Philips 2012 Annual Report Download - page 99

10 Supervisory Board report 10 - 10
Annual Report 2012 99
10 Supervisory Board report
Introduction
General
The supervision of the policies and actions of the
executive management of Koninklijke Philips Electronics
N.V. (the ‘Company’) is entrusted to the Supervisory
Board, which, in the two-tier corporate structure under
Dutch law, is a separate and independent corporate body.
This independence is also reflected in the requirement
that members of the Supervisory Board can neither be a
member of the Board of Management, member of the
Executive Committee nor an employee of the Company.
The Supervisory Board considers all its members to be
independent pursuant to the Dutch Corporate
Governance Code of December 2008 (the ‘Dutch
Corporate Governance Code’) and the applicable US
standards.
While retaining overall responsibility, the Supervisory
Board assigns certain of its tasks to three permanent
committees: the Corporate Governance and Nomination
& Selection Committee, the Remuneration Committee
and the Audit Committee. The separate reports of these
committees are part of this report and are published
below. The members (of the committees) of the
Supervisory Board are listed in chapter 9, Supervisory
Board, of this Annual Report.
For further information on the Company’s corporate
governance structure and a more detailed description of
the duties and functioning of the Supervisory Board, see
chapter 11, Corporate governance, of this Annual Report.
Activities of the Supervisory Board
In 2012, seven regular meetings were held. Furthermore,
the Supervisory board from time to time collectively and
individually interacted with management outside the
formal Supervisory Board meetings. The attendance
percentage of the Supervisory Board meetings including
the Supervisory Board committee meetings was in excess
of 95%. The Audit Committee met five times. The
Corporate Governance and Nomination & Selection
Committee had three regular meetings and some ad hoc
meetings in connection with the composition of the
Supervisory Board. The Remuneration Committee had
nine regular meetings and several conference calls in
connection with the design of the new Long-Term
Incentive Plan.
During 2012 the Supervisory Board devoted considerable
time to discuss the Company’s strategy and performance
as well as the effects of the macroeconomic outlook on
Philips. The Supervisory Board frequently engaged with
management on topics such as capital structure, the share
buyback program, inventory reduction and gross margin
improvement. It furthermore monitored the creation of
the TV joint venture as well as discussed the strategic
scenarios of the Lifestyle Entertainment business.
Additionally, the sustainability program was reviewed.
In respect of the Accelerate! program, the Supervisory
Board reviewed and advised on the various initiatives that
are part of the transformation such as the transformation
of the Finance function, the HR strategy & transformation
and the overhaul of the IT infrastructure. Furthermore,
the Supervisory Board engaged in dedicated sessions on
risk management and reviewed the impact of the
European Commission fine for alleged violation of
competition rules in the Cathode-Ray Tube industry.
In addition to the regular meetings, in June 2012, the
Supervisory Board visited the Philips Healthcare
operations in Andover, Massachusetts where they met
with Healthcare management, employees and customers.
In the same week, the Supervisory Board visited the
Philips Lighting operations in Burlington, Massachusetts.
In August 2012, the Supervisory Board visited the High
Tech Campus in Eindhoven, the Netherlands to review
various projects in Philips Research and Philips Design. In
October 2012 and December 2012, working visits were
made to the headquarters of Philips Lighting and Philips
Consumer Lifestyle respectively. During these visits, the
Supervisory Board engaged with Sector management and
business reviews were conducted in respect of existing
and future products and services.
Composition and evaluation of the Supervisory
Board
The Supervisory Board currently consists of eight
members. The Supervisory Board aims for an appropriate
combination of knowledge and experience among its
members in relation to the global and multi-product
character of Philips’ businesses. Consequently, the
Supervisory Board aims for an appropriate level of
experience in marketing, technological, manufacturing,
financial, economic, social and legal aspects of
international business, government and public
administration. The full profile is described in the chapter