Unilever 2005 Annual Report Download - page 56

Report of the Directors
Unilever Annual Report and Accounts 2005 53
Report of the Remuneration Committee
2005 was a year of far-reaching and important changes to the
way Unilever is run. These changes have had an important impact
on the work of the Remuneration Committee.
The most significant change was the ending of the dual
chairmanship and the creation of the single chief executive role.
At the AGMs in May 2005 Antony Burgmans was appointed to
the new role of Non-Executive Chairman, and Patrick Cescau took
on the new role of Group Chief Executive. This change improved
our governance and organisational effectiveness.
At the AGMs in May 2005, three Executive Directors retired after
long and distinguished careers with Unilever. Clive Butler, Keki
Dadiseth and Andre van Heemstra all agreed to retire to allow
the creation of a new executive team. Each agreed to retire at
the age of 60. Unilever continued to pay their base salary and
benefits, in lieu of notice, for a maximum of one year, fulfilling
its contractual obligations.
Antony Burgmans stepped down as Executive Director at the
2005 AGMs and assumed the new role of Non-Executive
Chairman. In fulfilment of contractual obligations he continues to
receive his salary and benefits until June 2006. However, he is no
longer entitled to any annual or long-term incentives. After June
2006, he will receive a fee for his services as Chairman.
Given the new Board structure and Unilever’s longer-term strategy,
the Committee reviewed the existing reward packages for each of
the current Executive Directors during the year. Base salaries have
been adjusted to reflect the new roles and responsibilities in line
with the market. The revised salary levels are set out on page 56.
Annual incentives criteria for 2005 were underlying sales growth,
trading contribution (Unilever’s version of economic value added)
and individual performance targets. Taking into account the
actual delivery of sales growth and trading contribution in 2005,
the annual incentive Executive Directors earned for 2005 were
roughly half maximum levels. No awards vested in 2005 for
Executive Directors under the TSR plan as Unilever’s TSR performance
over the period 2002-2004 fell short of requirements. Following
shareholder approval, we operated the Global Performance Share
Plan for the first time. Its clearly defined performance criteria
focus management on top-line growth and cash flow generation.
For 2006, we retained the same criteria as in 2005 for annual
incentive, and we reviewed individual performance targets to
ensure these reflect, next to corporate performance, each Executive
Director’s responsibility for delivering specific growth objectives.
All this was done to create the greatest possible alignment between
the various elements of the remuneration package and Unilever’s
longer-term strategy.
Finally, we have revised the Report of the Remuneration Committee
to improve its transparency in respect of the arrangements.
Bertrand Collomb Chairman of the Remuneration Committee
David Simon
Jeroen van der Veer