Unilever 2004 Annual Report Download - page 69

66 Unilever Annual Report and Accounts 2004
Corporate governance
(continued)
In 2003/2004 the Nomination Committee and the Boards decided
to continue to include the Chairmen of NV and PLC as members
of the Committee on the express condition that they do not
participate in any discussion of their own positions. Their advice
has proved invaluable on other appointments, given their wide
knowledge of Unilever executives and the practice of
predominantly promoting to top positions from within the Group.
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.
Remit
The remit of the Committee was also included as part of the
2003/2004 review of our corporate governance arrangements.
The primary role of the Committee continues to be the
recommendation to the Boards of candidates for the positions
of Director, both Executive and Non-Executive, and Chairman
and Vice-Chairman, and this includes a responsibility to concern
itself with succession planning within the Boards. In addition it
now has a responsibility for the oversight of all matters relating
to corporate governance, bringing any issues to the attention
of the Boards. Under its remit, the Committee is entitled to
use the services of recruitment consultants and other external
experts at the expense of the Company. It is also to conduct
a process of evaluation of its own performance each year.
The full remit is on the Unilever website at
www.unilever.com/ourcompany/investorcentre/, as is the
information used by the Committee for succession planning.
Also on that website is The Governance of Unilever, which,
amongst other matters, sets out the procedures for evaluating the
Boards and individual Directors. These are designed to enable the
results of the evaluations to be provided to the Nomination
Committee when it discusses the nominations for election as
Directors of NV and PLC at the next Annual General Meeting.
Meetings of the Committee
The Committee met twice in 2004. It agreed to propose the
nomination of all current available Advisory Directors for election
as Non-Executive Directors at the 2004 Annual General Meetings.
The Committee reviewed the results of the consultations with the
Boards over the respective candidates and proceeded to
recommend the selection of Patrick Cescau for the role of PLC
Chairman and the nomination of Kees van der Graaf to become
Foods Director. It also reviewed and approved the nominations
and proposed roles of the other Executive Directors. The
Committee considered issues relating to the succession planning
for the existing Executive Directors and the Non-Executive
Directors. Finally, at the request of the Boards, it had considered a
detailed review by the Joint Secretaries of personal factors
relevant to the ‘independence’ of the prospective Non-Executive
Directors.
The Committee also met early in 2005 to consider and agree to
recommend to the Boards the changes to the corporate
governance arrangements proposed for introduction in 2005. It
agreed appropriate proposals for nominations for election as
Directors at the Annual General Meetings in 2005. The
Committee also considered the allocation of roles on the
Boards in the light of those changes and taking account of
the proposed composition of the Executive Team. It supported the
appointment of the Senior Independent Director as
Vice-Chairman.
The Committee updated itself on succession planning issues,
notably with respect to the membership of the Audit Committee
and the positions of Senior Independent Director and Chairman,
and authorised appropriate actions in response to them. It
revisited the question, on the basis of up-to-date information,
of which of the Non-Executive Directors should be judged as
Independent and agreed a recommendation for the Boards’
consideration and decision. The Committee’s annual Report to
Shareholders was approved and it considered certain corporate
governance issues arising under the new requirements in the
Netherlands. Finally, it carried out the Committee’s annual review
of its terms of reference and performance of its responsibilities
and commenced its evaluation of its performance in 2004.
Combined earnings per share
Because of the Equalisation Agreement and the other
arrangements between NV and PLC, we calculate combined
earnings per share for NV and PLC (see note 7 on page 112).
We base the calculation on the average amount of NV and PLC’s
ordinary share capital in issue during the year. For the main
calculation, we exclude treasury shares which have been
purchased to satisfy employee share options. We also calculate a
diluted earnings per share figure, where we include employee
share option commitments, as well as certain PLC shares which
may be issued in 2038 under the arrangements for the variation
of the Leverhulme Trust, and those treasury shares utilised for the
conversion of the €0.05 preference shares.
The process by which we calculate earnings per share is as
follows. First, we convert the average capital of NV and PLC into
units using the formula contained in the Equalisation Agreement:
one unit equals 10.7 NV shares or 71.4 PLC shares. We add these
together to find the total number of units of combined share
capital. Then the amount of net profit in euros which is
attributable to ordinary capital is divided by this total number of
units to find the amount per combined unit. Finally, we convert
the combined unit back into NV and PLC ordinary shares, to show
the amount per one share of each. The amount per unit is divided
by 10.7 to find the amount per €0.51 share, and by 71.4 to find
the amount per 1.4p share.
Despite the Equalisation Agreement, NV and PLC are independent
corporations, and are subject to different laws and regulations
governing dividend payments in the Netherlands and the United