Unilever 2004 Annual Report Download - page 74

Unilever Annual Report and Accounts 2004 71
Remuneration report
Introduction and Letter to shareholders
Introduction
This report of the Remuneration Committee sets out Unilever’s
policy regarding Directors’ remuneration. It also sets out full
details of the remuneration payable to the Directors for the
year 2004.
The Report is divided into the following sections:
• Letter to shareholders from the members of the Remuneration
Committee
• Details of the members of the Committee together with their
tasks and responsibilities
• Policy regarding Executive Directors’ remuneration
• Commentary on Executive Directors’ remuneration payable for
2004
• Details of the service contracts relating to Executive Directors
• Tables of Executive Directors’ remuneration for 2004 and their
Unilever share interests
• Information regarding Non-Executive Directors including details
of remuneration and Unilever share interests
The report has been prepared in accordance with the
requirements of legislation and corporate governance codes
in the Netherlands, the United Kingdom and the United States.
In particular it takes into account:
• The Dutch Corporate Governance Code;
• The Combined Code of the United Kingdom issued in 1998, as
revised in 2003 (the Combined Code) appended to the United
Kingdom Listing Rules;
• The requirements of the United Kingdom Directors’
Remuneration Report Regulations 2002; and
• The SEC’s requirements for Form 20-F and the New York Stock
Exchange listing rules.
Directors are members of the Boards of both NV and PLC and
they receive remuneration from both companies. The information
shown in this report covers the total remuneration receivable
from both NV and PLC.
The report has been approved by the Boards and it has been
signed on their behalf by the Joint Secretaries of Unilever. It will
be presented to shareholders at the Annual General Meetings to
be held on 10 May 2005 (NV) and 11 May 2005 (PLC).
Letter to shareholders
Dear Shareholder,
The year 2004 has been a year of change.
In May the Advisory Directors were formally appointed as Non-
Executive Directors of NV and PLC.
During the year there were also other changes to the Boards of
NV and PLC. Charles Strauss, our US-based Executive Director,
retired in May and Niall FitzGerald, the Chairman of PLC, retired
at the end of September. Mr FitzGerald was succeeded by Patrick
Cescau who was previously our Foods Director. In May 2004 Kees
van der Graaf was appointed as an Executive Director.
2004 was also the final year of Unilever’s Path to Growth strategy
and we are now entering a new challenging phase leading up
to 2010.
In view of these changes the Remuneration Committee decided
to initiate an in-depth review of the remuneration package for
Executive Directors. This involved a detailed benchmarking of the
package against comparable companies based in the UK and
Continental Europe. The result of this exercise showed that the
value of the current package is broadly in line with the market.
However, the study also showed that part of the share-based
elements of the package required amendment in order to bring
them in line with developing market trends and to reinforce the
Unilever plans leading up to 2010. As a result of this study we are
proposing to shareholders the introduction of a new Performance
Share Plan in 2005 which will replace the existing executive share
option plans and which will have performance conditions on
vesting. Full details of this proposal are included in the notices
to shareholders regarding the 2005 Annual General Meetings.
Changes are also proposed for 2005 regarding the annual bonus
payable to Executive Directors (revisions to the performance
criteria as well as an increase in the bonus opportunity for the
Group Chief Executive Officer).
The Committee also reviewed the pension arrangements for
Executive Directors. As a result it has been decided that the
current policy of including a proportion of the annual bonus (of
up to 20% of base pay) as part of pensionable earnings would be
abandoned with immediate effect for new Executive Directors.
The Remuneration Committee is committed to linking a major
part of the Executive Directors’ pay to clearly defined levels of
performance. We are focused on achieving business goals and
on rewarding outstanding performance accordingly.
For 2004 the business results were disappointing and consequently
the bonuses paid to the Executive Directors for that year were low.
We strive to ensure that the remuneration package for Executive
Directors continues to deliver the best possible value for
shareholders.
Bertrand Collomb Chairman of the Remuneration Committee
David Simon
Jeroen van der Veer