Unilever 2004 Annual Report Download - page 79

Remuneration report
Policy (continued)
76 Unilever Annual Report and Accounts 2004
Pensions
The Unilever United Kingdom Pension Plan (UPF) increased
employee contributions from 2% to 5% of pensionable salary
with effect from 1 January 2004. The Unilever Netherlands
Pension Plan (Progress) reintroduced employee contributions
with effect from 1 January 2004, currently at the rate of 1%.
N W A FitzGerald and C B Strauss retired from the Boards on
30 September 2004 and 12 May 2004 respectively. C J van der
Graaf joined the Boards on 12 May 2004. The table on page 83
gives details of their pension entitlements and (in respect of
Messrs FitzGerald and Strauss) include the pension enhancements
agreed on retirement.
The UK Government is in the process of introducing a new tax
regime for pensions. The UK-based Executive Directors, together
with other UK-based senior executives, have been informed that
PLC intends to maintain their overall pension by capping the benefit
provided by the Unilever UK Pension Fund (UPF) and by making a
corresponding increase in the top-up provided by the company. The
Committee is continuing to review this position depending on the
final form of the UK Government’s new tax rules.
Executive Directors’ service contracts
The Executive Directors have service contracts with both NV and
PLC. The notice period under the service contracts for Executive
Directors is one year. If they choose, NV and PLC may pay an
Executive Director a sum equal to twelve months’ salary in lieu
of notice.
NV’s and PLC’s Articles of Association require that, in principle,
all Directors retire from office at every Annual General Meeting.
Executive Directors’ contracts of service with the Unilever Group
are generally terminated no later than the end of the month in
which the Annual General Meeting closest to their 62nd birthday
is held. However as from 2004 newly appointed Executive
Directors have a flexible termination date which is linked to an
AGM occurring at any time between ages 60 and 65. Details of
the service contracts are shown on page 85.
The current Executive Directors are long-serving Unilever
executives who can reasonably expect, subject to satisfactory
performance, to be employed by Unilever until retirement. The
Committee takes the view that the entitlement of the Executive
Directors to the security of twelve months’ notice of termination
of employment is in line both with the practice of many
comparable companies and the entitlement of other senior
executives within Unilever.
The Remuneration Committee’s aim is always to deal fairly with
cases of termination while taking a robust line in minimising any
compensation.
In 2003 eight Executive Directors served for the whole of the
year. In 2004 two of the Executive Directors retired, one was
newly appointed and the remaining six Executive Directors served
for the whole of the year.
Other items
Unilever’s share performance relative to broad-based
equity indices
Under the UK Directors’ Remuneration Report Regulations 2002,
we are required to show Unilever’s relative share performance,
based on Total Shareholder Return, against a holding of shares
in a broad-based equity index for the last five years. The
Remuneration Committee has decided to show Unilever’s
performance against two indices, namely the Euronext AEX Index,
Amsterdam and the FTSE 100 Index, as these are the most generally
used indices in the Netherlands and the UK, where we have our
principal listings.
Unilever
FTSE 100
Dec 1999 Dec 2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004
150
120
130
140
100
110
90
80
70
60
50
Unilever PLC vs FTSE 100
Five years ended 31 December 2004
Unilever
AEX
Dec 1999 Dec 2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004
130
110
120
90
100
80
70
60
50
40
Unilever NV vs AEX Amsterdam
Five years ended 31 December 2004