Unilever 2011 Annual Report Download - page 39

36
CORPORATE GOVERNANCE
Introduction
Since 1930 when the Unilever Group was formed, NV and PLC,
together with their group companies, have operated as nearly as
practicable as a single economic entity. This is achieved by a
series of agreements between NV and PLC (the Foundation
Agreements, further described on page 42), together with special
provisions in the Articles of Association of NV and PLC.
However, NV and PLC remain separate legal entities with different
shareholder constituencies and separate stock exchange listings.
Shareholders cannot convert or exchange the shares of one for
the shares of the other.
NV and PLC have the same Directors, adopt the same accounting
principles and pay dividends to their respective shareholders on
an equalised basis. NV and PLC and their group companies
constitute a single reporting entity for the purposes of presenting
consolidated accounts. Accordingly, the accounts of the Unilever
Group are presented by both NV and PLC as their respective
consolidated accounts.
Unilever is subject to various corporate governance requirements
and best practice codes, the most relevant being those in the
Netherlands, the United Kingdom and the United States. As stated
in our Code of Business Principles, Unilever “will conduct its
operations in accordance with internationally accepted principles
of good corporate governance”. It is therefore Unilever’s
practice to comply where practicable with the best practice
represented by the aggregate of these best practice codes.
NV and PLC are holding and service companies, and the business
activity of Unilever is carried out by their subsidiaries around the
world. Shares in group companies may ultimately be held wholly
by either NV or PLC or by the two companies in varying
proportions.
The Boards
It has always been a requirement of Unilever that the same people
be on the Boards of the two parent companies. This guarantees
that all matters are considered by the Boards as a single intellect,
reaching the same conclusions on the same set of facts save
where specific local factors apply. It is essential that in reaching
the same decisions the NV and PLC Boards identify and resolve
any potential conflicts of interest between NV and PLC.
The Boards are one-tier boards, comprising Executive Directors
and, in a majority, Non-Executive Directors. The Boards have
ultimate responsibility for the management, general affairs,
direction and performance and long-term success of our
business as a whole. The responsibility of the Directors is
collective, taking into account their respective roles as Executive
Directors and Non-Executive Directors.
The Boards are responsible for the overall conduct of the Group,
including the management, direction and performance of NV and
PLC. The Boards have, with the exception of certain matters
which are reserved for them, delegated the operational running of
the Group to the Chief Executive Officer. The Chief Executive
Officer is responsible to the Boards and is able to sub-delegate
any of his powers and discretions. Matters reserved for the
Boards include structural and constitutional matters, corporate
governance, approval of dividends, approval of overall strategy for
the Group and approval of significant transactions or
arrangements in relation to mergers, acquisitions, joint ventures
and disposals, capital expenditure, contracts, litigation, financing
and pensions.
The Boards have also established committees whose actions are
regularly reported to and monitored by the Boards, and these are
described on page 39. Further details of how our Boards
effectively operate as one board, govern themselves and delegate
their authorities, are set out in the document entitled ‘The
Governance of Unilever’, which can be found at
www.unilever.com/investorrelations/corp_governance.
Board meetings
A minimum of five meetings are held throughout the calendar
year. These are comprised of quarterly meetings, to consider the
results statements of the Group, and a meeting to approve the
Annual Report and Accounts. There are additional Board
meetings to discuss matters that arise as well as Group
strategic issues.
In addition to the above, during the year our Boards will consider
important corporate events and actions, such as:
• oversight of the performance of the business;
• review of risks and controls;
• authorisation of major transactions;
• declaration of dividends;
• convening of shareholders’ meetings;
• nominations for Board appointments;
• approval of Board remuneration policy;
• review of the functioning of the Boards and their Committees;
and
• Corporate Social Responsibility.
Our risk management approach and associated systems of
internal control are of utmost importance to the Boards and are
described further on pages 28 to 33.
Meetings of the Boards may be held either in London or
Rotterdam or such other locations as the Boards think fit, with
one or two off-site Board meetings a year. In 2011, Board
meetings were held at the offices of Unilever in both Jakarta,
Indonesia and Rome, Italy. In both locations the Boards learnt
more about the supply chain in these regions, and included
customer visits to local retail outlets, together with visits to local
consumers. Visits such as these allow the Non-Executive
Directors to meet senior managers around Unilever’s global
business and in turn allow them to gain a deeper understanding of
the business.
Board induction, training and support
Upon election, Directors receive a comprehensive Directors’
Information Pack and are briefed thoroughly on their
responsibilities and the business. Ongoing training is provided for
Directors by way of site visits, presentations, circulated updates,
and teach-ins at Board or Board Committee meetings on, among
other things, Unilever’s business, environmental, social and
corporate governance, regulatory developments and investor
relations matters.
A procedure is in place to enable Directors, if they so wish, to seek
independent advice at Unilever’s expense.
Unilever Annual Report and Accounts 2011
Report of the Directors Governance