The remuneration of the individual members of the Board of Management is determined by the Supervisory Board on the proposal of the Remuneration Committee of the Supervisory Board, and is consistent with any policy thereon as adopted by the General Meeting of Shareholders.
The remuneration structure, including severance pay, is such that it promotes the interests of Philips in the medium and long-term, does not encourage members of the Board of Management to act in their own interests and neglect the interests of Philips, and does not reward failing Board members upon termination of their employment. The level and structure of remuneration shall be determined in the light of factors such as the results, the share price performance and other developments relevant to Philips.
In 2013, Philips adopted a Long-Term Incentive Plan consisting of performance shares only for members of the Board of Management, the Executive Committee, Philips Executives and other key employees. Future substantial changes to the LTIP applicable to members of the Board of Management will be submitted to the General Meeting of Shareholders.
The Remuneration Committee of the Supervisory Board prepares an annual remuneration report. The remuneration report contains an account of the manner in which the remuneration policy has been implemented in the past financial year, as well as an overview of the implementation of the remuneration policy planned by the Supervisory Board for the next years.
A full and detailed description of the composition of the remuneration of the individual members of the Board of Management is included in the Report of the Supervisory Board and other parts of the Annual Report.