Philips 2014 Annual Report Download - page 91

Corporate governance 11.1
Annual Report 2014 91
The Executive Committee follows the Rules of
Procedure of the Board of Management and Executive
Committee, which set forth procedures for meetings,
resolutions and minutes. These Rules of Procedure are
published on the Company’s website.
(Term of) Appointment and conicts of
interests
Members of the Board of Management as well as the CEO
are appointed by the General Meeting of Shareholders
upon a binding recommendation drawn up by the
Supervisory Board after consultation with the CEO. This
binding recommendation may be overruled by a resolution
of the General Meeting of Shareholders adopted by a
simple majority of the votes cast and representing at least
one-third of the issued share capital. If a simple majority
of the votes cast is in favor of the resolution to overrule the
binding recommendation, but such majority does not
represent at least one-third of the issued share capital, a
new meeting may be convened at which the resolution
may be passed by a simple majority of the votes cast,
regardless of the portion of the issued share capital
represented by such majority. In the event a binding
recommendation has been overruled, a new binding
recommendation shall be submitted to the General
Meeting of Shareholders. If such second binding
recommendation has been overruled, the General
Meeting of Shareholders shall be free to appoint a board
member.
Members of the Board of Management and the CEO are
appointed for a term of four years, it being understood
that this term expires at the end of the General Meeting
of Shareholders to be held in the fourth year after the
year of their appointment. Reappointment is possible
for consecutive terms of four years or, if applicable, until
a later retirement date or other contractual termination
date in the fourth year, unless the General Meeting of
Shareholders resolves otherwise. Members may be
suspended by the Supervisory Board and by the
General Meeting of Shareholders and dismissed by the
latter. Individual data on the members of the Board of
Management and Executive Committee are published
in chapter 8, Management, of this Annual Report.
The other members of the Executive Committee are
appointed, suspended and dismissed by the CEO,
subject to approval by the Supervisory Board.
The acceptance by a member of the Board of
Management of a position as a member of a
supervisory board or a position of non-executive
director in a one-tier board (a ‘Non-Executive
Directorship’) at another company requires the
approval of the Supervisory Board. The Supervisory
Board is required to be notified of other important
positions (to be) held by a member of the Board of
Management. Under the Dutch Corporate Governance
Code, no member of the Board of Management shall
hold more than two Non-Executive Directorships at
listed companies, or is a chairman of a supervisory
board or one-tier board, other than of a Group
company or participating interest of the Company.
Dutch legislation provides for further limitations on the
Non-Executive Directorships. No member of the Board
of Management shall hold more than two Non-
Executive Directorships at ‘large’ companies (naamloze
vennootschappen or besloten vennootschappen) or
‘large’ foundations (stichtingen) as defined under Dutch
law and no member of the Board of Management shall
hold the position of chairman of another one-tier board
or the position of chairman of another supervisory
board. In order for a company or foundation to be
regarded as large, it must meet at least two of the
following criteria: (i) the value of the assets according
to the balance sheet with explanatory notes,
considering the acquisition or manufacturing price,
exceeds EUR 17.5 million; (ii) the net turnover exceeds
EUR 35 million; or (iii) the average number of employees
equals or exceeds 250. During the financial year 2014
all members of the Board of Management complied
with the limitations on Non-Executive Directorships
described above.
Pursuant to Dutch legislation on board diversity, the
Company must pursue a policy of having at least 30% of the
seats on the Board of Management held by men and at least
30% of the seats held by women. The rule will cease to have
effect on January 1, 2016. For more details on board diversity
please be referred to section 10.1, Report of the Corporate
Governance and Nomination & Selection Committee, of
this Annual Report
.
Dutch legislation on conflicts of interests provides that a
member of the Board of Management may not participate
in the adoption of resolutions if he or she has a direct or
indirect personal conflict of interest with the Company or
related enterprise. If all members of the Board of
Management have a conflict, the resolution concerned will
be adopted by the Supervisory Board. The Company’s
corporate governance includes rules to specify situations
in which a (potential) conflict may exist, to avoid (potential)
conflicts of interests as much as possible, and to deal with
such conflicts should they arise. The rules on conflicts of
interests apply to the other members of the Executive
Committee correspondingly.
Relevant matters relating to conflicts of interests, if any,
shall be mentioned in the Annual Report for the
financial year in question. No such matters have
occurred during the financial year 2014.
Amount and composition of the remuneration
of the Board of Management
The remuneration of the individual members of the Board
of Management is determined by the Supervisory Board
on the proposal of the Remuneration Committee of the
Supervisory Board, and must be consistent with the policy
thereon as adopted by the General Meeting of
Shareholders. The current remuneration policy applicable
to the Board of Management was adopted by the 2013
Annual General Meeting of Shareholders, and is published
on the Company’s website. A full and detailed description
of the composition of the remuneration of the individual