Unilever 2004 Annual Report Download - page 65

62 Unilever Annual Report and Accounts 2004
Corporate governance
(continued)
The following statements of compliance are based on Unilever’s
corporate governance arrangements in place following the
changes approved by our shareholders at the 2004 AGMs. Prior to
that, as you will appreciate from our description of our corporate
governance arrangements in the Annual Report and Accounts for
2003 and for previous years, our arrangements involving Advisory
Directors complied with the spirit, but not the letter, of the
principles relating to Non-Executive Directors. The compliance
statements that follow must be similarly so qualified for the period
prior to May 2004.
Although these statements of compliance must cover the
arrangements in force during 2004, for completeness, we do
mention at the relevant places the changes that will be made
during 2005, some of which require shareholder approval (see
page 53).
Further information can be found on our website
www.unilever.com/ourcompany/investorcentre/ in The
Governance of Unilever, the Boards’ own constitutional
document. This includes the terms of reference of our Board
Committees, including their full responsibilities. It will be kept
up to date with the changes in these internal constitutional
arrangements that our Boards may make from time to time.
Requirements – the Netherlands
General
For 2004, NV is required to state in its Annual Report and
Accounts whether it complies with the Principles (‘P’) and best
practice provisions (‘bpp’) of the Dutch Corporate Governance
Code (‘the Dutch Code’) and, if it does not comply, to explain the
reasons for this.
The preceding description of our governance arrangements and
the text on compliance that follows reflect Unilever’s governance
arrangements following the changes adopted at the Shareholder
Meetings in May 2004. Please refer to the preceding section. They
also reflect our Board’s specific intentions for 2005 and 2006. The
Board reserves the right, in cases where it decides such to be
conducive to the interests of the company and enterprise
connected therewith, to depart from that which is set out in the
present and previous sections in relation to our corporate
governance. Further changes will be reported in future Annual
Report and Accounts and, when necessary, through changes to
the relevant documents on our website. As appropriate, proposals
for change will be put to our shareholders for approval.
As will be clear from the preceding description of our governance
arrangements, NV complies with almost all of the principles and
best practice provisions of the Dutch Code. The text that follows
sets out areas of non-compliance and certain statements that the
Dutch Code invites us to give our shareholders that are not
included elsewhere in this Annual Report and Accounts.
Board and Committee structures
As already indicated, NV has a single-tier Board, consisting of
both Executive and, as a majority, Independent Non-Executive
Directors. We achieve compliance of our Board arrangements
with the Dutch Code, which is for the most part based on the
customary two-tier structure in the Netherlands, by, as far as is
possible and practicable, applying the provisions of the Dutch
Code relating to members of a management board to our
Executive Directors and the provisions relating to members of a
supervisory board to our Non-Executive Directors. Management
tasks not capable of delegation are performed collectively by the
Board. Reference is made to Ps II and III and corresponding bpps.
Our compliance with the Dutch Code in these respects should be
seen in the light of our one-tier board structure.
Role of the Chairman
Our application of the provisions of the Dutch Code with regard
to the chairman of the supervisory board to the Chairman of the
Board should be seen in the light of the fact that the Chairman
has hitherto combined this role with that of Joint Chief Executive
and that, in accordance with UK practice, we have the role of
the Senior Independent Director (see page 55). We will in 2005
separate the roles of Chairman and Chief Executive (see pages
8 and 53).
The Dutch Code recommends that in a one-tier board the
chairman should not also be, or have been, responsible for the
day-to-day conduct of the business (bpp III.8.1). NV and PLC are
separate legal entities, each subject to their own national
traditions and practices and each with responsibilities to different
sets of shareholders. Unilever has, since its inception, adopted the
principle that it is good practice that the most senior roles within
NV and PLC are shared and not concentrated in one person. As a
consequence it is a principal tenet of our governance philosophy,
which has hitherto been reflected in the form of two people who
each combine the roles of Chairman and Chief Executive and who
meet regularly for joint decision-making. Whilst this carefully
balanced arrangement has served Unilever very well for many
years, the Boards reviewed it during 2004 and concluded that it
would give greater clarity to each role if they were held by
separate people (see page 8). It was also relevant to the
arrangements in place during 2004 that, in addition to the
Chairmen, the Boards of NV and PLC have a Senior Independent
Director who is appointed by the Non-Executive Directors and acts
as their spokesperson. In 2005 he will be made Vice-Chairman of
each company.
Nomination Committee
The Dutch Code states that the Nomination Committee (bpp
III.8.3) should consist of non-executive directors. In their role as
Chairmen of NV and PLC, the Chairmen are currently members
of our Nomination Committee. However, the majority of the
Nomination Committee consists of Independent Non-Executive
Directors. We believe that the thorough knowledge that the two
Chairmen have of the company and the management talent that
is available within it has proved extremely helpful for the effective
functioning of the Nomination Committee. Our arrangements
have been aligned to the UK practice applicable to PLC.
Following implementation of the changes in 2005, the single
Non-Executive Chairman of NV and PLC will remain as a member
of the Committee but not be regarded as Independent. The
Group Chief Executive will not be a member of the Nomination
Committee.