Unilever 2006 Annual Report Download - page 47

44 Unilever Annual Report and Accounts 2006
Report of the Directors (continued)
Corporate governance (continued)
Retention period of shares
The Dutch Code recommends that shares granted to executive
directors without a financial consideration must be retained for
aperiod of at least five years (bpp II.2.3). In 2001 we introduced
anew remuneration policy with shareholder approval which
requires our Executive Directors to build and retain a personal
shareholding in Unilever equal to at least 150% of their annual
base pay. We believe that this is in line with the spirit of the
Dutch Code.
Severance pay
It is our policy to set the level of severance payments for Directors
to no more than one year’s salary, unless the Board, at the
proposal of the Remuneration Committee, finds this manifestly
unreasonable given circumstances or unless otherwise dictated by
applicable law (bpp II.2.7).
Regulations for transactions in securities in other
companies
The Dutch Code recommends that a director shall give periodic
notice of any changes in his holding of securities in other Dutch
listed companies (bpp II.2.6 and bpp III.7.3). Our Share Dealing
Code provides that Directors are required, upon request, to
disclose to the compliance officer their holdings and transactions
in securities in other listed companies. We believe this
requirement constitutes an appropriate arrangement.
Conflicts of interest
In the event of a (potential) conflict of interest, the provisions of
the Dutch Code (P II.3 and III.6) are applied. Conflicts of interest
arenot understood to include transactions and other activities
between companies in the Unilever Group.
Financing preference shares
NV issued 4%, 6% and 7% cumulative preference shares
between 1927 and 1970. Their voting rights are based on their
nominal value, as prescribed by Dutch law. The Dutch Code
recommends that the voting rights on such shares should, in any
event when they arenewly issued, be based on their economic
value rather than on their nominal value (bpp IV.1.2). NV agrees
with this principle but cannot unilaterally reduce voting rights of
its outstanding shares.
Anti-takeover constructions and control over the company
With reference to bpp IV.3.9, NV has no anti-takeover
constructions, in the sense of constructions that are intended
solely, or primarily, to block future hostile public offers for its
shares. Nor does it have any constructions whose specific purpose
is to prevent a bidder, after acquiring 75% of the capital, from
appointing or dismissing members of the Boardand subsequently
altering the Articles of Association. The acquisition through a
public offer of a majority of the shares in a company does not
under Dutch law preclude in all circumstances the continued right
of the boardof the company to exercise its powers. The relevant
information which NV is required to disclose in accordance with
the Decree dated 5 April 2006 to implement Article 10 of
Directive 2004/25/EC can be found in this document.
Provision of information
We consider it important to comply with all applicable statutory
regulations on the equal treatment of shareholders and provision
of information and communication with shareholders and other
parties (P IV.2 and P IV.3).
Meetings of analysts and presentations to investors
Wehave extensive procedures for handling relations with and
communicating with shareholders, investors, analysts and the
media (see description on page 38). The important presentations
and meetings are conducted as far as practicable in accordance
with bpp IV.3.1. Due to their large number and overlap in
information, some of the less important ones are not announced
in advance, made accessible to everyone or put on our website.
Requirements – the United Kingdom
PLC is required, as a company that is incorporated in the United
Kingdom and listed on the London Stock Exchange, to state how
it has applied the principles and how far it has complied with the
provisions set out in Section 1 of the Combined Code issued in
1998, as revised in 2003 (‘the Combined Code’), appended to the
United Kingdom Listing Rules.
In the preceding pages we have described how we have applied
the Principles and the provisions in the Combined Code. In 2006,
Unilever complied with the Combined Code except in the
following two areas:
•Antony Burgmans, who before May 2005 was an Executive
Director, is not considered to be independent. The Nomination
Committee and the Board nominated him for election as a
Non-Executive Director in 2005 because of his thorough
knowledge of Unilever and its operations. However, with the
appointment of Michael Treschow as Chairman, subject to his
appointment as a Non-Executive Director at the AGMs, Unilever
will comply with the provision that requires the Chairman to be
independent on appointment; and
•Due to the requirement for Unilever to hold two AGMs for its
respective companies on consecutive days, it may not always be
possible for all Directors, and possibly the Chairmen of the
Audit, Remuneration and Nomination Committees, to be
present at both meetings. The Chairman therefore ensures that
amajority of Directors attend both meetings and that at least
one member of each Committee attends each AGM.
Requirements – the United States
Both NV and PLC arelisted on the New York Stock Exchange and
must therefore comply with such of the requirements of US
legislation, such as the Sarbanes-Oxley Act of 2002, regulations
enacted under US securities laws and the Listing Standards of the
New York Stock Exchange as are applicable to foreign private
issuers. In some cases the requirements are mandatory and in
other cases the obligation is to ’comply or explain’.