Philips 2015 Annual Report Download - page 89

Corporate governance 11
Annual Report 2015 89
11 Corporate governance
Corporate governance of the Philips Group -
Introduction
Koninklijke Philips N.V., a company organized under
Dutch law, is the parent company of the Philips Group.
The Company, which started as a limited partnership
with the name Philips & Co in Eindhoven, the
Netherlands, in 1891, was converted into the company
with limited liability N.V. Philips’ Gloeilampenfabrieken
on September 11, 1912. The Company’s name was
changed to Philips Electronics N.V. on May 6, 1994, to
Koninklijke Philips Electronics N.V. on April 1, 1998, and
to Koninklijke Philips N.V. on May 15, 2013. Its shares
have been listed on the Amsterdam Stock Exchange,
Euronext Amsterdam, since 1912. The shares have been
traded in the United States since 1962 and have been
listed on the New York Stock Exchange since 1987.
Over the last decades the Company has pursued a
consistent policy to improve its corporate governance
in line with Dutch, US and international (codes of) best
practices. The Company has incorporated a fair
disclosure practice in its investor relations policy, has
strengthened the accountability of its executive
management and its independent supervisory
directors, and has increased the rights and powers of
shareholders and the communication with investors.
The Company is required to comply with, inter alia,
Dutch corporate governance rules, the US Sarbanes-
Oxley Act, other US securities laws and related
regulations (including applicable stock exchange rules),
insofar as applicable to the Company. A summary of
significant dierences between the Company’s
corporate governance practice and the New York Stock
Exchange corporate governance standards is
published on the Company’s website
(www.philips.com/investor).
In this report, the Company addresses its overall
corporate governance structure and states to what
extent and how it applies the principles and best
practice provisions of the Dutch Corporate Governance
Code (as revised on December 10, 2008; the ‘Dutch
Corporate Governance Code’). This report also includes
the information which the Company is required to
disclose pursuant to the Dutch governmental Decree on
Article 10 Takeover Directive and the governmental
Decree on Corporate Governance. Deviations from
aspects of the corporate governance structure of the
Company, when deemed necessary in the interests of
the Company, will be disclosed in the Annual Report.
Substantial changes in the Company’s corporate
governance structure and in the Company’s compliance
with the Dutch Corporate Governance Code, if any, will
be submitted to the General Meeting of Shareholders
for discussion under a separate agenda item. The
Supervisory Board and the Board of Management,
which are responsible for the corporate governance
structure of the Company, are of the opinion that the
principles and best practice provisions of the Dutch
Corporate Governance Code that are addressed to the
Board of Management and the Supervisory Board,
interpreted and implemented in line with the best
practices followed by the Company, are being applied.
11.1 Board of Management
Introduction
The Board of Management is entrusted with the
management of the Company. Certain key officers have
been appointed to manage the Company together with
the Board of Management. The members of the Board
of Management and these key officers together
constitute the Executive Committee. Under the
chairmanship of the President/Chief Executive Officer
(CEO), the members of the Executive Committee share
responsibility for the deployment of its strategy and
policies, and the achievement of its objectives and
results. The Executive Committee has, for practical
purposes, adopted a division of responsibilities
indicating the functional and business areas monitored
and reviewed by the individual members. For the
purpose of this corporate governance report, where the
Executive Committee is mentioned this also includes
the Board of Management unless the context requires
otherwise.
The Board of Management remains accountable for the
actions and decisions of the Executive Committee and
has ultimate responsibility for the Company’s
management and the external reporting and is
answerable to shareholders of the Company at the
Annual General Meeting of Shareholders.
All resolutions of the Executive Committee are adopted
by majority vote comprising the majority of the
members of the Board of Management present or
represented, such majority comprising the vote of the
CEO. The Board of Management retains the authority
to, at all times and in all circumstances, adopt
resolutions without the participation of the other
members of the Executive Committee. In discharging its
duties, the Executive Committee shall be guided by the
interests of the Company and its affiliated enterprise,
taking into consideration the interests of the Company’s
stakeholders.
The Executive Committee is supervised by the
Supervisory Board and provides the latter with all
information the Supervisory Board needs to fulfill its
own responsibilities. Major decisions of the Board of
Management and Executive Committee require the
approval of the Supervisory Board; these include
decisions concerning (a) the operational and financial
objectives of the Company, (b) the strategy designed to