Meeting everyday needs of people everywhere - Unilever
Meeting everyday needs of people everywhere - Unilever
Meeting everyday needs of people everywhere - Unilever
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50 <strong>Unilever</strong> Annual Report on Form 20-F 1999 Report <strong>of</strong> the Directors<br />
Remuneration report<br />
Policy: directors’ pensions<br />
The aim <strong>of</strong> the Remuneration Committee is that pension<br />
and other related benefits should be in line with good<br />
practice by major companies in the Netherlands and the<br />
United Kingdom, bearing in mind the need to establish<br />
reasonable comparability between the conditions for the<br />
various nationalities <strong>of</strong> directors.<br />
All directors are members <strong>of</strong> the normal <strong>Unilever</strong> pension<br />
schemes. Because directors are paid by both NV and PLC,<br />
they participate in both the NV and PLC normal pension<br />
schemes. The NV scheme has been on a contribution<br />
holiday since 1990. The PLC scheme has been on a<br />
contribution holiday since January 1997.<br />
All directors are also members <strong>of</strong> their respective early<br />
retirement scheme, which provides an overall pension<br />
coverage inclusive <strong>of</strong> benefits under other <strong>Unilever</strong><br />
schemes. The current arrangements are that directors<br />
belong to either the NV or PLC scheme, depending on<br />
their contractual arrangements. NV finances the NV<br />
scheme and PLC finances the PLC scheme. Also, under<br />
the current arrangements, in order to equalise benefits<br />
amongst the directors, those directors who are members<br />
<strong>of</strong> the NV scheme and retire at normal retirement date,<br />
receive an additional lump sum amount equal to one<br />
year’s final pensionable pay. The benefits received by<br />
directors under these early retirement schemes are, in<br />
most other respects, the same as those generally provided<br />
for senior management.<br />
Under both the early retirement schemes, final<br />
pensionable pay takes into account the bonuses paid<br />
in the last three years prior to termination <strong>of</strong> service,<br />
subject to a maximum <strong>of</strong> 20% <strong>of</strong> pensionable pay.<br />
The Remuneration Committee believes that the policy <strong>of</strong><br />
allocating a significant part <strong>of</strong> directors’ emoluments to<br />
performance related payments instead <strong>of</strong> salary, whilst<br />
retaining control over the overall package <strong>of</strong> emoluments,<br />
should not affect the directors’ reasonable expectations <strong>of</strong><br />
a pension at a level that is in line with that provided by<br />
major companies in the Netherlands and the United<br />
Kingdom. The Committee does not agree with the<br />
recommendations <strong>of</strong> the Combined Code in this respect<br />
but continues to keep the development <strong>of</strong> best practice<br />
in respect <strong>of</strong> the pensionability <strong>of</strong> bonuses under review.<br />
Directors’ pensions: further information<br />
It is expected that the directors’ pensions will be regularly<br />
increased in payment and in deferment in line with the<br />
increase in the consumer price index in the country,<br />
the Netherlands or United Kingdom, to which the scheme<br />
in which they participate relates. These pension increases<br />
a re awarded at the discretion <strong>of</strong> NV or PLC, as appro p r i a t e ,<br />
although the schemes in the United Kingdom guarantee<br />
increases in line with retail price inflation, up to a<br />
maximum <strong>of</strong> 5% per annum.<br />
For directors in the NV early retirement scheme who are<br />
aged 55 or more, the immediate early retirement pension<br />
is shown. For the NV director who has not attained age<br />
55 by the year end, the pension payable under the normal<br />
NV scheme is shown payable from the age at which it is<br />
most valuable, while that payable under the normal PLC<br />
scheme is payable unreduced (partly discretionary and<br />
partly by right) from age 60, and subject to a 5% per<br />
annum reduction for each year that retirement precedes<br />
age 60.<br />
For directors in the PLC early retirement scheme, early<br />
retirement is possible from age 50 (or age 55 for PLC<br />
directors appointed after 1 January 1999), in which case<br />
the total accrued pension is reduced by 5% per annum<br />
for each year <strong>of</strong> early retirement prior to age 60.<br />
Dependants’ and children’s pensions are payable under<br />
the normal and early retirement schemes in each country.<br />
Under the NV normal and early retirement scheme, the<br />
spouse’s pension is 70% <strong>of</strong> the member’s pension, while<br />
under the PLC early retirement scheme, the spouse’s<br />
pension is 66.7% <strong>of</strong> the member’s retirement pension.<br />
Under the normal PLC scheme, the spouse’s pension is<br />
50% <strong>of</strong> the member’s pension.<br />
Where, for directors in the NV early retirement scheme,<br />
the early retirement pension is shown, this amount will be<br />
reduced at age 65 by an allowance, currently Fl. 25 801,<br />
corresponding to the State benefits payable. The pension<br />
may also be subject to minor adjustments to equalise<br />
social security benefits.<br />
Members may pay additional voluntary contributions.<br />
Neither the contributions nor the resulting benefits are<br />
included in the table <strong>of</strong> pension entitlements.