Unilever 2005 Annual Report Download - page 39

36 Unilever Annual Report and Accounts 2005
Corporate governance
(continued)
Currently, in the case of NV, the Articles of Association grant to
the holders of the special ordinary shares numbered 1-2 400
inclusive the right to draw up a nomination list for shareholders to
vote upon at the General Meeting. In the case of PLC, this right
of nomination is given by the Articles of Association to the
holders of PLC's deferred stock. The joint holders of both the NV
special ordinary shares and the PLC deferred stock are N.V. Elma
and United Holdings Limited, which are joint subsidiaries of NV
and PLC. The boards of N.V. Elma and United Holdings Limited
comprise the members of the Nomination Committee. Only
persons who have offered themselves for election to the Boards
of both NV and PLC are eligible to be elected as Directors of NV
and PLC.
The interests of our shareholders are protected because all the
Directors submit themselves for election every year and
shareholders can remove any of them by a simple majority vote.
Thus, as a practical matter, the Boards cannot perpetuate
themselves contrary to the will of the shareholders.
In addition, shareholders can overrule Director nominations. In the
case of NV, this can be done by a resolution adopted by at least a
two-thirds majority of the votes cast, which majority must
represent more than one half of NV’s issued share capital. If this
happens, a new meeting can be held and a new Director can be
appointed with an absolute majority of the votes cast. In the case
of PLC, shareholders can overrule nominations with resolutions
passed at General Meetings to alter the nomination rights
attached to the Deferred Shares and to alter the Articles of
Association. The former resolution would require a two-thirds
majority of those voting, so long as that majority comprises not
less than half of the issued PLC shares. The latter resolution would
require a three-quarters majority of those voting.
Board meetings
Our Boards meet at least seven times a year to consider important
corporate events and actions, such as:
• approval of corporate strategy;
• approval of the corporate Annual Plan;
• review of risks and controls;
• authorisation of major transactions;
• review of the functioning of the Boards and their Committees;
• preparation of the Annual Report and Accounts;
• declaration of dividends;
• agreement of quarterly results announcements;
• convening of shareholders’ meetings;
• nominations for Board appointments; and
• approval of Board remuneration policy.
In 2005 the Boards of NV and PLC met ten times. All our
Executive Directors attended all meetings. All the Non-Executive
Directors attended all meetings, except for Hilmar Kopper and
David Simon who each missed one meeting and Jeroen van der
Veer and Oscar Fanjul who each missed two meetings.
Board meetings are held either in London or Rotterdam and
chaired by the Chairman. The Chairman is assisted by the Joint
Secretaries, who ensure the Boards are supplied with all the
information necessary for their deliberations. The Chairman and
the Joint Secretaries involve the Senior Independent Director (see
page 38) in the arrangements for Board Meetings.
Board induction and training
Upon election, Directors receive a comprehensive Directors’
Manual and are briefed thoroughly on their responsibilities.
Updates on corporate governance developments and investor
relations matters are frequent items at Board meetings. They
receive presentations, either as Directors of the Boards or as a
member of a Board Committee, on relevant aspects of the
Unilever business. In addition, during 2005 the Boards received
two separate teach-ins, one on the new market abuse regime in
the Netherlands and the UK and the other on Directors’
indemnification (see page 40) and Directors’ and Officers’
insurance cover.
Board evaluation
The terms of reference of each Board Committee provide that the
Committees conduct an annual self-assessment of their
performance, which includes taking the views of the Boards on
the performance of the Committee. The Chairman of the
Committee reports to the Boards on the results of the process.
2005 was the first year of our new Boards’ operation. To ensure
optimal functioning of the Board and the individual Directors and
compliance with the most recent developments in best practice,
the Nomination Committee commissioned Spencer Stuart to carry
out a full review of the functioning of the Boards and of its
governance arrangements. This review concluded that our
arrangements stood comparison with our peers. A full report was
made to the Boards in February 2006 and a range of minor
changes in terms of the day-to-day operations of the Boards will
be introduced during the balance of the year. A Board evaluation
and Chairman and individual director appraisal process is
scheduled for the second quarter of 2006. Thus, the changes
following the said review can be taken into account in the
evaluations.
Board support
The Joint Secretaries are available to advise all Directors and
ensure that Board procedures are complied with. They are
appointed and can be removed by the Boards.
A procedure is in place to enable Directors, if they so wish, to
seek independent professional advice at Unilever’s expense.
Board changes
The current Directors, with their biographies, are shown on page
49. All the Executive Directors held office throughout the year,
with the exception of Ralph Kugler, who was elected as a Director
at the 2005 AGMs.
Antony Burgmans took up the role of Non-Executive Chairman
of NV and PLC at the 2005 AGMs and Patrick Cescau became
Group Chief Executive in April 2005.