Philips 2015 Annual Report Download - page 96

Corporate governance 11.2
96 Annual Report 2015
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 CEO and the Executive Committee on candidates to
fill vacancies on the Supervisory Board, the Board of
Management and 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 external
consultant and 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 nancial expert as set out
in the Dutch Corporate Governance Code and each
member is nancially literate. In accordance with this
code, a nancial expert has relevant knowledge and
experience of nancial administration and accounting
at the company in question. None of the members of
the Audit Committee is designated as an Audit
Committee nancial expert as dened under the
regulations of the US Securities and Exchange
Commission. The Supervisory Board considers the fact
of being compliant with the Dutch Corporate
Governance Code, in combination with the expertise
and experience available in the Audit Committee as
well as the possibility to take advice from internal and
external experts and advisors, to be sucient for the
fulllment of the tasks and responsibilities of the Audit
Committee. The Audit Committee may not be chaired
by the Chairman of the Supervisory Board or by a
(former) member of the Board of Management.
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