Unilever 2000 Annual Report Download - page 39

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Unilever Annual Report & Accounts and Form 20-F 2000 Report of the Directors
Remuneration report
Starting in 2000, each director is required to build up a
shareholding in NV and PLC. Currently it is the intention that
this shareholding should be built up to the equivalent of one
and a half times their salary over a period of five years.
As explained in the letter from the Chairmen to the
shareholders concerning the Annual General M eetings
to be held in 2001, there are proposals to introduce a share
based long term incentive plan and amend the current
remuneration arrangements for Directors in other respects
with effect from the year 2001.
Policy: directors’ pensions
The aim of the Remuneration Committee is that pension
and other related benefits should be in line with good
practice by major companies in the Netherlands and the
United Kingdom, bearing in mind the need to establish
reasonable comparability betw een the conditions for the
various nationalities of directors.
All directors are members of the normal Unilever pension
schemes. Because directors are paid by both NV and PLC,
they participate in both the NV and PLC normal pension
schemes, with the exception of a US based director w ho
participates in the normal US schemes. The NV scheme has
been on a contribution holiday since 1990. The PLC scheme
has been on a contribution holiday since January 1997.
The US schemes, with the exception of the 401(k) scheme,
are non-contributory.
All directors are also members of their respective early
retirement schemes, w hich provides an overall pension
coverage inclusive of benefits under other Unilever schemes.
The current arrangements are that directors belong to either
the NV or PLC scheme, depending on their contractual
arrangements. NV finances the NV scheme and PLC finances
the PLC scheme. Also, under the current arrangements, in
order to equalise benefits amongst the directors, those
directors appointed prior to 31 December 1998 who are
members of the NV scheme and retire at or after normal
retirement date, receive an additional lump sum amount
equal to one year’s final pensionable pay. For directors
who are members of the NV scheme and appointed after
1 January 1999, the additional lump sum of one year’s final
pensionable pay is no longer provided. The benefits received
by directors under these early retirement schemes are, in
most other respects, the same as those generally provided
for senior management.
Under both the early retirement schemes, final pensionable
pay takes into account the bonuses paid in the last three
years prior to termination of service, subject to a maximum
of 20% of base pay. The Remuneration Committee believes
that the policy of allocating a significant part of directors’
emoluments to performance related payments instead of
salary, w hilst retaining control over the overall package of
emoluments, should not affect the directors’ reasonable
expectations of a pension at a level that is in line with that
provided by major companies in the Netherlands and the
United Kingdom. The Committee reconsidered this topic
during 2000 in the light of the recommendations of the
Code and decided that the current arrangements should
be kept in place. It w ill, however, continue to keep under
review the development of best practice in respect of the
pensionability of bonuses.
Directors’ pensions: further information
This information is supplemental to the accompanying table.
It is expected that the directors’ pensions will be regularly
increased in payment and in deferment in line with the
increase in the consumer price index in the country relating
to the currency in which the benefits are defined. These
pension increases are awarded at the discretion of NV or
PLC, as appropriate, although the schemes in the United
Kingdom guarantee increases in line with retail price
inflation, up to a maximum of 5% per annum.
For directors in the NV early retirement scheme w ho are
aged 55 or more, the immediate early retirement pension
entitlement is shown in the accompanying table.
For directors in the PLC early retirement scheme, early
retirement is possible from age 50 (or age 55 for PLC
directors appointed after 1 January 1999), in which case the
total accrued pension is reduced by 5% per annum for each
year of early retirement prior to age 60.
Dependants’ and children’s pensions are payable under the
normal and early retirement schemes in each country. Under
the NV early retirement scheme, the spouse’s pension is
70% of the member’s pension for directors appointed
before 31 December 1998 and 66.7% for directors
appointed after 1 January 1999. Under the PLC early
retirement scheme, the spouse’s pension is 66.7% of the
member’s retirement pension. Under the normal NV scheme,
the spouse’s pension is 70% of the member’s pension, while
under the normal PLC scheme, the spouse’s pension is 50%
of the member’s pension.
For directors in the NV early retirement scheme aged over
55 and who are members of the Dutch social security
system, the amount w ill be reduced at age 65 by an
allowance corresponding to the State benefits payable.
The pension may also be subject to minor adjustments
to equalise social security benefits.
Members may pay additional voluntary contributions.
Neither the contributions (including member contributions
into a US 401(k) plan where appropriate) nor the resulting
benefits are included in the table of pension entitlements.