Unilever Annual Report & Accounts and Form 20-F 2000

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Unilever Annual Report & Accounts and Form 20-F 2000 Report of the Directors
Corporate governance
All committees are formally set up by Board resolution with
carefully defined remits. They report regularly and are
responsible to the Boards of NV and PLC.
Requirements in the Netherlands and the UK
Unilever is subject to corporate governance requirements
in both the Netherlands and the United Kingdom.
A vital factor in the arrangements between NV and PLC
is their having the same directors. As the concept of the
non-executive director, as recognised in the United
Kingdom, is not a feature of corporate governance in the
Netherlands, and the Supervisory Board, as recognised in the
Netherlands, is unknown in the United Kingdom, it is not
practicable to appoint supervisory or non-executive directors
who could serve on both Boards. However, a strong
independent element has long been provided by Unilever’s
Advisory Directors, who perform many of the functions of
supervisory and non-executive directors. The Audit, External
Affairs and Corporate Relations and Remuneration
Committees consist exclusively of Advisory Directors and the
majority of the members of the Nomination Committee are
Advisory Directors. See pages 33 to 35 for details.
The Committee on Corporate Governance in the
Netherlands issued its report ‘Recommendations on
Corporate Governance in the Netherlands’ in 1997.
NV applies the Committee’s recommendations for
supervisory directors to its Advisory Directors in so far
as these are in line with their specific role within Unilever.
NV complies with all other recommendations of the
Committee, except that the Board of Directors takes the
view that requests for an item to be placed on the agenda
for a shareholders’ meeting must be supported by more
than an insignificant proportion of the shareholders and
will therefore only accept requests from a shareholder or
group of shareholders holding at least 1% of the voting
rights attaching to the issued share capital of NV. Requests
must be submitted, at the latest, 60 days prior to the date
of the meeting.
PLC is required, as a company that is incorporated in
the United Kingdom and listed on the London Stock
Exchange, to state how it has applied the principles and
how far it has complied with the provisions set out in
Section 1 of the Combined Code (‘the Code’) appended
to the United Kingdom Listing Rules.
As already explained, the Boards control the Company
through the Executive Committee. Responsibilities are
shared by the Chairmen of NV and PLC, while the Advisory
Directors perform many of the functions of the supervisory
board members or non-executive directors, although they
are not formally members of the Boards. For the purposes
of the Code, the Boards have not appointed a senior
independent director, on the basis that issues for the Boards
can be raised with whichever Advisory Director is the
Chairman of the relevant Board Committee and the Advisory
Directors are entitled to meet as a body and appoint a
senior member as their spokesman.
Unilever’s remuneration policy is contained within the report
by the Boards on the directors’ remuneration and interests
on pages 36 to 44. This also deals with aspects of noncompliance
with the Code in this area. Members of the
Audit, Remuneration and Nomination Committees will
be available to answer questions at the Annual General
Meetings of both NV and PLC. The members attending each
meeting will not necessarily include the Chairman of the
Committee, since these meetings take place at about the
same time in Rotterdam and London respectively.
A description of Unilever’s compliance with ‘Internal Control
– Guidance for Directors on the Combined Code’ is given on
page 45.
Unilever has, since its inception, adopted the principle that
it is good practice that the most senior roles in NV and PLC
are shared and not concentrated in one person. As a
consequence it is a principal tenet of its governance
philosophy, which finds expression in two people who each
combine the roles of Chairman and Chief Executive and
who meet regularly for joint decision making. This carefully
balanced arrangement has served Unilever’s unique
constitutional arrangements very well for many years and
the Boards believe that to separate these roles would only
introduce undesirable and unnecessary complexity. Since the
Advisory Directors are not formally members of the Boards,
it would be inappropriate for one of them to act as
Chairman. In all other respects, PLC has complied with
the Code throughout 2000.
Shareholder relations
We believe it is important to both explain the business
developments and financial results to shareholders and
to understand the objectives of investors. Within the
Executive Committee, the Financial Director has lead
responsibility for investor relations, with the active
involvement of the Chairmen. They are supported by
an Investor Relations Department which organises
presentations for analysts and institutional investors,
mainly held in Europe and North America. Such
presentations are generally made available on our website.
In addition, during 2000, quarterly teleconference briefings
were introduced which are accessible by telephone or via
our website. For further information visit our website at
www.unilever.com.
Both NV and PLC communicate with their respective
shareholders through the Annual General Meetings. At the
AGMs, each Chairman gives a full account of the progress
of the business over the last year and a review of the current
issues. A summary of their addresses is published on our
website and released to stock exchanges and media. Copies
are freely available on request.