Unilever 1999 Annual Report Download - page 32

Directors’ remuneration and interests
Unilever Group
Report to the shareholders
The following comprises the report to shareholders by the Boards. In drawing up this report, the Boards have taken into account the
recommendations of the Committee on Corporate Governance in the Netherlands (Peters Committee).
The Boards have also given full consideration to the Combined Code appended to the Listing Rules of the London Stock Exchange
(’Combined Code’) in framing the remuneration policy. PLC’s statement of compliance with respect to the Combined Code, as required
by the said Listing Rules, is on page 5. This report deals with any non-compliance with the Combined Code in the area of remuneration
policy.
The Boards are guided by a Remuneration Committee comprising F H Fentener van Vlissingen (Chairman), Sir Derek Birkin and B Collomb
which makes recommendations to the Boards on Unilever’s framework of executive remuneration. The Committee determines, on the
Boards’ behalf, specific remuneration packages for each of the executive directors, including pension rights, grants of share options and
any compensation payments.
Policy: directors’ emoluments
The objective of Unilever’s remuneration policy for directors is to motivate and retain top class business people able to direct and lead a
large global company, and to reward them accordingly.
The Remuneration Committee believes that the level of remuneration of Dutch or British directors resident in their home countries should
be in line with that of executive directors of major international industrial companies based in the Netherlands and the United Kingdom
respectively who have similar responsibilities to a Unilever director whilst recognising Unilever’s size and special features. The levels of
remuneration of the Chairmen and the members of the Executive Committee take into account their special responsibilities and provide
differentials comparable to those found in other major international industrial companies. A director who is not resident in his home
country is paid at the level of remuneration appropriate to his place of residence if this is higher than that in his home country. Directors
not of Dutch or British nationality are, in principle, to be no worse off than they would be if based in their home country in a job of
comparable importance.
Levels of remuneration are reviewed annually by the Remuneration Committee in the light of external expert advice which assesses
competitive levels of remuneration in the largest companies relevant to the residence of the group of Unilever directors concerned.
Comparison is also made with the remuneration of other employees within Unilever.
The Remuneration Committee’s policy is to seek to link reward closely to performance by using merit pay increases and bonuses based on
both corporate and personal performance.
NV and PLC and their group companies constitute a single group. It is therefore the practice for directors to receive emoluments from
both NV and PLC because they serve both companies. Emoluments, wherever stated, include payments from both NV and PLC. All
emoluments and fees earned by directors from outside directorships and like sources are required to be paid to and are retained by
Unilever.
All directors’ emoluments, including those of the Chairmen, are made up of the following elements:
(i) Salary:
Salaries are fixed by the Remuneration Committee. They are usually fixed in the currency appropriate to the location,
the Netherlands, United Kingdom or United States, where the director is based. On the same basis as other employees, directors
receive an additional month’s salary in the year they complete 25 years’ service with Unilever.
(ii) Allowances and value of benefits in kind:
In appropriate cases, and usually in accordance with the same rules as apply to all qualifying employees, directors receive
allowances to help them meet expenses incurred by virtue of their employment, for example in respect of relocation and
consequential disturbance and education expenses. Certain of the London based directors receive an allowance to take account of
the fact that part of their remuneration is paid in the Netherlands. Benefits in kind are items such as a company car and medical
insurance.
(iii) Performance related payments:
These arise primarily under an annual bonus scheme.
Bonuses are set by the Remuneration Committee. The maximum cash bonus for directors is 40% of salary. Bonuses are based
on achievement of a target or target range which may involve two measures of performance:
(a) a corporate target; and
(b) individual targets.
The corporate target is based on the average of the increase in earnings per share expressed in guilders and in pounds sterling.
The individual targets are based on previously agreed key objectives.
Directors are given the opportunity to use 25% of their cash bonuses, during the year of payment, to purchase shares in NV and
PLC and to be awarded shares of equivalent value, upon condition that all the shares are retained for at least five years.
32 Unilever Annual Accounts 1999