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Report of the Supervisory Board


The Supervisory Board submits to the shareholders the financial statements and the report of the Board of Management of Akzo Nobel N.V. for the financial year 2008, as prepared by the Board of Management and approved by the Supervisory Board in its meeting of February 23, 2009.

The 2008 financial statements were audited by KPMG Accountants N.V. see for further information in the chapter Auditor's report. The financial statements were discussed extensively with the auditors by the Audit Committee and in the presence of the Chairman of the Board of Management (CEO) and the Chief Financial Officer (CFO). In addition, the 2008 financial statements were a topic of discussion for the full Supervisory Board with the full Board of Management, in the presence of the auditors. Based on these discussions, the Supervisory Board is of the opinion that the 2008 financial statements of Akzo Nobel N.V. meet all requirements for correctness and transparency and that they form a good basis to account for the supervision provided.

We recommend that the Annual General Meeting of shareholders adopts the 2008 financial statements as presented in this 2008 Report. We propose that the Annual General Meeting of shareholders resolves that the total dividend for 2008 on each of the common shares outstanding will be €1.80 and that this amount, less the interim dividend of €0.40, which was payable in November 2008, will be payable on May 7, 2009. As the financial year 2008 has ended in a loss, the dividend will be distributed from the free reserves of the company.

Additionally, we request that shareholders discharge the members of the Board of Management of their responsibility for the conduct of business in 2008 and the members of the Supervisory Board for their supervision of management.

Supervisory Board activities

The Supervisory Board met five times during the course of 2008, which included a meeting with a special focus on the integration of ICI, as well as one meeting with a whole day fully dedicated to the company’s strategy. All meetings were plenary sessions with the full Board of Management present and were well attended by the Supervisory Board members. The Supervisory Board also held a separate meeting, which was attended in part by the CEO, during which the Supervisory Board conducted a self-assessment and appraised its committees, working methods, procedures and performance, as well as evaluating the functioning of the Board of Management and its individual members. The Supervisory Board also assessed its relationship with the Board of Management and discussed the composition of the Supervisory Board and its committees. The Chairman of the Supervisory Board prepared the meetings with the assistance of the CEO.

In 2008, the Supervisory Board again devoted considerable time to discussions on the company’s strategy. The Supervisory Board reviewed and discussed in-depth the overall company strategy and strategic options with the Board of Management, including objectives, associated risks and the mechanisms for controlling financial risks. Other discussion topics included the integration of ICI, the return of value to the shareholders, corporate governance, debt placement, risk management, scenario planning, remuneration and the approval of major investments, acquisitions and divestments. Regular agenda items included financial and operational performance, share price development, operational planning, course of business and the annual financing and investment plan.

The Supervisory Board met with the Managing Directors of the business units and the staff directors on at least two occasions.

The Board of Management keeps the Supervisory Board regularly informed of intended organizational changes and appointments of senior managers.

Composition of the Supervisory Board

At the 2008 Annual General Meeting of shareholders, Mr. Ellwood, Chairman of Rexam plc, former Chairman of ICI plc and former Group Chief Executive of Lloyds TSB Group, was appointed to the Supervisory Board for a four-year term. On February 23, 2009, Mr. Van den Bergh resigned as Chairman and member of the Supervisory Board and its committees. The Supervisory Board has appointed Mr. Vuursteen as Chairman of the Supervisory Board. With effect from March 5, 2009, Mr. Bufe will be appointed Deputy Chairman of the Supervisory Board.

Board of Management changes

It will be proposed at the 2009 Annual General Meeting of shareholders to appoint Mr. Tex Gunning as a member of the Board of Management of AkzoNobel for a four-year term commencing May 1, 2009. For this purpose it will be proposed at the 2009 Annual General Meeting of shareholders to increase the number of Board of Management members to five.

Audit Committee

The Audit Committee consists of three members and is chaired by Mr. Van den Brink. With effect from March 5, 2009, Mr. Bufe will resign from the Audit Committee. With effect from the same date, Mrs. Bruzelius will be appointed as a member of the Audit Commitee. The Audit Committee had six regular meetings in 2008. As a rule, the CEO, the CFO, the director of corporate control, the internal auditor and the lead partner of the external auditor, KPMG, attend all regular meetings. After every Audit Committee meeting, the Audit Committee holds a separate meeting with only the internal auditor present and one with only the external auditor present. In addition, the Audit Committee met once without the presence of members of the Board of Management to conduct self-evaluation and appraise performance. The Audit Committee regularly discussed financial statements, internal and external control procedures, risk management, internal auditing reports, planning, tax, pensions and the external auditor’s performance and independence. Before each announcement of quarterly results, the Audit Committee was informed of the figures and consulted on the reports and press releases to be published. The Audit Committee also discussed items including:

  • Annual Compliance Report
  • KPMG’s approach to auditing the company, engagement letter, fees and audit plan
  • Internal Audit Plan
  • Operating Working Capital management
  • Scenario planning.

Issues discussed in Audit Committee meetings are reported back to the full Supervisory Board in subsequent meetings of this Board.

Remuneration Committee

The Remuneration Committee consists of four members and is chaired by Mr. Burgmans. Mr. Burgmans was appointed as a member of the Remuneration Committee with effect from July 1, 2008. Mr. Ellwood will be appointed a member of the Remuneration Committee with effect from March 5, 2009. The Committee met five times in 2008. In 2008, the Remuneration Committee made recommendations on the remuneration and remuneration policy for the members of the Board of Management, including personal targets. Information on remuneration of the Board of Management and of the Supervisory Board can be found in the Supervisory Board’s remuneration report.

Nomination Committee

The Nomination Committee consists of four members and is chaired by Mr. Vuursteen. Messrs. Burgmans and Ellwood will be appointed as members of the Nomination Committee with effect from March 5, 2009. The Committee met twice in 2008. The Nomination Committee made proposals for an increase in the number of members of the Board of Management, as well as the appointment of Mr. Gunning to the Board of Management in 2009.

The Supervisory Board wishes to thank the Board of Management, as well as all employees, for their dedication and hard work for the company in 2008.

Amsterdam, February 23, 2009
The Supervisory Board

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