Unilever 2001 Annual Report Download - page 43

Unilever Annual Report & Accounts and Form 20-F 2001
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REMUNERATION REPORT
Report to shareholders
This report sets out the policy and disclosures on
directors’ remuneration. In drawing up the report the
Boards have taken into account the recommendations of the
Committee on Corporate Governance in The Netherlands
(Peters Committee). They have also given full consideration
to the Combined Code (‘the Code’) appended to the United
Kingdom Listing Rules.
The Remuneration Committee is responsible for making
recommendations to the Boards on remuneration policy for
directors. The Committee consists of Advisory Directors who
are chosen for their broad experience, international outlook
and independence. In 2001 the Committee comprised
F H Fentener van Vlissingen (Chairman), B Collomb, Lord
Simon of Highbury and, since May 2001, Professor W Dik.
On behalf of the Boards the Committee sets specific
remuneration packages for directors, including pension
rights, bonus and long-term incentive awards, grants of
share options and any compensation payments.
Remuneration of Directors and Executive Officers
The total amount of remuneration (including share option
gains) received by all directors and executive officers (being
the Directors and Corporate Officers listed on pages 37 to 39)
for services in all capacities during 2001 was 25 518 358
(£15 872 163).
The aggregate amount set aside by the Unilever Group
during 2001 to provide pension, retirement or similar
benefits for directors and executive officers was
3 123 084 (£1 942 216).
Directors’ remuneration policy
The objective of our remuneration policy for directors is to
motivate and retain top class business people able to direct
and lead a large global company, and to base their reward
on performance.
The Remuneration Committee believes that the level of
remuneration of Dutch or British directors should be in line
with that of executive directors of major international
industrial companies based in Continental Europe or
the United Kingdom respectively who have similar
responsibilities to a Unilever director, whilst recognising
Unilever’s size and special features. The remuneration of the
Chairmen and the members of the Board takes into account
their special responsibilities and the differentials between
them are comparable with those in other major international
industrial companies. It is our policy that directors who are
based outside their home country are to be no worse off
than they would be if they were based in their home
country in a comparable job. They are paid at the level of
remuneration appropriate to the country where they are
based, if this is higher than the level in their home country.
Levels of remuneration are reviewed annually by the
Remuneration Committee in the light of external expert
advice which assesses competitive levels of remuneration
in relevant comparable companies. They are also compared
with the levels of remuneration of other Unilever employees.
The Remuneration Committee’s policy is to seek to link
reward closely to performance by using merit pay
increases and bonuses based on both corporate and
personal performance.
NV and PLC and their group companies constitute a single
Group. Directors serve both companies as executives and
therefore receive emoluments from both. Wherever we refer
to emoluments, these include payments from both NV and
PLC. The remuneration for the US based director is paid
wholly in the US where he is resident. All emoluments
and fees earned by directors from outside directorships and
similar sources must be paid to and are retained by Unilever.
The emoluments of the directors are made up of the
following components:
(i) Salary:
Salaries are set by the Remuneration Committee. They are
usually fixed in the currency appropriate to where the
director is based: the Netherlands, United Kingdom or
United States.
(ii) Allowances and value of benefits in kind:
In accordance with rules which apply to all qualifying
employees, directors receive allowances to help them meet
expenses incurred as a result of their employment. An
example would be relocation and resulting disturbance and
education expenses. The London based directors receive
an allowance to compensate for the fact that part of their
remuneration is paid in the Netherlands. Benefits in kind
include items such as company cars and medical insurance.
(iii) Annual performance bonus:
Annual bonuses are set by the Remuneration Committee
and range between 0% and 100% of salary. Bonuses are
based on achievement of a target or target range which are
set at the beginning of each year and which involve two
measures of performance:
(a) corporate targets; and
(b) individual targets.
The corporate targets are based on a combination of the
increase in earnings per share and turnover. The individual
targets are based on previously agreed key objectives which
are set at the beginning of each year.