit, as well as the staffing,
independence and organizational structure of the internal