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Board of Management


General

The Board of Management is entrusted with the management of the company which means that, among other responsibilities, it defines the strategic direction, establishes the policies and manages the company’s day-to-day operations. The members of the Board of Management collectively manage the company and are responsible for its performance. They are jointly and individually accountable for all decisions made by the Board of Management. In performing its duties, the Board of Management is guided by the interest of the company.

The Chief Executive Officer (CEO) leads the Board of Management in its overall management of the company to achieve its performance goals and ambitions. He is the main point of liaison with the Supervisory Board. The Chief Financial Officer (CFO) is specifically responsible for the company’s financial affairs. The Board of Management has members with specific responsibilities for the company’s main business areas: Decorative Paints, Performance Coatings and Specialty Chemicals.

The Managing Directors responsible for the performance of the business units, and the Staff Directors responsible for the performance of the different functions, report to the specific Board member responsible for their overall business areas and performance. To safeguard consistency and coherence for the total organization, the Board of Management has established corporate directives.

To effectively steer the strategy and operations of the business units, the Board of Management has constituted Business Area Boards for each of the business areas: Decorative Paints, Performance Coatings and Specialty Chemicals. Furthermore, a Pensions Board Committee oversees the general pension policies (to be) implemented in the various pension plans of the company.

Business Area Boards are chaired by the member of the Board of Management responsible for that business area. The CFO chairs the Board Committee Pensions. The authority of the Business Area Boards and the Board Committee is laid down in an internal authority schedule.

Representative authority, including the signing of documents, is vested in at least two members of the Board of Management jointly. The Board of Management may appoint corporate agents, whose powers of attorney will be determined by the Board of Management upon their appointment.

The tasks and responsibilities, as well as internal procedural matters for the Board of Management, are addressed in the Rules of Procedure for the Board of Management. These Rules of Procedure have been adopted by the Supervisory Board and are available on AkzoNobel’s corporate website.

Appointment, conflicts of interest

The Annual General Meeting of shareholders appoints the members of the Board of Management. As a rule, the members of the Board of Management step down at the Annual General Meeting in the year in which they reach the age of 62. Members of the Board of Management can be removed from office by the Annual General Meeting of shareholders.

As of 2004, members of the Board of Management are appointed for four-year terms, with the possibility of reappointment at the expiry of such term. This is in line with the Code’s provision II.1.1. However, the contract of Mr. Wijers, who was appointed before 2004, was not renegotiated as this was not felt to be in the interest of the company.

The Meeting of Holders of Priority Shares has the right to make binding nominations for the appointment of members of the Board of Management and the Supervisory Board. The priority shares are held by the Foundation AkzoNobel. The Board of the Foundation AkzoNobel consists of members of the Supervisory Board who are not members of the Audit Committee.

According to the Code’s recommendation (provision IV.1.1), the Annual General Meeting of shareholders should be able to pass a resolution to cancel the binding nature of a nomination for the appointment of the Supervisory Board or the Board of Management. Under the Articles of Association, the binding nature of the nominations by the holders of priority shares cannot be canceled by the Annual General Meeting of shareholders.

The company subscribes to the Code’s principle in general and therefore, as described in the 2004 Annual Report and discussed at the Annual General Meeting of shareholders in 2005, it has been decided that in normal circumstances, the members of the Supervisory Board and the Board of Management will be appointed on the basis of a non-binding nomination by the Supervisory Board. The Board of the Foundation AkzoNobel has confirmed its intention to use its binding nomination rights only in the case of exceptional circumstances, such as in the event of a (threatened) hostile takeover (reference is made to the description of anti-takeover provisions and control, see chapter Anti-takeover provisions and control). In normal circumstances, resolutions to appoint a person as a member of the Supervisory Board or the Board of Management will therefore require a simple majority of the votes cast. Of course, shareholders meeting the requirements laid down in the Articles of Association are also entitled to nominate members of the Supervisory Board or the Board of Management. According to the Articles of Association, such appointments will require a two-thirds majority representing at least 50 percent of the outstanding share capital.

Although a deviation from provision IV.1.1. of the Code, the Supervisory Board and the Board of Management hold the view that these provisions will enhance the continuity of the company’s management and policies.

Members of the Board of Management are allowed to hold a maximum of two supervisory board memberships or non-executive directorships in other listed companies. This is in line with the Code (provision II.1.7). The exception to this rule is that in the year prior to their retirement, Board of Management members are allowed to hold more than two supervisory board memberships or non-executive directorships in order to allow them to prepare for retirement, as long as this does not interfere with the performance of their tasks as members of the Board of Management. Acceptance of external supervisory board memberships or non-executive directorships is subject to approval by the Supervisory Board, which authority has been delegated to the Chairman of the Supervisory Board.

The handling of (potential) conflicts of interest between the company and members of the Board of Management is governed by the Rules of Procedure for the Board of Management. Decisions to enter into transactions under which Board of Management members have conflicts of interests that are of material significance to the company and/or to the relevant Board of Management member, require the approval of the Supervisory Board and will be mentioned in the annual report for the relevant year. In 2008, no transactions were reported under which a member of the Board of Management has had a conflict of interest that is of material significance to the company.

Remuneration

In line with the remuneration policy adopted by the Annual General Meeting of shareholders in 2005, the remuneration of the members of the Board of Management is determined by the Supervisory Board on the advice of its Remuneration Committee. A description of the composition of the remuneration of the Board of Management members and the remuneration policy is included in the Remuneration Report and the Financial Statements.

The main elements of the employment contract of members of the Board of Management have been published on the company’s corporate website. For appointments starting from 2004, the maximum remuneration in the event of dismissal is in principle one year’s base salary. In the event of the dismissal of the Board member appointed before 2004, the Supervisory Board will determine a severance payment upon the advice of the Remuneration Committee. Since it is not believed to be in the interest of the company to renegotiate the existing contracts of the members of the Board of Management, the company has decided not to follow Code provision II.2.7 for the member of the Board of Management appointed before 2004. However, the Supervisory Board intends to take the provisions of the Code as guidance for establishing severance payments.

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