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Legal Structure
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Under Section 6, Part 4 of Book 2 of the Dutch Civil Code, the rules for large companies ('structuurvennootschap') are mandatory for KPN. As such, KPN has a two-tier management structure with a Board of Management and a Supervisory Board.
The Board of Management manages KPN's strategic, financial and organizational matters and appoints senior managers.
The Supervisory Board appoints and discharges members of the Board of Management and establishes their individual remuneration within the boundaries of the remuneration policies approved by the Annual General Meeting and the recommendations by the Remuneration & Organization Development Committee. The Supervisory Board supervises and advices the Board of Management regarding strategic and organizational policymaking and the way in which the Board of Management manages and directs the operations of the company and affiliated/associated companies.
Members of the Supervisory Board are appointed by the Annual General Meeting of Shareholders upon binding nomination by the Supervisory Board. The nominees must fit within the profile of the Supervisory Board. The General Meeting of Shareholders and the Central Works Council can make a recommendation.
Under Dutch corporate law, shareholders are entitled to approve decisions of the Board of Management that have a Company-transforming effect. Moreover, they are entitled to approve the remuneration policy and share (option) plans. Also, they are entitled to appoint members of the Supervisory Board upon proposal by the Supervisory Board and to dismiss the Supervisory Board.
As of July 1st 2010, the Shareholder Rights Act and the Right of Speech of Works Council Act entered into force. The key changes of these Acts related to the notice period (extended from 15 to 42 days) and registration date (now set on 28 days before the AGM). Both changes were already implemented by KPN at the AGM in 2010 when these bills were still pending legislation. The amendments were generally current practice at KPN and therefore had not resulted in major changes in the KPN policies.
Recently, legislation was adopted on the possibility of introducing a one-tier management structure for Dutch companies including ‘structuurvennootschappen’, which is expected to enter into force on 1 January 2012. Other pending legislation covers other shareholder rights such as raising the threshold for proposing items to the shareholders meeting and decreasing the threshold for disclosure obligations for shareholders regarding their voting and capital interest. KPN closely monitors these developments. Where relevant, changes in legislation will be implemented in KPN’s Articles of Association. The Articles were last amended on May 3, 2007.
