Philips 2013 Annual Report Download - page 122

10 Corporate governance 10.2 - 10.3
122 Annual Report 2013
Shares or rights to shares shall not be granted to a Supervisory Board
member. In accordance with the Rules of Procedure of the Supervisory
Board, any shares in the Company held by a Supervisory Board member
are long-term investments. The Supervisory Board has adopted a policy
on ownership of and transactions in non-Philips securities by members of
the Supervisory Board. This policy is included in the Rules of Procedure of
the Supervisory Board.
The Corporate Governance and Nomination & Selection Committee
The Corporate Governance and Nomination & Selection Committee
consists of at least the Chairman and Vice-Chairman of the Supervisory
Board. The Committee reviews the corporate governance principles
applicable to the Company at least once a year, and advises the
Supervisory Board on any changes to these principles as it deems
appropriate. It also (a) draws up selection criteria and appointment
procedures for members of the Supervisory Board, the Board of
Management and the Executive Committee; (b) periodically assesses the
size and composition of the Supervisory Board, the Board of Management
and the Executive Committee, and makes the proposals for a composition
profile of the Supervisory Board, if appropriate; (c) periodically assesses
the functioning of individual members of the Supervisory Board, the Board
of Management and the Executive Committee, and reports on this to the
Supervisory Board. The Committee also consults with the President/CEO
and the Executive Committee on candidates to fill vacancies on the
Supervisory Board, the Executive Committee, and advises the Supervisory
Board on the candidates for appointment. It further supervises the policy
of the Executive Committee on the selection criteria and appointment
procedures for Philips Executives.
The Remuneration Committee
The Remuneration Committee meets at least twice a year and is
responsible for preparing decisions of the Supervisory Board on the
remuneration of individual members of the Board of Management and the
Executive Committee.
The Remuneration Committee prepares an annual remuneration report.
The remuneration report contains an account of the manner in which the
remuneration policy has been implemented in the past financial year, as
well as an overview of the implementation of the remuneration policy
planned by the Supervisory Board for the next year(s). The Supervisory
Board aims to have appropriate experience available within the
Remuneration Committee. No more than one member of the
Remuneration Committee shall be an executive board member of another
Dutch listed company.
In performing its duties and responsibilities the Remuneration Committee
is assisted by an in-house remuneration expert acting on the basis of a
protocol ensuring that the expert acts on the instructions of the
Remuneration Committee and on an independent basis in which conflicts
of interests are avoided.
The Audit Committee
The Audit Committee meets at least four times a year, before the
publication of the annual, semi-annual and quarterly results. All of the
members of the Audit Committee are considered to be independent under
the applicable US Securities and Exchange Commission rules and at least
one of the members of the Audit Committee, which currently consists of
four members of the Supervisory Board, is a financial expert as set out in
the Dutch Corporate Governance Code and each member is financially
literate. In accordance with this code, a financial expert has relevant
knowledge and experience of financial administration and accounting at
the company in question. The Supervisory Board considers the fact of
being compliant with the Dutch Corporate Governance Code, in
combination with the knowledge and experience available in the Audit
Committee as well as the possibility to take advice from internal and
external experts and advisors, to be sufficient for the fulfillment of the
tasks and responsibilities of the Audit Committee. None of the members of
the Audit Committee is an Audit Committee financial expert as defined
under the regulations of the US Securities and Exchange Commission. The
Audit Committee may not be chaired by the Chairman of the Supervisory
Board or by a (former) member of the Board of Management.
All members of the Audit Committee are independent
The tasks and functions of the Audit Committee, as described in its charter,
which is published on the Company’s website as part of the Rules of
Procedure of the Supervisory Board, include the duties recommended in
the Dutch Corporate Governance Code. More specifically, the Audit
Committee assists the Supervisory Board in fulfilling its oversight
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 qualifications, its independence and its performance, as
well as the Company’s process for monitoring compliance with laws and
regulations and the General Business Principles (GBP). It reviews the
Company’s annual and interim financial statements, including non-
financial information, prior to publication and advises the Supervisory
Board on the adequacy and appropriateness of internal control policies
and internal audit programs and their findings.
In reviewing the Company’s annual and interim statements, including
non-financial information, and advising the Supervisory Board on internal
control policies and internal audit programs, the Audit Committee reviews
matters relating to accounting policies and compliance with accounting
standards, compliance with statutory and legal requirements and
regulations, particularly in the financial domain. Important findings and
identified risks are examined thoroughly by the Audit Committee in order
to allow appropriate measures to be taken. With regard to the internal
audit, the Audit Committee, in cooperation with the external auditor,
reviews the internal audit charter, audit plan, audit scope and its coverage
in relation to the scope of the external audit, staffing, independence and
organizational structure of the internal audit function.
With regard to the external audit, the Audit Committee reviews the
proposed audit scope, approach and fees, the independence of the
external auditor, its performance and its (re-)appointment, audit and
permitted non-audit services provided by the external auditor in
conformity with the Philips Policy on Auditor Independence, as well as any
changes to this policy. The Audit Committee also considers the report of
the external auditor and its report with respect to the annual financial
statements. According to the procedures, the Audit Committee acts as the
principal contact for the external auditor if the auditor discovers
irregularities in the content of the financial reports. It also advises on the
Supervisory Board’s statement to shareholders in the annual accounts.
The Audit Committee periodically discusses the Company’s policy on
business controls, the GBP including the deployment thereof, overviews
on tax, IT, litigation and legal proceedings, environmental exposures,
financial exposures in the area of treasury, real estate, pensions, and the
Group’s major areas of risk. The Company’s external auditor, in general,
attends all Audit Committee meetings and the Audit Committee meets
separately at least on a quarterly basis with each of the President/CEO,
the CFO, the internal auditor and the external auditor.
10.3 General Meeting of Shareholders
Introduction
A General Meeting of Shareholders is held at least once a year to discuss
the Annual Report, including the report of the Board of Management, the
annual financial statements with explanatory notes thereto and additional
information required by law, and the Supervisory Board report, any
proposal concerning dividends or other distributions, the appointment of
members of the Board of Management and Supervisory Board (if any),
important management decisions as required by Dutch law, and any other
matters proposed by the Supervisory Board, the Board of Management or
shareholders in accordance with the provisions of the Company’s Articles
of Association. The Annual Report, the financial statements and other
regulated information such as defined in the Dutch Act on Financial
Supervision (Wet op het Financieel Toezicht), will solely be published in
English. As a separate agenda item and in application of Dutch law, the
General Meeting of Shareholders discusses the discharge of the members
of the Board of Management and the Supervisory Board from
responsibility for the performance of their respective duties in the
preceding financial year. However, this discharge only covers matters that
are known to the Company and the General Meeting of Shareholders
when the resolution is adopted. The General Meeting of Shareholders is
held in Eindhoven, Amsterdam, Rotterdam, The Hague, Utrecht or
Haarlemmermeer (Schiphol Airport) no later than six months after the end
of the financial year.
Meetings are convened by public notice, via the Company’s website or
other electronic means of communication and to registered shareholders
by letter or by the use of electronic means of communication, at least 42
days prior to the (Extraordinary) General Meeting of Shareholders.
Extraordinary General Meetings of Shareholders may be convened by the
Supervisory Board or the Board of Management if deemed necessary and
must be held if shareholders jointly representing at least 10% of the
outstanding share capital make a written request to that eect to the
Supervisory Board and the Board of Management, specifying in detail the
business to be dealt with. The agenda of a General Meeting of
Shareholders shall contain such business as may be placed thereon by the
Board of Management or the Supervisory Board, and agenda items will be
explained where necessary in writing. The agenda shall list which items are
for discussion and which items are to be voted upon. Material