Consistent with the two-tier Board structure of the company, the Supervisory Board’s role is differentiated from the role of the Board of Management. The Supervisory Board’s main responsibility is to supervise the general conduct of the business of the company and to provide advice to the Board of Management.
In 2011, the oversight role of the Supervisory Board was equally applied to the policies and conduct of the Executive Committee, which was established in 2011. The Supervisory Board is also responsible for overseeing the strategic development of the company and ensuring high caliber succession to the Board of Management positions.
Financial statements and profit allocation
The has submitted the financial statements of Akzo Nobel N.V. for the financial year 2011, together with the report of the Board of Management and the report of the external auditor of Akzo Nobel N.V. to the Supervisory Board. The 2011 financial statements were audited by KPMG Accountants N.V. and the Auditor’s report appears in . 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 2011 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 2011 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.
The Supervisory Board recommends that the Annual General Meeting of shareholders adopts the 2011 financial statements as presented in this 2011 Report, and, as proposed by the Board of Management, allocates €340 million for the payment of dividend. This is consistent with our aim to provide a stable to rising dividend that is in line with sustainable earnings. The proposed total dividend for 2011 on each of the common shares outstanding is €1.45, and this amount, less the interim dividend of €0.33 – which was paid in November 2011 – is proposed to be made payable on May 24, 2012. The dividend will, at the shareholder’s discretion, be paid either in cash or in shares. In addition, we request that the Annual General Meeting of shareholders discharges the members of the Board of Management of their responsibility for the conduct of business in 2011 and the members of the Supervisory Board for their supervision in 2011.
Supervisory Board activities
The Supervisory Board held eight meetings during 2011, including a one-day meeting in June 2011 fully dedicated to the company’s strategy. Seven meetings were plenary sessions with the full Board of Management present and one meeting was held via a conference call. Supervisory Board attendance percentage in 2011 was on average 87.5 percent. The Chairman of the Supervisory Board prepared the meetings with the Secretary and discussed matters, such as the agendas, with the CEO.
Regular agenda items included financial and operational performance, share price development, operational planning (budget) and the annual financing and investment plan. Business unit Managing Directors and Corporate Functional Directors were regularly invited to give presentations to the Supervisory Board. The Board of Management has kept the Supervisory Board regularly informed of intended organizational changes, appointments of senior managers and major contracts.
One of the main activities of the Supervisory Board in 2011 was the CEO succession. The Supervisory Board is pleased to have identified Ton Büchner as successor to Mr. Wijers and is fully intending to formally appoint Mr. Büchner as CEO following his appointment to the Board of Management by the Annual General Meeting of shareholders on April 23, 2012. The Supervisory Board believes that Mr. Büchner’s international and operational experience will be a great asset to lead the company through the current volatile market conditions. For more details, see the Nomination Committee section in this report. Progress was also made in finding new candidates for appointment to the Supervisory Board and an announcement regarding two candidates is expected to be made when the agenda of the 2012 AGM is published on March 12.
The Supervisory Board devoted considerable time to discussing the company’s strategy and reviewing strategic options with the Board of Management. In addition to the full day strategy review meeting held in June 2011, business unit and regional strategies were presented to the Supervisory Board following the strategic review sessions at company level with the Executive Committee.
In September 2011, the full Supervisory Board and Board of Management visited some of the company’s businesses in the US. This included meetings with local management, customers and other stakeholders, as well as a visit to AkzoNobel’s Surface Chemistry site in Houston. The trip provided an excellent opportunity for the Supervisory Board to liaise and engage with local management and for a comprehensive review of the businesses in the US.
The was discussed with the full Supervisory Board in three meetings. Three Supervisory Board members also held additional meetings with the CEO and program director. In these additional meetings, the program design, process and progress was reviewed and discussed in detail. The results of these meetings were reported back to the full Supervisory Board. The performance improvement program presents a next step in the evolution of our company. By leveraging our scale via operational and functional excellence at lower costs, we will ensure delivery of medium-term profitability ambitions in a challenging market environment.
The activities related to the program included detailed discussions on functional and Business Area plans with objectives, associated risks and the mechanisms for controlling those (financial) risks. Furthermore, the Supervisory Board discussed sustainability on a number of occasions, in the broader sense, but also specifically in relation to the Values of the company’s medium-term strategy (for example process and people safety) and the significant effort being put into people and talent development.
Other topics discussed and reviewed by the Supervisory Board included:
Independence of the Supervisory Board
Each member of the Supervisory Board meets the independence requirements as stated in Dutch Corporate Governance Code provisions III.2.1 and III.2.2 and has completed an annual independence questionnaire addressing the relevant requirements for independence.
The Audit Committee held six meetings during 2011. Discussions regularly focused on financial statements, internal control procedures, risk management, internal audit reports and 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:
Issues discussed in Audit Committee meetings were reported back to the full Supervisory Board in subsequent meetings of this Board. The Audit Committee has performed the annual review of the adequacy of the Audit Committee charter. The Audit Committee also evaluated the services of the external auditor and an external fee benchmark has been performed. Both processes have been concluded and the Audit Committee has recommended to the Supervisory Board not to propose a change in the external auditor’s appointment. The Audit Committee has decided to reconsider undertaking an external auditor selection process (full tender) towards the end of 2013, for submission and decision at the Annual General Meeting of shareholders in 2014.
The Remuneration Committee held three meetings in 2011. Recommendations were made on the remuneration for members of the Board of Management and the other members of the Executive Committee, including personal targets. The remuneration of Mr. Büchner was also discussed. For a report of the committee work carried out in 2011, reference is made to the Remuneration report and Note 23 of the Financial statements, where information on the remuneration of the Board of Management and the Supervisory Board can also be found.
The Nomination Committee held five meetings in 2011. After a thorough and confidential selection process – which included the help of an executive search firm to facilitate the process – a proposal was made for the succession of Mr. Wijers. Interviews and introduction meetings were held with the members of the Nomination Committee and the Supervisory Board.
In addition, the Nomination Committee successfully identified a candidate to succeed Baroness Bottomley as a member of the Supervisory Board and made a proposal to expand the Supervisory Board to nine members instead of eight. An announcement regarding these two new appointments is expected to be made when the agenda of the 2012 Annual General Meeting of shareholders is published on March 12.
Based on the advice of the Nomination Committee, the Supervisory Board recommends the reappointment of all members of the Supervisory Board and the Board of Management who are up for reappointment at the Annual General Meeting of shareholders in 2012.
The Supervisory Board carried out a performance evaluation of itself, its committees, the Chairman and the chairmen of the committees. The process consisted of Supervisory Board members and other participants of the meetings completing questionnaires designed by an external facilitator in conjunction with the Chairman and chairmen of the committees. The completed questionnaires were available to the facilitator only, who consequently prepared written reports for the Chairman, the Deputy Chairman and the chairmen of the Supervisory Board committees.
In separate meetings without the Board of Management, the full Supervisory Board and the Audit Committee discuss the results of the evaluation of the Supervisory Board and its committees. These discussions are minuted and the conclusions and actions are discussed and confirmed at the next meeting of the Supervisory Board and the Audit Committee. The evaluation of the Chairman is discussed by the full Supervisory Board in the Chairman’s absence. It is the Supervisory Board’s intention to use an external facilitator in the evaluation process every third year.
The Supervisory Board wishes to thank both Mr. Wijers and Baroness Bottomley in particular for their contributions to AkzoNobel during their time with the company.
All members of the Supervisory Board also extend their gratitude to the Board of Management and the other members of the Executive Committee, as well as all employees around the world, for their dedication and hard work for the company in 2011.
Amsterdam, February 15, 2012
Main 2011 activities
Selected Keyword: ‘Management’