Unilever 2004 Annual Report Download - page 56

Unilever Annual Report and Accounts 2004 53
Corporate governance
(continued)
Under the Equalisation Agreement NV and PLC adopt the same
financial periods and accounting policies. Dividends are paid in
accordance with a formula relating to the nominal values of NV
and PLC’s issued share capital. Neither company can issue or
reduce capital without the consent of the other. Further
information on the Equalisation Agreement is given on page 60.
Mutual guarantee of borrowings
There is also a contractual arrangement between NV and PLC
under which each will, if asked by the other, guarantee the
borrowings of the other. They can also agree jointly to guarantee
the borrowings of their subsidiaries. We use this arrangement,
as a matter of financial policy, for certain significant public
borrowings.
These arrangements enable lenders to rely on our combined
financial strength.
Corporate governance arrangements
Corporate governance developments in 2004
The text that follows describes Unilever’s corporate governance
arrangements following acceptance by the NV and PLC
shareholders of the proposals put to the Annual General
Meetings in 2004. The principal change was to make individuals
who were formerly 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.
The position of Advisory Director ceased.
Full information on our previous arrangements and those changes
were reported in the Annual Report and Accounts 2003 and in
the papers relating to the 2004 Annual General Meetings
respectively. These can be found on the Unilever website at
www.unilever.com/ourcompany/investorcentre/.
More information on our current corporate governance
arrangements are set out in The Governance of Unilever,
which can also be found at
www.unilever.com/ourcompany/investorcentre/.
Corporate governance developments in 2005
The text that follows should be read in the light of the changes
that are being implemented in 2005. As indicated in the
Chairmen’s statement on pages 8 and 9, this streamlining of
our leadership structure results in the separation of the roles of
Chairman and Group Chief Executive and the replacement of the
Executive Committee and Divisions with a new Executive Team
that will report to the Group Chief Executive.
Shareholders will be asked at the Annual General Meetings
in May 2005 to approve the necessary changes to the NV and
PLC Articles of Association. Further details are set out in the
Notices of the Meetings and these can also be found at
www.unilever.com/ourcompany/investorcentre/.
The Board level changes lead to a reduction in the number of
Executive Directors. Further information is given in Board changes
on page 70. The Governance of Unilever is being revised to
incorporate these changes, which will include the definition of the
roles and responsibilities of the single Chairman, who will be Non-
Executive, and of the single Group Chief Executive. The Senior
Independent Director will be made the Vice-Chairman of each of
NV and PLC.
The unified Board
The Boards of NV and PLC comprise the same Directors.
The Chairmen and all of the Directors are Directors of both NV
and PLC. This ensures unity of governance and of management.
The Boards currently comprise seven Executive Directors and nine
independent Non-Executive Directors. See pages 68 and 69 for
their biographies and page 70 for the changes planned for 2005.
We achieve this unity through provisions in the NV and PLC
Articles of Association governing which persons are eligible to be
elected as Directors. See page 57 for details of our nomination
procedure.
Board responsibility
Our Boards have ultimate responsibility for the management,
general affairs, direction and performance of the business as a
whole. The responsibility of the Directors is collective, taking into
account their respective roles as Executive Directors and Non-
Executive Directors.
Our Boards meet at least seven times a year to consider important
corporate events and actions, such as:
• agreement of quarterly results announcements;
• approval of the Annual Report and Accounts;
• declaration of dividends;
• nominations for Board appointments;
• convening of shareholders’ meetings;
• approval of Board Remuneration Policy;
• approval of corporate strategy;
• approval of Corporate Annual Plan;
• review of risks and controls;
• authorisation of major transactions; and
• review of the functioning of the Boards and its Committees.
Our Directors have set out a number of areas of responsibility
which are reserved to themselves and other areas for which
matters are delegated to committees whose actions are regularly
reported to and monitored by the Boards. These are described in
the following section and on page 56.
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. This information is
normally supplied during the week prior to each meeting. Other
information is supplied as and when it is available. The Chairmen
and the Joint Secretaries involve the Senior Independent Director
(see page 55) in the arrangements for Board Meetings.