Unilever 2005 Annual Report Download - page 38

Report of the Directors
Unilever Annual Report and Accounts 2005 35
Corporate governance
(continued)
Developments in 2005
In 2005 the Boards announced a series of further changes to
streamline management and leadership. These were approved by
our shareholders at the Annual General Meetings (AGMs) in
2005. A separate Non-Executive Chairman and Group Chief
Executive were appointed. The Group Chief Executive established
the Unilever Executive (UEx) which comprises three Regional
Presidents (for Europe, The Americas, Asia Africa), two Category
Presidents (for Foods and Home and personal care) the Chief
Financial Officer and the Chief HR Officer. The regions are
responsible for performance, implementing proven brand mixes in
their region and focusing on building capabilities with customers.
The categories are responsible for the entire brand development
process including innovation, brand positioning and
communication and category strategies. The interdependence
between the regions and categories allows us to exploit our
global scale, while building on our deep roots in local markets.
Our HR and Finance functions concentrate on excellence in
human capabilities and cost-efficiencies across the Group.
In 2005, we also announced that we would undertake a
thorough review of our corporate structure to see if any change
should be made. The review team was led by the Chairman,
Antony Burgmans, and included Non-Executive Directors David
Simon and Jeroen van der Veer. On 19 December 2005, the
conclusions of the structure review were announced. The Boards
decided that Unilever would retain its current structure with some
important changes (see below). Reference is made to the
announcement text on our website at
www.unilever.com/ourcompany/investorcentre.
Proposed Developments for 2006
The changes in our structure that the Boards wish to propose to
our shareholders at the AGMs in 2006 are:
• to adapt Unilever’s constitutional arrangements to allow
greater flexibility to allocate assets between both parent
companies;
• to simplify the relationship between our NV and PLC shares by
establishing a one-to-one equivalence in their economic interest
in the Unilever Group; this will be achieved by a split of the NV
shares and a consolidation of the PLC shares; and
• to allow shareholders the right to nominate candidates to the
Boards, taking into account the need to ensure the unity of
management.
The above proposals will require changes to the Articles of
Association of NV and PLC, to the Deed of Mutual Covenants,
and to the Equalisation Agreement.
More information on these proposals can be found in the notices
to these AGMs, which can be found at
www.unilever.com/investorcentre/agms.
The text that follows describes the corporate governance
arrangements since the 2005 AGMs. More information on our
corporate governance arrangements is set out in The Governance
of Unilever, the Boards’ statement of their internal arrangements,
which can be found at
www.unilever.com/investorcentre/corpgovernance.
The Boards
The Boards of NV and PLC comprise the same Directors. The
Chairman and all of the Directors are Directors of both NV and
PLC. This ensures unity of governance and management. In order
to operate as nearly as practicable as a single entity it is important
for the Boards of NV and PLC to operate as far as possible as one
Board. This ensures that all matters are considered by the Boards
as a single intellect, reaching the same conclusions on the same
set of facts.
The Boards are one-tier boards, comprising Executive Directors
and, in a majority, Non-Executive Directors. The Boards have
ultimate responsibility for the management, general affairs,
direction and performance of the business as a whole. The
responsibility of the Directors is collective, taking into account
their respective roles as Executive Directors and Non-Executive
Directors. The Executive Directors have additional responsibilities
for the operation of our business as determined by the Group
Chief Executive.
Our Directors have set out a number of areas of responsibility
which are reserved to themselves and other areas for which
matters are delegated to the Group Chief Executive and
committees whose actions are regularly reported to and
monitored by the Boards. These are described on pages 37 to 39.
Further details of how our Boards effectively operate as one
board, govern themselves and delegate their authorities are set
out in The Governance of Unilever, which can be found at
www.unilever.com/investorcentre/corpgovernance.
Appointment of Directors
In order to try to ensure that NV and PLC have the same Directors,
the Articles of Association of NV and PLC contain provisions which
ensure that both NV and PLC shareholders are presented with the
same candidates for election as Directors. This is achieved through
a nomination procedure operated by the Boards of NV and PLC
through Unilever’s Nomination Committee.
As mentioned above, proposals will be made to the AGMs in
2006 to allow shareholders the right to nominate directors. Below,
we describe our current system used in 2005.