Unilever 2008 Annual Report Download - page 73

Report of the Remuneration Committee continued
70 Unilever Annual Report and Accounts 2008
Report of the Directors
Comments on pensions
Jim Lawrence is a member of the Unilever International Pension Plan (IPP), a defined contribution arrangement. In line with current
policy, the contribution structure is equivalent in value to the all-employee plan in the USA, his home country. The current rate of
company contributions is 9% of base salary and he makes a personal contribution of 5% of base salary (by individual salary sacrifice).
The company contributions paid in 2008 cover the period from September 2007, his date of hire.
Paul Polman will be offered membership of a defined contribution pension plan. In line with current policy, the contribution structure
will be broadly equivalent in value to the all-employee plan in the Netherlands, his home country. The company will contribute 15% of
his base salary and he will make a personal contribution similar to other managers in the Netherlands. To compensate for the forfeiture
of pension from his previous employer, additional company contributions of 12% of base salary with investment returns in line with his
defined contribution pension account will vest at age 60 or later at actual retirement.
Three Executive Directors retired from Unilever during 2008. Patrick Cescau stepped down from the Boards and retired at year end aged
60 and 3 months. His pension is payable from 31 December 2008. Kees van der Graaf stepped down from the Boards at the AGMs in
May 2008 and retired on 31 May 2008. His pension is payable from 1 March 2009. His retirement terms were in line with Unilever’s
normal practice for long-serving senior executives in the Netherlands. Ralph Kugler stepped down from the Boards at the AGMs and
left the company on 31 May 2008. His pension is payable from 1 March 2009. His retirement terms were in line with Unilever’s normal
practice for long-serving senior executives in the UK.
Executive Directors’ pensions(a)
Pension values for the year ended 31 December 2008 are set out below.
Movement
Movement in Transfer in transfer Transfer
accrued value of value during Individual value of
Accrued pension Accrued accrued 2008 (less contributions accrued
pension at during pension at pension at individual made during pension at
Age at 31/12/07 2008(b) 31/12/08(c) 31/12/07(d) contributions)(e) 2008(f) 31/12/08(d)
Name and base country 31/12/08 €’000 pa €’000 pa €’000 pa €’000 €’000 €’000 €’000
Patrick Cescau (UK)(g) 60 1 029 59 1 088 23 937 (131) 4 23 810
Kees van der Graaf (NL)(h) 58 639 (16) 623 7 951 948 4 8 903
Ralph Kugler (UK)(h) 52 418 (111) 307 7 800 428 – 8 228
(a) Figures have been translated into euros where necessary using the following exchange rates: 31 December 2007 €1.00 = £0.7342, $1.471
31 December 2008 €1.00 = £0.9773, $1,471; average for the year ended 31 December 2008 €1.00 = £0.7880, $1.468.
(b) Includes the effect of inflation on the accrued pension at 31 December 2007 and the impact on the accrued pension of changes to the
payment dates of the pensions during the year. In the case of Patrick Cescau no pension accrued after age 60 and in the case of Kees van
der Graaf and Ralph Kugler the pensions were recalculated for early retirement. See note (c) for details.
(c) Based on the Executive Directors’ pension benefits that have now crystallised and become payable from 31 December 2008 in the case of
Patrick Cescau and 1 March 2009 in the cases of Kees van der Graaf and Ralph Kugler (rather than the normal retirement date). It includes
all pensions provided from Unilever pension plans.
(d) The Netherlands-based Executive Director’s arrangement is calculated on the basis used by the Unilever Netherlands pension plan
(Progress), as prescribed by the Netherlands Ministry of Social Affairs and Employment. This basis changed for accounting periods ending
after 1 January 2008. Calculated on the old basis the transfer value at 31 December 2007 was €8 975 000. The UK-based Executive
Directors’ arrangement is calculated on the market-related basis used by the Unilever United Kingdom Pension Fund (UUKPF). This basis has
changed during 2008. Calculated on the old basis, the transfer values at 31 December 2007 for Patrick Cescau and Ralph Kugler were
€20 617 000 and €6 502 000. The transfer values at 31 December 2008 were calculated using market conditions at December 2008 for
Patrick Cescau and May 2008 for Ralph Kugler.
(e) The movement in transfer values during 2008 includes market changes, together with additional service, the Executive Directors being one
year closer to retirement and exchange rate movements (for pensions denominated in currencies other than euros). For Patrick Cescau also
includes the impact of his salary increase effective from 1 January 2008. For Kees van der Graaf and Ralph Kugler includes the
enhancement for early retirement of €542 000 and €2 515 000 respectively.
(f) Consistent with employees in the current Unilever Netherlands pension plan, the rate of individual contributions paid by Kees van der Graaf
is 0.5% of pensionable salary between €12 209 and €58 993 and 1% on the balance. Consistent with employees in the Unilever United
Kingdom pension plan, Ralph Kugler’s contributions are paid through salary sacrifice at 7% of pensionable salary (5% of pensionable salary
from January to March) above the UK Lower Earnings Limit, and as such no individual contributions are shown above. Patrick Cescau’s
contributions on the part of his salary paid in the Netherlands are paid on the basis of the old Unilever Netherlands pension plan, at 1%
above €58 993. His contribution on the part of his salary paid in the UK are consistent with employees in the Unilever United Kingdom
pension plan, paid through salary sacrifice at 7% of pensionable salary (5% of pensionable salary from January to March) above the UK
Lower Earnings Limit.
(g) Stepped down from the Boards and retired on 31 December 2008. Attained age 60 on 27 September 2008, accrued no additional pension
for service thereafter.
(h) Stepped down from the Boards at the AGMs in May 2008 with pension payable from 1 March 2009. The values shown in the table are at
31 May 2008, or the period ending on that date, as appropriate, and include the enhancement for early retirement. Life cover benefits
continued to be payable as if still in employment up to 1 March 2009.