Unilever 2002 Annual Report Download - page 52

Remuneration report 49
Report of the Directors
Unilever Annual Report & Accounts and Form 20-F 2002
Report to shareholders
This report sets out the policy and disclosures on directors’
remuneration, as required by legislation in the Netherlands
and the United Kingdom. It also takes into account the
recommendations of the Committee on Corporate
Governance in the Netherlands (Peters Committee).
In addition, full consideration has been given to
the Combined Code of the United Kingdom Listing
Rules (‘the Combined Code’).
The Remuneration Committee
The Remuneration Committee is responsible for making
recommendations to the Boards on the remuneration policy
for directors. The Committee consists of Advisory Directors
who are chosen for their broad experience, international
outlook and independence. In 2002 the Committee
comprised F H Fentener van Vlissingen (Chairman),
BCollomb, Lord Simon of Highbury and, with effect from
May 2002, J van der Veer. Professor W Dik was a member
of the Committee until April 2002.
The Committee meets at least three times a year and,
on behalf of the Boards, sets the remuneration packages
for directors, including base salary, pension rights, bonus
and long-term incentive awards, grants of share options
and any compensation payments. The Committee is assisted
by the Secretary to the Remuneration Committee,
JAAvan der Bijl, Joint Secretary of Unilever. A Burgmans
and N W A FitzGerald attend part of the Committee
meetings in their capacity as Chairmen of NV and
PLC respectively.
The Remuneration Committee does not retain remuneration
consultants but seeks professional advice from external
advisors as it sees fit. During the year professional advice on
remuneration matters was sought from an independent firm
of remuneration specialists, Towers Perrin. This firm also
provides general consultancy advice to Unilever Group
companies on pension, communications and other human
resource matters.
Directors’ remuneration policy
The objective of Unilever’s remuneration policy for
directors is to attract, motivate and retain top class
business executives who are able to direct and lead a
large global company and to reward them accordingly
based on performance.
Levels of remuneration are reviewed annually by the
Remuneration Committee in the light of external expert
advice which assesses competitive levels of remuneration
paid by other major international companies. In particular,
remuneration arrangements for comparable companies
based in Continental Europe and the UK are taken into
account. For our US-based director the Committee also
reviews remuneration packages applicable in the US market.
In addition a comparison is made with the remuneration
arrangements for other senior employees within Unilever.
In line with the Path to Growth strategy it is the
Remuneration Committee’s policy to link a significant
proportion of directors’ remuneration to a number of key
measures of company performance. As will be seen from
the descriptions below, the three main measures underlying
our annual and longer-term incentive plans are earnings per
share growth (BEIA), underlying sales growth in the leading
brands and the total shareholder return generated by
Unilever in comparison with a group of 20 relevant
competitors. In broad terms, if the Group achieves its target
levels of performance the variable elements will account for
about 60% of the directors’ total remuneration. The variable
elements would, of course, result in no incentive awards if
performance is unsatisfactory. By the same token, if the
Group clearly achieves outstanding results the overall value
of the incentive awards could increase to more than three-
quarters of the directors’ total remuneration.
NV and PLC and their group companies operate as nearly
as possible as a single entity. Directors serve both companies
as executives and therefore receive remuneration from both.
Whenever we refer to remuneration, this includes payments
from both NV and PLC. The remuneration for the US-based
director is paid mainly by Unilever United States, Inc. (UNUS)
to reflect the fact that a major proportion of his duties is
performed in the US. He does, however, also receive part
of his remuneration from NV and PLC to cover his executive
responsibilities as a director of these companies. In this
report his total remuneration from all three sources is
shown in full.
All remuneration and fees earned by directors from outside
directorships and similar sources are required to be paid over
to, and retained by, Unilever.
The Remuneration Committee keeps its remuneration
policies under review in the light of company and market
developments. However it has no plans, at present, to
materially alter the framework of the current remuneration
arrangements, as described below, during 2003.