Philips 2014 Annual Report Download - page 94

Corporate governance 11.1
94 Annual Report 2014
Company regarding accounting, internal accounting
controls or auditing matters and the confidential,
anonymous submission by employees of concerns
regarding questionable accounting or auditing matters.
Internal ‘whistleblowers’ have the opportunity, without
jeopardizing their position, to report on irregularities of
a general, operational or financial nature and to report
complaints about members of the Executive Committee
to the Chairman of the Supervisory Board.
In view of the requirements under the US Securities
Exchange Act, procedures are in place to enable the
CEO and the CFO to provide certifications with respect
to the Annual Report on Form 20-F.
A Disclosure Committee is in place, which advises the
various officers and departments involved, including
the CEO and the CFO, on the timely review, publication
and filing of periodic and current (financial) reports. In
addition to the certification by the CEO and CFO under
US law, each individual member of the Board of
Management and the Supervisory Board must under
Dutch law, sign the Group and Company financial
statements being disclosed and submitted to the
General Meeting of Shareholders for adoption. If one or
more of their signatures is missing, this shall be stated,
and the reasons given for this. The members of the
Board of Management issue the responsibility
statement with regard to chapter 12, Group nancial
statements, of this Annual Report, as required by
applicable Dutch company law and securities law.
11.2 Supervisory Board
Introduction
The Supervisory Board supervises the policies of the
Board of Management and Executive Committee and
the general course of aairs of Philips and advises the
executive management thereon. The Supervisory
Board, in the two-tier corporate structure under Dutch
law, is a separate body that is independent of the Board
of Management. Its independent character is also
reflected in the requirement that members of the
Supervisory Board can be neither a member of the
Board of Management nor an employee of the
Company. The Supervisory Board considers all its
members to be independent pursuant to the Dutch
Corporate Governance Code and under the applicable
US Securities and Exchange Commission standards.
The Supervisory Board, acting in the interests of the
Company and the Group and taking into account the
relevant interest of the Company’s stakeholders,
supervises and advises the Board of Management and
Executive Committee in performing its management
tasks and setting the direction of the Group’s business,
including (a) the Philips group’s performance, (b) the
Philips group’s general strategy and the risks connected
to its business activities, (c) the operational and
financial objectives, (d) the parameters to be approved
in relation to the strategy, (e) corporate social
responsibility issues (f) the structure and management
of the systems of internal business controls, (g) the
financial reporting process, (h) the compliance with
applicable laws and regulations, (i) the company-
shareholders relationship, and (j) the corporate
governance structure of the Company. The Group’s
strategy and major management decisions are
discussed with and approved by the Supervisory Board.
For a description of further responsibilities and tasks of
the Supervisory Board please refer to the Supervisory
Board’s Rules of Procedure which is published on the
Company’s website.
In its report, the Supervisory Board describes the
composition and functioning of the Supervisory Board
and its committees, the activities of the board and its
committees in the financial year, the number of
committee meetings and the main items discussed.
Rules of Procedure of the Supervisory Board
The Supervisory Board’s Rules of Procedure set forth its
own governance rules (including meetings, items to be
discussed, resolutions, appointment and re-election,
committees, conflicts of interests, trading in securities,
profile of the Supervisory Board). Its composition
follows the profile, which aims for an appropriate
combination of knowledge and experience among its
members encompassing marketing, technological,
manufacturing, financial, economic, social and legal
aspects of international business and government and
public administration in relation to the global and multi-
product character of the Group’s businesses. The
Supervisory Board attaches great importance to
diversity in its composition. More particularly, it aims at
having members with a European and a non-European
background (nationality, working experience or
otherwise) and one or more members with an executive
or similar position in business or society no longer than
5 years ago.
Pursuant to Dutch legislation on board diversity, the
Company shall pursue a policy of having at least 30%
of the seats on the Supervisory Board held by men and
at least 30% of the seats held by women. The rule will
cease to have eect 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.
The Rules of Procedure of the Supervisory Board are
published on the Company’s website. They include the
charters of its committees, to which the plenary
Supervisory Board, while retaining overall
responsibility, has assigned certain tasks: the Corporate
Governance and Nomination & Selection Committee,
the Audit Committee and the Remuneration
Committee. Each committee reports, and submits its
minutes for information, to the Supervisory Board.
In line with US and Dutch best practices, the Chairman
of the Supervisory Board must be independent
pursuant to the Dutch Corporate Governance Code and
under the applicable US standards. Furthermore, the