Philips 2013 Annual Report Download - page 111

9 Supervisory Board report 9.2 - 9.2.2
Annual Report 2013 111
9.2 Report of the
Remuneration
Committee
Introduction
The Remuneration Committee is chaired by James
Schiro and its other members are Jeroen van der Veer,
Ewald Kist and Christine Poon. The Committee 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 external
consultant and in-house remuneration expert acting on
the basis of a protocol which ensures that he acts on the
instructions of the Remuneration Committee. 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.
9.2.1 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
eective 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
enhancing 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 performance
shares. 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 contractual ultimum
remedium- and claw back clauses. In addition,
pursuant to new Dutch legislation eective January 1,
2014, incentives may under circumstances be amended
or clawed back pursuant to statutory powers. For more
information please refer to chapter 10, Corporate
governance, of this Annual Report. Further information
on the performance targets is given in the chapters on
the Annual Incentive and the Long-Term Incentive Plan
respectively.
9.2.2 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 members
end of term
F.A. van Houten March 31, 2015
R.H. Wirahadiraksa March 31, 2015
P.A.J. Nota March 31, 2015
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
Simultaneously with the introduction of the new LTI
Plan in 2013, the guideline for members of the Board of
Management to hold a certain number of shares in the
company has been increased to the level of at least