Unilever 2010 Annual Report Download - page 55

52 Unilever Annual Report and Accounts 2010
Report of the Directors Governance
Our requirements and compliance continued
Requirements – European Union
Following implementation of the European Takeover Directive,
certain information is required to be disclosed in relation to
control and share structures and interests of NV and PLC. Such
disclosures, which are not covered elsewhere in this Annual
Report, include the following:
• there are no requirements to obtain the approval of NV
orPLC, or of other holders of securities in NV or PLC, for a
transfer of such securities. The NV special ordinary shares may
only be transferred to one or more holders of such shares;
• there are no arrangements by which, with NV’s or PLC’s
cooperation, financial rights carried by securities are held by
aperson other than the holder of such securities;
• NV and PLC are not aware of any agreements between
holders of securities which may result in restrictions on the
transfer of such securities or on voting rights;
• neither NV nor PLC are parties to any significant agreements
which include provisions that take effect, alter or terminate
such agreement upon a change of control following a
takeover bid;
• NV and PLC do not have any agreements with any Director or
employee that would provide compensation for loss of office
or employment resulting from a takeover except that most of
Unilever’s share schemes contain provisions which operate in
the event of a takeover of Unilever, which provisions may for
instance cause options or awards granted to employees under
such schemes to vest after a takeover or be exchanged into
new awards for shares in another entity; and
• the Trustees of the PLC employee share trusts may vote or
abstain in any way they think fit and in doing so may take
intoaccount both financial and non-financial interests of the
beneficiaries of the employee share trusts or their dependants.
Historically the Trustees tend not to exercise this right.
The Netherlands
NV is required to state in its Annual Report and Accounts whether
it complies or will comply with the Principles 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. As will be clear from the description of our governance
arrangements, NV complies with almost all of the principles and
best practice provisions of the Dutch Code, a copy of which is
available at www.commissiecorporategovernance.nl. The text that
follows sets out certain statements that the Dutch Code invites us
to make to our shareholders that are not included elsewhere in this
Annual Report and Accounts as well as areas of non-compliance.
Unilever places a great deal of importance on corporate
responsibility and sustainability as is evidenced by our mission to
double the size of the company while reducing our environmental
impact. With respect to our performance measures Unilever is
keen to ensure focus on key financial performance measures
which we believe to be the drivers of shareholder value creation
and relative total shareholder return. Unilever therefore believes
that the interests of the business and shareholders are best served
by linking the long-term share plans to the measures as described
in the Directors’ Remuneration Report and has not included a
non-financial performance indicator (Principle II.2 and bpp II.2.3).
Board and Committee structures
NV has a one-tier board, consisting of both Executive and, in a
majority, 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 by applying the provisions relating to
members of a supervisory board to our Non-Executive Directors.
Management tasks not capable of delegation are performed by
the NV Board as a whole.
Risk management and control
Our principal risks are described on pages 33 to 37. Our approach
to risk management and systems of internal control is based on
the COSO framework and is described on page 38.
As a result of the review of the Audit Committee (as described in
its report on pages 56 and 57) the NV Board believes that as
regards financial reporting risks the risk management and control
systems provide reasonable assurance that the financial
statements do not contain any errors of material importance and
the risk management and control systems have worked properly
in 2010 (bpp ll.1.5).
The aforesaid statements are not statements in accordance with
the requirements of Section 404 of the US Sarbanes-Oxley Act
of2002.
Retention period of shares
The Dutch Code recommends that shares granted to Executive
Directors must be retained for a period of at least five years
(bpp II.2.5). Our shareholder-approved remuneration policy
requires Executive Directors to build and retain a personal
shareholding in Unilever. The Boards believe that this is in line
with the spirit of the Dutch Code.