Report of the Supervisory Board

The Supervisory Board hereby submits to shareholders the financial statements and the report of the Board of Management of Akzo Nobel N.V. for the financial year 2009, as prepared by the Board of Management and approved by the Supervisory Board in its meeting of February 16, 2010.

Main 2009 activities

  • Advising the Board of Management during the economic downturn
  • Strategic discussions at company and Business Area level
  • Human resources and succession planning
  • Board visit to India.

The 2009 financial statements were audited by KPMG Accountants N.V. and the Auditor’s Report appears in Other Information. 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 2009 financial statements were discussed by 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 2009 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 2009 financial statements as presented in this 2009 Report. We recommend that the Annual General Meeting of shareholders resolves that the total dividend for 2009 on each of the common shares outstanding will be €1.35 and that this amount, less the interim dividend of €0.30 which was payable in November 2009, will be payable on May 11, 2010. Additionally, we request that shareholders discharge the members of the Board of Management of their responsibility for the conduct of business in 2009 and the members of the Supervisory Board for their supervision of management.

Supervisory Board activities

The Supervisory Board met six times during 2009, including a one-day meeting fully dedicated to the company’s strategy. All meetings were plenary sessions with the full Board of Management present. These meetings were also attended by all the Supervisory Board members. In addition, a separate meeting was held – 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 members. The Supervisory Board also assessed its relationship with the Board of Management and discussed the composition of the Supervisory Board and its committees. For this purpose, questionnaires were sent to the Supervisory Board. The answers were used as a framework for the evaluation discussion. This discussion was minuted and the conclusions and actions were discussed and confirmed at the next meeting of the Supervisory Board. The Chairman of the Supervisory Board prepared the meetings with the assistance of the CEO.

During 2009, the Supervisory Board again devoted considerable time to discussing the company’s strategy and reviewing strategic options with the Board of Management. This included detailed discussions on objectives, associated risks and the mechanisms for controlling financial risks. Other topics included:

  • Integration of ICI
  • Additional cost savings at the company
  • Governance of the company, including the implementation of the new Dutch Corporate Governance Code (the “Code”)
  • Risk management
  • Sourcing
  • Strategy for the company in certain high growth economies
  • Human resources and succession planning
  • Sustainability
  • Remuneration policy
  • 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. Business unit Managing Directors and Staff Directors are regularly invited to give presentations to the Supervisory Board.

In September 2009, the full Supervisory Board and Board of Management met in India. The visit included meetings with local management, customers, suppliers and other stakeholders, as well as a tour of AkzoNobel’s Bangalore multi-site.

The Board of Management keeps the Supervisory Board regularly informed of intended organizational changes and appointments of senior managers. The main topic for the Supervisory Board meeting in October 2009 was human resources, including succession planning.

Composition and profile of the Supervisory Board

The Supervisory Board – which currently consists of eight members – aims for an appropriate level of experience among its members in marketing, manufacturing, finance, economics, sustainability, human resources and other aspects of international business. Consequently, the current members have a diverse and appropriate mix of knowledge and experience of the markets in which AkzoNobel operates, as well as insights from different markets and non-operational areas. A further aim of the Supervisory Board – which its members believe is currently being met – is that at least one-third of the membership should meet the diversity criteria of gender (female) and/or nationality (outside of the European Union). This is in compliance with provision III.3.1 of the Code, which ensures that its composition better reflects society at large and the markets in which the company operates. In the Supervisory Board’s view, the Code’s provision III.2.1 (regarding independence) has been fulfilled.

On February 23, 2009, Mr. Van den Bergh resigned as Chairman of the Supervisory Board and Mr. Vuursteen was appointed Chairman with immediate effect. On March 5, 2009, Mr. Bufe was appointed Deputy Chairman. The terms of office of Messrs. Vuursteen, Burgmans and Hughes expire on May 1, 2010. Messrs. Vuursteen, Burgmans and Hughes are available for reappointment. It will be proposed at the 2010 Annual General Meeting of shareholders that Messrs. Vuursteen, Burgmans and Hughes should be reappointed for a second term of four years.

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 resigned from the Audit Committee. On the same date, Mrs. Bruzelius was appointed as a member of the Audit Committee. Seven meetings were held during 2009. 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 three members hold a separate meeting with only the internal auditor present, and one meeting with only the external auditor present. In addition, the Audit Committee met once without members of the Board of Management being present to conduct a self-evaluation and appraise performance. Discussions regularly focus on 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 the company’s 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 topics including:

  • The quality of internal audit
  • Internal audit strategy
  • KPMG’s approach to auditing the company, engagement letter, fees and audit plan
  • The company finance policy
  • Tax strategy
  • Compliance at the company.

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. Ellwood was appointed to the Remuneration Committee with effect from March 5, 2009. Four meetings were held in 2009. Recommendations were made on the remuneration and remuneration policy for members of the Board of Management, including personal targets. Information on the remuneration of the Board of Management and 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 were appointed as members with effect from March 5, 2009. During the year, proposals were made for the reappointment of Messrs. Vuursteen, Hughes and Burgmans to the Supervisory Board.

Changes in the composition of the Board of Management

At the 2009 Annual General Meeting of shareholders, Mr. Gunning was appointed to AkzoNobel’s Board of Management for a four-year term, commencing May 1, 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 2009.

Amsterdam, February 16, 2010
The Supervisory Board

Keyword Search
Copyright © 2010 Akzo Nobel N.V.