Unilever 2003 Annual Report Download - page 50

Unilever Annual Report & Accounts and Form 20-F 2003 47
Organisational structure of Unilever
NV and PLC are the two parent companies of the Unilever Group
of companies. NV was incorporated under the name Naamlooze
Vennootschap Margarine Unie in the Netherlands in 1927. PLC
was incorporated under the name Lever Brothers Limited in Great
Britain in 1894.
Since 1930 when the Unilever Group was formed, NV and PLC
together with their group companies have operated, as nearly as
is practicable, as a single entity. They have the same directors,
adopt the same accounting principles, and are linked by a series
of agreements. The Equalisation Agreement, which regulates the
mutual rights of the two sets of shareholders, is particularly
important. It makes the position of the shareholders of both
companies, as far as possible, the same as if they held shares
in a single company.
NV and PLC are separate companies, with separate stock
exchange listings and different shareholders. You cannot convert
or exchange the shares of one for shares of the other and the
relative share prices on the various markets can, and do,
fluctuate. This happens for a number of reasons, including
changes in exchange rates. However, over time the prices
of NV and PLC shares do stay in close relation to each other,
in particular because of our equalisation arrangements.
NV and PLC are holding and service companies. Our businesses
are carried out by our group companies around the world. The
holding companies have agreed to co-operate in all areas, to
exchange all relevant business information and to ensure all
group companies act accordingly. Usually, shares in the group
companies are held ultimately by either NV or PLC, with the main
exception being that the US companies are owned by both and,
as a result of the legal integration of Bestfoods into Unilever,
a number of the group companies are partly held by Unilever
United States, Inc. These group companies are therefore also
ultimately owned jointly by NV and PLC.
These arrangements are designed to create a balance between
the funds generated by the NV and PLC parts of the Group.
See pages 142 to 145 for a listing of the Group’s principal
subsidiaries and also Control of Unilever on page 152.
Legal structure of the Group
NV owned
operating
companies
Jointly owned
operating
companies
PLC owned
operating
companies
NV Equalisation
and other
agreements
PLC
Directors
Shareholders Shareholders
Corporate governance developments
The text that follows describes Unilever’s corporate governance
arrangements throughout 2003. This text should be read in
the light of the proposals that will be put to the NV and PLC
shareholders for consideration at the Annual General Meetings
in 2004 to change those arrangements. The principal change
is to make individuals who are currently Advisory Directors formal,
non-executive members of the Boards of NV and PLC, with full
entitlement to vote at meetings and responsibility for the actions
of the Boards. Full information on these proposed changes can be
found on the Unilever website at
www.unilever.com/investorcentre/.
These and other changes are being proposed in order to maintain
Unilever’s high standards of corporate governance in response to
the latest developments in Europe and the US. Subject to
acceptance of these proposals by shareholders, fuller details of
Unilever’s changed corporate governance arrangements will be
placed on Unilever’s website at www.unilever.com/investorcentre/.
Directors
The Chairmen and all of the Directors are full-time executives and
directors of both NV and PLC and, as well as holding specific
management responsibilities, they are responsible for the conduct
of the business as a whole.
The Chairmen of NV and PLC are the principal executive officers
of Unilever.
Our operations are organised into two global divisions – Foods
and Home & Personal Care – headed by Division Directors.
Reporting to their respective Division Directors are the Foods and
the Home & Personal Care Business Presidents, responsible for the
profitability of their regional and global businesses. For details of
the Division Directors and Business Presidents, see pages 52 to 53.
The Directors have set out a number of areas for which
the Boards have direct responsibility for decision making. They
meet at least five times a year to consider the following corporate
events and actions:
• Agreement of quarterly results announcements
• Approval of the Annual Report and Accounts and Form 20-F
• Declaration of dividends
• Convening of shareholders’ meetings
• Approval of corporate strategy
• Authorisation of major transactions
All other matters are delegated to committees whose actions are
reported to and monitored by the Boards.
Board meetings are held in London and Rotterdam and chaired by
the Chairmen of NV and PLC. The Chairmen are assisted by the
Joint Secretaries, who ensure the Boards are supplied with all the
information necessary for their deliberations. Information is
normally supplied a week prior to each meeting.
Directors are elected by shareholders at the Annual General
Meetings of NV and PLC, to hold office until the end of the
next Annual General Meetings. For details of the nomination
procedure for Directors, see Control of Unilever on page 152.
All the Directors submit themselves for re-election each year and
Corporate governance