Remuneration information for 2007
The following section contains detailed information and commentary on the Executive Directors’ annual remuneration, long-term incentives, pension benefits and share interests in respect of 2007.
Aggregate remuneration for Executive Directors
The following table gives details of the aggregate remuneration (including value of the vesting of matching shares and exercise of options) as a group.
| 2007 € ’000 |
2006 € ’000 |
|
|---|---|---|
| Annual emoluments | ||
| Base salary | 3 491 | 4 061 |
| Allowances and other payments | 221 | 913 |
| Benefits | 82 | 111 |
| Performance-related payments (annual incentive) | 4 865 | 2 409 |
| Sub-total of annual emoluments | 8 659 | 7 494 |
| Other income arising from vesting/exercise of long-term incentives(a) | ||
| Gains on exercise of share options | 50 | 427 |
| Vesting of matching shares | 230 | 566 |
| Vesting of awards under TSR Long-Term Incentive Plan | – | – |
| Total of annual emoluments and other income arising from long-term incentives | 8 939 | 8 487 |
(a) Includes the gains realised in 2007 following the exercise of share options granted in earlier years and the value of matching shares vested in 2007.
Comments on base salary
In 2007, base salary levels were benchmarked against those paid in other major global companies based in Europe, excluding companies in the financial sector. The Committee decided not to increase base salaries for 2007 and to place greater emphasis on performance-based pay.
Comments on annual incentive
The annual incentive awards for 2007 were subject to achievement of underlying sales growth and trading contribution targets in combination with individual key strategic business targets. The Committee measured the results against the targets set and determined the annual incentive amounts for 2007.
Remuneration for individual Executive Directors
The following table gives details of the remuneration received in 2007 (including the value of vested share match and options exercised) by each Executive Director individually.
| Annual Emoluments 2007 | Other income arising from long-term incentives and exercise of options in 2007 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Name and Base Country | Base salary € ’000 |
Allowances and other payments(a) € ’000 |
Value of benefits(b) € ’000 |
Bonus(c) € ’000 |
Total 2007 € ’000 |
Total 2006 € ’000 |
Option gains € ’000 |
Share match € ’000 |
TSR/LTIP € ’000 |
Grand total 2007 € ’000 |
Grand total 2006 € ’000 |
| Patrick Cescau (UK)(d) | 1 426 | 129 | 47 | 2 346 | 3 948 | 2 727 | 50 | 63 | – | 4 061 | 2 940 |
| Kees van der Graaf (NL) | 798 | 27 | 9 | 988 | 1 822 | 1 202 | – | 60 | – | 1 882 | 1 287 |
| Ralph Kugler (UK) | 861 | 56 | 11 | 1 033 | 1 961 | 1 313 | – | 53 | – | 2 014 | 1 414 |
| Rudy Markham (UK)(e) | 406 | 9 | 15 | 498 | 928 | 1 517 | – | 54 | – | 982 | 2 111 |
(a) Includes: allowance in lieu of company car; blind trust fees compensation; compensation for loss of net income
because part of the salary was paid in the Netherlands; entertaining allowance and employers’ cost for the all-employee
savings plan in the Netherlands. All allowances are taxable in the country of residence apart from the entertaining
allowance which is currently tax free in the Netherlands.
(b) Includes: benefits for company car; housing (for business use) instead of hotel; medical insurance and private use
of chauffeur driven cars. Included are benefits that are taxable in the country of residence. In addition, Unilever
provides support to Executive Directors in relation to spouse’s travel expenses when travelling together on company business. This amount is capped at 5% of base salary and for 2007 totalled €168 559 (including related taxes payable).
(c) Bonus of the year 2007. Includes: the value of both the cash element and the element paid in shares of NV and PLC. In addition to the
element of the bonus paid in shares each Executive Director is awarded, on a conditional basis, an equivalent number of matching shares.
(d) Group Chief Executive.
(e) Rudy Markham stepped down as a Director at the May 2007 AGMs. He retired from Unilever at 31 October 2007. In the table above are
the emoluments for the period January – May 2007. His emoluments for the period June – October were in total: €1 140 000.
Figures have been translated into euros using the following exchange rate: €1 = £0.6822 (2006: €1 = £0.6818).
Comments on long-term incentive arrangements
Global Share Incentive Plan
The first award was made in 2007 with a performance period 1 January 2007 to 31 December 2009. Vesting will be in May 2010 (three years after award).
Global Performance Share Plan
The performance period for the first awards made under the plan ended on 31 December 2007. Vesting will be in May 2008 (three years after award).
TSR Plan
In 2007 the conditional shares awarded in 2004 lapsed. Vesting was based on the TSR performance of Unilever (when ranked against its defined peer group with competitors) over the three-year performance period which ended 31 December 2006. For this period, Unilever ranked 13th in its peer group and therefore no vesting occurred for this award and the shares lapsed in March 2007.
Share Matching Plan
In 2007 the matching shares originally granted in 2004 on a conditional basis vested, subject to fulfilment of the retention conditions.
Executive Share Options
The grants of executive share options made in 2004 became exercisable as from 2007. As the 2004 grant was based on Unilever’s EPS performance, the options at vesting were subject to no further conditions.
Executive Directors’ Global Share Incentive Plan
The Global Share Incentive Plan was approved by shareholders at the 2007 AGMs.
The following conditional shares were granted during 2007 and outstanding at 31 December 2007 under the Global Share Incentive Plan:
| Conditional grant made 22 May 2007 (Performance period 1 January 2007 to 31 December 2009)(a) |
Balance of conditional shares at 31 December 2007 |
|||
|---|---|---|---|---|
| Share type | No. of shares(a) | Price at award | No. of shares | |
| Patrick Cescau | NV | 40 505 | €22.20 | 40 505 |
| PLC | 40 505 | 1 582.00p | 40 505 | |
| Kees van der Graaf | NV | 20 550 | €22.20 | 20 550 |
| PLC | 20 550 | 1 582.00p | 20 550 | |
| Ralph Kugler | NV | 22 145 | €22.20 | 22 145 |
| PLC | 22 145 | 1 582.00p | 22 145 | |
| Rudy Markham(b) | NV | – | – | |
| PLC | – | – | ||
(a) Each award of performance shares is conditional and vests subject to certain conditions three years after the date of the award.
(b) Was not awarded under this new Scheme as he stepped down as a Director at the May 2007 AGMs.
Executive Directors’ Global Performance Share Plan
The following conditional shares were outstanding from grants made in 2005 and 2006.
No new awards from 2007 onwards will be made under this Plan as a new plan was approved by shareholders at the 2007 AGMs and as from 2007 LTI awards will be made only under the new plan.
| Balance of conditional shares at 1 January 2007 |
Balance of conditional shares at 31 December 2007 |
||
|---|---|---|---|
| Share type | No. of shares(a) | No. of shares(a) | |
| Patrick Cescau | NV | 18 000 | 18 000 |
| PLC | 18 000 | 18 000 | |
| Kees van der Graaf | NV | 12 000 | 12 000 |
| PLC | 12 150 | 12 150 | |
| Ralph Kugler | NV | 12 000 | 12 000 |
| PLC | 12 150 | 12 150 | |
| Rudy Markham | NV | 12 000 | 12 000(b) |
| PLC | 12 150 | 12 150(b) |
(a) Each award of performance shares is conditional and vests subject to performance conditions three years after the date of the award.
(b) Balance is at May 2007 when he stepped down as an Executive Director.
Executive Directors’ conditional share awards under the TSR Long-Term Incentive Plan
The following conditional shares were outstanding from grants made in 2004 to 2006.
From 2007 onwards no new awards will be made under this Plan as a new plan was approved by shareho lders at the 2007 AGMs. From 2007 LTI awards will be made only under the new plan.
| Balance of conditional shares at 1 January 2007 | Conditional awards lapsed 24 March 2007 (Performance period 2004 to 2006)(a) |
Balance of conditional shares at 31 December 2007 | |||
|---|---|---|---|---|---|
| Share type | No. of shares | No. of shares | Original price at award | No. of shares | |
| Patrick Cescau | NV | 58 476 | (13 863) | €18.03 | 44 613 |
| PLC | 60 449 | (14 391) | 1 154.00p | 46 058 | |
| Kees van der Graaf | NV | 36 201 | (8 319) | €18.03 | 27 882 |
| PLC | 37 422 | (8 634) | 1 154.00p | 28 788 | |
| Ralph Kugler | NV | 36 201 | (8 319) | €18.03 | 27 882 |
| PLC | 37 422 | (8 634) | 1 154.00p | 28 788 | |
| Rudy Markham | NV | 41 745 | (13 863) | €18.03 | 27 882(b) |
| PLC | 43 179 | (14 391) | 1 154.00p | 28 788(b) | |
(a) The conditional awards made in 2004 lapsed in 2007, based on the TSR performance of Unilever over the three-year performance period ending 31 December 2006. For this period, Unilever ranked 13th in its peer group and therefore no vesting occurred for this award.
(b) Balance is at May 2007 when he stepped down as an Executive Director.
Unilever’s position relative to the TSR reference group
The reference group, including Unilever, consists of 21 companies. Unilever’s position is based on TSR over a three-year rolling period.
Executive Directors’ Share Matching Plan
The following conditional shares were outstanding, awarded or vested during 2007 under the share matching plan:
| Balance of conditional shares at 1 January 2007 |
Conditional shares awarded in 2007(a) | Shares vested on 24 March 2007(b) | Balance of conditional shares at 31 December 2007 |
|||||
|---|---|---|---|---|---|---|---|---|
| Share type | No. of shares | No. of shares | Price at award | No. of shares | Market Price at vesting | Original price at award | No. of shares | |
| Patrick Cescau | NV | 8 778 | 6 627 | €21.33 | (1 413) | €21.66 | €18.03 | 13 992 |
| PLC | 8 992 | 6 627 | 1 488.00p | (1 469) | 1 505.11p | 1 154.00p | 14 150 | |
| Kees van der Graaf | NV | 4 266 | 2 121(c) | €21.33 | (1 341) | €21.66 | €18.03 | 2 925 |
| PLC | 4 394 | 2 121(c) | 1 488.00p | (1 392) | 1 505.11p | 1 154.00p | 3 002 | |
| Ralph Kugler | NV | 3 831 | 2 402 | €21.33 | (1 191) | €21.66 | €18.03 | 5 042 |
| PLC | 3 936 | 2 402 | 1 488.00p | (1 238) | 1 505.11p | 1 154.00p | 5 100 | |
| Rudy Markham | NV | 4 932 | 2 830 | €21.33 | (1 209) | €21.66 | €18.03 | 6 553(d) |
| PLC | 5 071 | 2 830 | 1 488.00p | (1 257) | 1 505.11p | 1 154.00p | 6 644(d) | |
(a) Each award of matching shares is conditional and vests three years after the date of the award subject to certain conditions. The 2007
award was made at grant date 21 March 2007.
(b) The conditional shares awarded on 24 March 2004 (relating to the 2003 performance period) vested on 24 March 2007.
(c) Kees van der Graaf (based in the Netherlands) was granted a conditional right to receive at the vesting date a cash amount equal to
the value on that date of 2 121 NV shares and 2 121 PLC shares.
(d) Balance is at May 2007 when he stepped down as an Executive Director.
Executive Directors’ share options
Options to acquire NV ordinary shares of €0.16 each and options to acquire PLC ordinary shares of 31/9p each were outstanding, were exercised or lapsed during 2007. No option awards were made in 2007.
| Options outstanding below market price at 31 December 2007 | Options outstanding above market price at 31 December 2007 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share type | Balance of options at 1 January 2007 | Number of options exercised/ lapsed in 2007 | Balance of options at 31 December 2007 | Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | First exercisable date | Final expiry date | |
| Patrick Cescau | ||||||||||
| Executive Plan | NV | 269 166 | (27 000)(a) | 242 166 | 242 166 | €19.50 | – | – | 24/03/02 | 08/11/15 |
| Executive Plan | PLC | 272 967 | (27 000)(b) | 245 967 | 245 967 | 1 175p | – | – | 24/03/02 | 08/11/15 |
| NL All-Employee Plan | NV | 750 | (150)(c) | 600 | 600 | €17.53 | – | – | 02/06/03 | 17/05/11 |
| UK ShareSave Plan | PLC | 1 374 | – | 1 374 | 1 374 | 1 171p | – | – | 01/10/11 | 31/03/12 |
| Kees van der Graaf | ||||||||||
| Executive Plan | NV | 135 450 | – | 135 450 | 135 450 | €19.70 | – | – | 24/03/02 | 08/11/15 |
| Executive Plan | PLC | 135 450 | – | 135 450 | 135 450 | 1 203p | – | – | 24/03/02 | 08/11/15 |
| NL All-Employee Plan | NV | 750 | (150)(d) | 600 | 600 | €17.53 | – | – | 02/06/03 | 17/05/11 |
| UK ShareSave Plan | PLC | 1 374 | – | 1 374 | 1 374 | 1 202p | – | – | 01/10/10 | 31/03/11 |
| Ralph Kugler | ||||||||||
| Executive Plan | NV | 176 625 | – | 176 625 | 176 625 | €19.41 | – | – | 24/03/02 | 20/03/15 |
| Executive Plan | PLC | 176 625 | – | 176 625 | 176 625 | 1 163p | – | – | 24/03/02 | 20/03/15 |
| NL All-Employee Plan | NV | 300 | – | 300 | 300 | €17.59 | – | – | 18/05/05 | 17/05/11 |
| UK ShareSave Plan | PLC | 1 374 | – | 1 374 | 1 374 | 1 202p | – | – | 01/10/10 | 31/03/11 |
| Rudy Markham | ||||||||||
| Executive Plan | NV | 237 150 | – | 237 150(e) | 237 150 | €19.67 | – | – | 24/03/02 | 31/10/09 |
| Executive Plan | PLC | 237 150 | – | 237 150(e) | 237 150 | 1 212p | – | – | 24/03/02 | 31/10/09 |
| NL All-Employee Plan | NV | 750 | (150)(d) | 600(e) | 600 | €17.53 | – | – | 02/06/03 | 17/05/11 |
| UK ShareSave Plan | PLC | 1 373 | – | 1 373(e) | 1 373 | 1 190p | – | – | 01/11/07 | 30/04/08 |
(a) Options in respect of 27 000 shares exercised on 1 November 2007 at a market value of €23.24. The options would have expired 7 November 2007 if not exercised before. The options had originally been granted on 8 May 1998 at a price (after taking into account the share split in May 2006) of €23.10.
(b) Options in respect of 5 355 shares exercised on 8 May 2007 at a market price of 1 658p. Further options in respect of 21 645 shares exercised on 26 September 2007 at a market price of 1 585p. The options would have expired 7 November 2007 if not exercised before. The options had originally been granted on 8 May 1998 at a price (after taking into account the share consolidation in May 2006) of 1 483p.
(c) Options lapsed without value on 12 June 2007.
(d) Options exercised on 8 May 2007 at a market value of €23.75. The options had originally been granted on 12 June 2002 at a price (after taking into account the share split in May 2006) of €22.63.
(e) Balances are at May 2007 when he stepped down as a Director. On 2 November 2007, 33 750 options each of NV and PLC were exercised at €23.64 and 1 725p respectively. The original grant prices were €23.10 and 1 483p. On 27 December 2007, a further 96 750 NV and 164 250 PLC options were exercised at €25.32 and 1 902p. The original grant prices were on average €17.21 and 1 158p.
The term ‘Executive Plan’ refers to options granted under the PLC or NV Executive Option Plans.
The closing market prices of ordinary shares at 31 December 2007 were €25.15 (NV shares) and 1 890p (PLC shares). During 2007 the highest market prices were €25.72 and 1 924p respectively, and the lowest market prices were €18.89 and 1 320p respectively.
Comments on pensions
The Netherlands all-employee pension plan benefit basis was changed from final salary to career average earnings at 31 December 2006. This had a small impact on the accrued pension of the Netherlands-based Executive Director.
During 2007, individual contributions paid by Executive Directors in the UK were paid through a salary sacrifice arrangement.
Executive Directors’ pensions(a)
Pension values for the year ended 31 December 2007 are set out below.
| Name and base country | Age at 31/12/07 |
Accrued pension at 31/12/06(b) €’000 pa |
Movement in accrued pension during 2007(c) €’000 pa |
Accrued pension at 31/12/07(b) €’000 pa |
Transfer value of accrued pension at 31/12/06(d) €’000 |
Movement in transfer value during 2007 (less individual contributions)(e) €’000 |
Individual contributions made during 2007(f) €’000 |
Transfer value of accrued pension at 31/12/07(d) €’000 |
|---|---|---|---|---|---|---|---|---|
| Patrick Cescau (UK) | 59 | 1 000 | 29 | 1 029 | 18 662 | 1 951 | 4 | 20 617 |
| Kees van der Graaf(g) (NL) | 57 | 602 | 37 | 639 | 8 098 | 868 | 9 | 8 975 |
| Ralph Kugler (UK) | 51 | 441 | (23) | 418 | 6 283 | 219 | – | 6 502 |
| Rudy Markham(h) (UK) | 61 | 793 | (68) | 725 | 15 909 | (1 928) | – | 13 981 |
(a) Figures have been translated into euros where necessary using the following exchange rates: 31 December 2007 €1.00 = £0.7342; 31 December 2006 €1.00 = £0.6712; Average for the year ended 31 December 2007 €1.00 = £0.6822.
(b) Based on the Executive Directors’ current pension letters and calculated on a deferred basis using the Executive Directors’ service to 31 December 2006 and 31 December 2007 respectively on the basis that the Executive Directors remain in service until at least age 60 and that the pension payment commences at that time. It includes all pensions provided from Unilever pension plans. In the event that an Executive Director leaves service prior to age 60 and the payment of pension commences earlier than age 60, the pension payable would be on a reduced basis.
(c) Includes the effect of inflation on the accrued pension at 31 December 2006.
(d) For the Netherlands-based Executive Director the arrangement is calculated on the basis used by the Unilever Netherlands pension plan (‘Progress’), as prescribed by the Netherlands Ministry of Social Affairs and Employment. These prescriptions changed on 1 January 2008 as illustrated in footnote (g). For the UK-based Executive Directors’ the arrangement is calculated on the market related basis used by Unilever United Kingdom pension plan (UUKPF), in line with the GN11 guidance note published by the Board for Actuarial Standards in the United Kingdom.
(e) The movement in transfer value during 2007 of market changes for the UK based Executive Directors together with additional service and the Executive Directors being one year closer to retirement and exchange rate movements (for pensions denominated in currency other than euros). There have been no salary increases in 2007.
(f) Consistent with employees in the current Netherlands pension plan, the rate of individual contributions paid by Kees van der Graaf is 0.5% of pensionable salary between €11 872 and €56 990 and 1% on balance. Consistent with employees in the United Kingdom pension plan, Ralph Kugler’s and Rudy Markham’s contributions are paid through salary sacrifice and at a rate of 5% of pensionable salary (above the UK Lower Earnings Limit), and as such no individual contributions are shown above. Patrick Cescau’s contributions on the part of his salary paid in the Netherlands are paid based on the basis of the old Unilever Netherlands pension plan, at 1% above €56 990, and on the part of his salary paid in the UK are consistent with employees in the Unilever United Kingdom pension plan.
(g) The increase in accrued pension and transfer value during 2007 includes the effect of revaluation on the accrued pension in the Unilever Netherlands pension plan at January 2008. The basis for calculation of the transfer value in the Netherlands as prescribed by the Netherlands Ministry of Social Affairs and Employment changed for accounting periods ending after 1 January 2008. Calculated on this new basis the transfer value at 31 December 2007 for Kees van der Graaf would be €7 951 000.
(h) Attained age 60 in 2006 and accrued no additional pension. Stepped down as a Director at the 2007 AGMs. The values shown are at 31 May 2007, or the period ending on that date, as appropriate. Schedule 7A of the UK Companies Act requires the disclosure of pension values at retirement as he performed qualifying services during 2007. The accrued pension at 31 October 2007 (the date he retired from Unilever) is unchanged from that shown in the table. The transfer value of the accrued pension at 31 October 2007 was €14 055 000.
The Listing Rules of the Financial Services Authority are different from the Directors’ Remuneration Report Regulations 2002 and require the following disclosures for defined benefit pension plans which are calculated on an alternative basis to those disclosed in the previous table.
The Dutch Corporate Governance Code requires the disclosure of pension service costs charged to operating profit:
| Listing rules of the Financial Services Authority | Dutch Corporate Governance Code |
||
|---|---|---|---|
| €’000(a) | €’000(b) | €’000 | |
| Patrick Cescau (UK) | (9) | (192) | 552 |
| Kees van der Graaf (NL) | 32 | 450 | 249 |
| Ralph Kugler (UK) | (1) | (14) | 294 |
| Rudy Markham (UK) | (31) | (601) | 50(c) |
(a) Movement in accrued pension during 2007 (excluding the effect of inflation on the accrued pension at 31 December 2006).
(b) Transfer value at 31 December 2007 of the movement in accrued pension during 2007 (excluding the effect of inflation on the accrued pension at 31 December 2006 and less individual contributions).
(c) This includes €28 000 that was incurred up to May 2007 when he left the Board and €22 000 that was incurred subsequently up to 31 October 2007.
Executive Directors’ interests – share capital
The interests in the share capitals of NV and PLC and their group companies of those who were Executive Directors at 31 December 2007 and of their connected persons were as shown in the table below:
| Share type(a) | Shares held at 1 January 2007(b) |
Shares held at 31 December 2007(b) |
|
|---|---|---|---|
| Patrick Cescau(c) | NV | 85 059 | 93 099 |
| PLC | 52 347 | 65 798 | |
| Kees van der Graaf | NV | 23 157 | 32 499 |
| PLC | 16 718 | 20 339 | |
| Ralph Kugler | NV | 45 396 | 48 489 |
| PLC | 20 124 | 23 366 |
(a) NV shares are ordinary €0.16 shares and PLC shares are ordinary 31/9p shares.
(b) Numbers are excluding unvested matching shares.
(c) Balances include under NV 38 715 NV New York shares and under PLC 10 220 PLC ADRs.
The Executive Directors, in common with other employees of PLC and its United Kingdom subsidiaries, had beneficial interests in 16 678 871 PLC ordinary shares at 1 January 2007 and 10 920 385 PLC ordinary shares at 31 December 2007, acquired by the Unilever Employee Share Trust (Jersey) for the purpose of satisfying options and vesting of shares under various group share plans (including the PLC Executive Option Plans and the UK Employee ShareSave Plan). Further information, including details of the NV and PLC ordinary shares acquired by certain group companies in connection with other share-based compensation plans, is given in note 29.
The voting rights of the Directors who hold interests in the share capitals of NV and PLC are the same as for other holders of the class of shares indicated. None of the Directors’ or other executive officers’ shareholdings amounts to more than 1% of the issued shares in that class of share. Except as stated above, all shareholdings are beneficial.
The only changes in the interests of the Executive Directors and their connected persons in NV and PLC ordinary shares between 31 December 2007 and 1 March 2008 were that:
- The holding of the Unilever Employee Share Trust (Jersey) has reduced to 10 814 117 PLC ordinary shares; and
- Kees van der Graaf and Ralph Kugler each acquired an additional 14 PLC ordinary shares during January and February as a result of regular contributions to an employee share investment plan.
