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| THE DUTCH CORPORATE GOVERNANCE CODE On 10 December 2008 an amended Corporate Governance Code (the new code) was published. The new code will come into force from the financial year starting on or after 1 January 2009. The Monitoring Committee Corporate Governance recommends that listed companies present their corporate governance structure and compliance with the new code to the general meeting in 2010 for discussion. Therefore, this Annual Report will not reflect particular issues addressed in the new code, but is based on the Dutch Corporate Governance Code 2004 (the code). In accordance with the Dutch Order of Council of 23 December 2004, we apply all of the relevant provisions of the code with the following deviations which, together with the reasons for those deviations, are set out below. |
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| MANAGEMENT BOARD General The members of the Management Board have collective powers and responsibilities. They are responsible for the day-to-day management of our operations, under the supervision of the Supervisory Board. Composition and appointment The Articles of Association provide that the number of members of the Management Board will be determined by the Supervisory Board, and will consist of at least two members. Each member of the Management Board is appointed for a maximum of four years, which can be renewed for another period of not more than four years at a time. A resolution of the General Meeting of Shareholders to suspend or dismiss members of the Management Board requires a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital. The General Meeting of Shareholders appoints the members of the Management Board, subject to the right of the Supervisory Board to make a binding nomination. The General Meeting of Shareholders may at all times, by a resolution passed with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital, resolve that the nomination submitted by the Supervisory Board is not binding. In such cases, the General Meeting of Shareholders may appoint a member of the Management Board in contravention of the Supervisory Board’s nomination, by a resolution passed with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital. If the Supervisory Board fails to use its right to submit a binding nomination, the General Meeting of Shareholders may appoint members of the Management Board with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital. Members of the Management Board Alexander Ribbink resigned as a member of the Management Board on 1 July 2008. During the Extraordinary General Meeting of Shareholders held on 19 September 2008, his release from liability towards the company for his management over the period from 1 January 2008 up until the date of his resignation was accepted. At this Extraordinary General Meeting of Shareholders, Alain De Taeye was appointed as a member of the Management Board. Currently, the Management Board consists of: • Harold Goddijn – Chief Executive Officer • Marina Wyatt – Chief Financial Officer • Alain De Taeye – member of the Management Board. Further details on the members of the Management Board, and their biographies, can be found in the Profile of Management Board and Supervisory Board section. Remuneration The Supervisory Board establishes the remuneration of the individual members of the Management Board, in accordance with the Management Board remuneration policy, as adopted by the General Meeting of Shareholders. The Supervisory Board presents to the General Meeting of Shareholders for approval any scheme providing for the remuneration of the members of the Management Board in the form of shares. For further information about the remuneration of the members of the Management Board, see the notes included in the Financial Statements in this Annual Report. Conflicts of interest Members of the Management Board must report and provide all relevant information regarding any conflict of interest or potential conflict of interest to the Chairman of the Supervisory Board. The Supervisory Board shall decide, without the member of the Management Board being present, whether there is a conflict of interest. No such conflicts of interest occurred during 2008. Supervisory Board General The Supervisory Board is responsible for supervising the conduct of the Management Board and the general course of the business, as well as for providing advice to the Management Board. In performing its duties, the Supervisory Board is required to act in the interests of the business as a whole. The Articles of Association require certain decisions of the Management Board to be approved by the Supervisory Board. These decisions include the issue of shares or granting of rights to subscribe for shares, and the exclusion of pre-emptive rights, to the extent that these rights are vested in the Management Board; proposals to amend the Articles of Association; proposals to merge or demerge; proposals to dissolve the company; and proposals for capital reductions. Composition and appointment The Articles of Association provide that the number of members of the Supervisory Board will be at least three. Each member of the Supervisory Board is appointed for a maximum of four years. This appointment can be renewed for two additional periods of not more than four years at a time. The members of the Supervisory Board retire periodically in accordance with a rotation schedule. The Supervisory Board appoints a Chairman and a Deputy Chairman from amongst its members. A resolution of the General Meeting of Shareholders to suspend or dismiss members of the Supervisory Board requires a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital. The General Meeting of Shareholders appoints the members of the Supervisory Board, subject to the right of the Supervisory Board to make a binding nomination. The General Meeting of Shareholders may at all times, by a resolution passed with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital, resolve that the nomination submitted by the Supervisory Board is not binding. In such cases, the General Meeting of Shareholders may appoint a member of the Supervisory Board, in contravention of the Supervisory Board’s nomination, by a resolution passed with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital. Members of the Supervisory Board The Supervisory Board now consists of: • Karel Vuursteen – Chairman • Doug Dunn – Deputy Chairman • Guy Demuynck – member of the Supervisory Board • Rob van den Bergh – member of the Supervisory Board • Ben van der Veer – member of the Supervisory Board. Further details on the members of the Supervisory Board, and their biographies, can be found in the Profile of Management Board and Supervisory Board section. The Committees From amongst its members the Supervisory Board established an Audit Committee, Remuneration Committee and a Selection and Appointment Committee. The Audit Committee Among other things, the Audit Committee assists the Supervisory Board in overseeing the integrity of our financial statements, the operation of the overall internal risk and control systems, the performance of our independent auditor and internal audit function and our systems of disclosure controls and procedures. The Audit Committee comprises: • Ben van der Veer (Chairman) • Rob van den Bergh • Doug Dunn. The Remuneration Committee The Remuneration Committee reviews the remuneration of the Management Board and drafts amendments to the company's remuneration policy, when required. It determines, within the parameters set, specific remuneration arrangements for each of the members of the Management Board and prepares the remuneration report to be included in the Annual Report. The Remuneration Committee comprises: • Guy Demuynck (Chairman) • Karel Vuursteen. The Selection and Appointment Committee The Selection and Appointment Committee focuses on drawing up selection criteria and appointment procedures for Supervisory Board members and Management Board members, assessing the size and composition of the Supervisory Board and the Management Board, making a proposal for a composition profile of the Supervisory Board and making proposals for appointments and reappointments The Selection and Appointment Committee comprises: • Karel Vuursteen (Chairman) • Guy Demuynck. The charter of each committee can be found on our website. Remuneration The remuneration of the members of the Supervisory Board is determined by the General Meeting of Shareholders. Members of the Supervisory Board are not authorised to receive any payments under our pension or bonus schemes or under our option or share plans. For detailed information about the individual remuneration of members of the Supervisory Board see the notes to the Financial Statements of TomTom NV included in this Annual Report, on page 48. Conflicts of interest Members of the Supervisory Board must report and provide all relevant information regarding any potential conflict of interest to the Chairman of the Supervisory Board or, in the case of a conflict of interest of the Chairman of the Supervisory Board, to the Deputy Chairman of the Supervisory Board. The Supervisory Board shall decide, without the relevant member of the Supervisory Board being present, whether a conflict of interest exists. A member of the Supervisory Board shall not take part in any discussions or decision making that involves a subject or a transaction in relation to which he has a conflict of interest with the company. Such a transaction shall be disclosed in the Annual Report. No such conflicts of interest occurred during 2008. Shareholdings Rob van den Bergh owns 5,000 shares in the company. These shares are held as a long-term investment within the meaning of best practice provision III.7.2 of the Corporate Governance Code and were not granted as part of his remuneration. Mandatory Statement for Large Companies within the meaning of 2:153 Dutch Civil Code A statement within the meaning of clause 153 subparagraph 1 of Book 2 of the Dutch Civil Code was filed with the Trade Register which provides that the company meets the requirements as set in clause 2:153 (2) Dutch Civil Code. Rotation schedule On 27 October 2008, the Supervisory Board adopted the following rotation schedule. |
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| Shares and shareholders’ rights Issue of ordinary shares and pre-emptive rights The company may issue ordinary shares, or grant rights to subscribe for ordinary shares, pursuant to a resolution of the General Meeting of Shareholders, upon proposal of the Management Board, subject to the prior approval of the Supervisory Board. If so designated by the General Meeting of Shareholders or our Articles of Association, the company may issue ordinary shares, or grant rights to subscribe for ordinary shares, pursuant to a resolution of the Management Board, subject to the prior approval of the Supervisory Board. No resolution of the General Meeting of Shareholders or the Management Board is required for an issue of ordinary shares pursuant to the exercise of a previously granted right to subscribe for ordinary shares. The current authority of the Management Board to issue ordinary shares and to grant rights to subscribe for such shares expires on 13 May 2009 and is limited to 20% of the authorised ordinary share capital. During the Annual General Meeting held in April 2008, a resolution was passed to extend the abovementioned authority until 13 October 2009. However, this resolution includes the following limitations to the authority effective as of 13 May 2009 (when the current authorisation lapses) until 13 October 2009. |
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| A shareholder may exercise pre-emptive rights during a period of two weeks from the date of the announcement of the issue of shares. The Management Board, subject to the prior approval of the Supervisory Board, and if so designated by the General Meeting of Shareholders, may restrict or exclude shareholder pre-emptive rights. A resolution by the General Meeting of Shareholders to authorise the Management Board to exclude or restrict pre-emptive rights requires a majority of at least two-thirds of the votes cast, if less than 50% of our issued share capital is present or represented at the General Meeting of Shareholders. If the General Meeting of Shareholders has not delegated this authority to the Management Board, the General Meeting of Shareholders may itself vote to restrict or exclude pre-emptive rights, but only upon a proposal of the Management Board. During the Annual General Meeting of Shareholders, held in April 2008, a resolution was passed to extend the current authority to restrict or exclude pre-emptive rights (which expires on 13 May 2009) until 13 October 2009. General Meetings of Shareholders and voting rights The Annual General Meeting of Shareholders must be held within six months of the end of each financial year. An Extraordinary General Meeting of Shareholders may be convened, whenever our interests so require, by the Management Board or the Supervisory Board. Shareholders representing alone or in aggregate at least one-tenth of our issued and outstanding share capital may, pursuant to the Dutch Civil Code and our Articles of Association, request that a General Meeting of Shareholders be convened. If such General Meeting of Shareholders has not been convened within 14 days, or is not held within one month following such a request, the shareholders are authorised to call such a General Meeting of Shareholders themselves. The notice convening a General Meeting of Shareholders must include the agenda, indicating the items for discussion, as well as any voting proposals. Shareholders holding at least 1% of our issued and outstanding share capital, or shares representing a value of at least €50 million according to the Daily Official List, may submit proposals for the agenda. Provided we receive such proposals no later than the 60th day before the General Meeting of Shareholders, we will have the proposals included in the notice we publish in a national newspaper distributed daily in the Netherlands and also in the Daily Official List at least 15 days before the meeting. The Management Board may determine a record date to establish which shareholders are entitled to attend and vote at the General Meeting of Shareholders. There is no attendance quorum. Each of our ordinary shares and preference shares is entitled to one vote. Shareholders may vote by proxy. The voting rights attached to any of our shares held by us are suspended as long as they are held in treasury. Resolutions of the General Meeting of Shareholders are adopted by a simple majority, except where Dutch law or our Articles of Association provide for a special majority. According to our Articles of Association, the following decisions of the General Meeting of Shareholders require a majority of at least two-third of the votes cast, representing more than 50% of our issued share capital: |
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| In addition, our Articles of Association require a majority of at least two-thirds of the issued capital, if less than 50% of our issued share capital is represented for among other matters: | ||||||||||||||||||||||||||||||||||||||
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| Preference shares as protection measure General On 26 May 2005, the Stichting Continuïteit TomTom (the “Foundation”) was established as an instrument of protection against hostile takeovers and to protect our interests in other situations. The purpose of the Foundation is to safeguard our interests and those of our subsidiaries in such a way that these interests as well as the interests of all those involved in the organisation, are safeguarded, and that influences, which in contravention with those interests could affect our independence, continuity and/or corporate identity, are repelled. Since the incorporation of the Foundation the views and provisions in respect of anti-takeover measures and other protection measures (beschermingsmaatregelen) in the Netherlands have changed due to case law and changes in Dutch law. In view of these developments the Board of the Foundation wants to ensure that the Foundation can continue to serve the interests of the company in the best possible way, and therefore has resolved to, amongst others, amend the Foundation's Articles of Association. One of the main changes aims to maintain, ensure and enhance its independence from the company. The amendment of the Foundation's Articles of Association was effected on 3 February 2009. The Articles of Association of the company provide for the possibility of issuing preference shares and granting rights to subscribe for preference shares. We believe that the issue of preference shares or the grant of rights to subscribe for preference shares to the Foundation, may have the effect of preventing, discouraging or delaying an unsolicited attempt to obtain (de facto) control and may help us to determine our position in relation to a bidder and its plans, and to seek alternatives. There are currently no preference shares outstanding. Composition of Continuity Foundation As per the amendment of the Foundation’s Articles the Management Board of the Foundation consists of two Board members. The Board members are appointed by the Board of the Foundation. The members of the Management Board of the Foundation currently are: • Mick den Boogert, Board member • Robert de Bakker, Board member. In view of the new provisions with regard to the composition of the Board, Guy Demuynck resigned as a Board member. So far, his seat has not been filled. The Foundation’s Articles of Association provide that the number of members of the Management Board will consist of at least three. The Board is seeking a third Board member to be appointed as soon as possible. The Management Board of the company and the Board of the Foundation declare that they are jointly of the opinion that the Foundation is independent from the company. Protection mechanism The company has granted the Foundation a call option (the “Call Option”), entitling it to subscribe for preference shares, up to a maximum of 50% of the total issued and outstanding share capital (excluding issued and outstanding preference shares) of the company. In addition to the aforementioned amendment to the Foundation's Articles of Association, the Management Board’s right to terminate the Option Agreement has been cancelled by an amendment to the Option Agreement dated 3 February 2009. The issue of preference shares in this manner would cause substantial dilution to the voting power of any shareholder whose objective was to gain control of the company. As part of the changes mentioned above, the agreement, entered into between the company and the Foundation on 26 May 2005, pursuant to which the company had the right to require the Foundation to exercise the Call Option in whole or in part if, for example, a hostile takeover has been announced or made, was terminated on 3 February 2009. Preference shares During our Annual General Meeting held in April 2006, a resolution was passed which grants the Management Board the irrevocable authority to issue preference shares, or grant rights to subscribe for preference shares, up to a maximum of 50% of the outstanding share capital of ordinary shares, for a period of two years starting on 13 May 2007 (i.e. expiration date of authority previously granted) and ending on 13 May 2009, subject to the approval of the Supervisory Board. The Management Board and Supervisory Board wish to retain the ability to issue preference shares or grant rights to subscribe for such shares for the same reasons for which the Foundation has been set up. The company believes that the issuance of preference shares may help the Management Board and the Supervisory Board to determine their position in relation to a bidder and its plans, to enter into a constructive dialogue with the bidder and to gain time to explore possible alternatives all in the interest of the company. During the Annual General Meeting held in April 2008, a resolution was passed to extend the abovementioned authority until 13 October 2009. Pursuant to the Articles of Association, the Management Board must provide a justification for such issue or grant of rights to subscribe for preference shares (but not for the issue of preference shares as a result of the exercise of rights) at the General Meeting of Shareholders, held within four weeks after the date of issue or grant, unless such a justification has been given at an earlier General Meeting of Shareholders. A resolution of our Management Board to issue preference shares, or to grant rights to subscribe for preference shares, as a result of which the aggregate nominal value of the issued preference shares will exceed 50% of the outstanding capital of ordinary shares at the time of issue, will at all times require the prior approval of the General Meeting of Shareholders. Upon the issue of preference shares, subscribers for preference shares must pay at least 25% of the nominal value of the preference shares. Each transfer of preference shares requires the prior approval of the Management Board and Supervisory Board. No resolution of the General Meeting of Shareholders or the Management Board is required for an issue of preference shares pursuant to the exercise of a previously granted right to subscribe for preference shares (including the right of the Foundation to acquire preference shares pursuant to the Call Option). The issue of preference shares is meant to be temporary. Unless the preference shares have been issued by a vote of the General Meeting of Shareholders, our Articles of Association require that a General Meeting of Shareholders be held within six months after the issue of preference shares to consider their cancellation and redemption. If the General Meeting of Shareholders does not resolve to redeem and cancel the preference shares, a General Meeting of Shareholders will be held every six months thereafter for as long as preference shares remain outstanding. Obligations of shareholders to disclose holdings Under the Financial Markets Supervision Act (Wet op het financieel toezicht), any person who, directly or indirectly, acquires or disposes of an interest in the capital and/or the voting rights of a limited liability company, incorporated under Dutch law with an official listing on a stock exchange within the European Economic Area, or a company organised under the laws of a state that is not a member of the European Union or party to the European Economic Area with an official listing on Euronext Amsterdam, must give written notice of such acquisition or disposal if, as a result of such acquisition or disposal, the percentage of capital interest and/or voting rights held by such a person meets, exceeds or falls below one of the following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95% of a company's issued and outstanding share capital. Such notification must be given to the Dutch securities regulator (Autoriteit Financiële Markten) (the "AFM") without delay. Under the Financial Supervision Act, we are required to inform the AFM immediately if our issued and outstanding share capital, or voting rights, change by 1% or more compared with our previous notification. Other changes in our capital or voting rights need to be notified periodically. The AFM will publish such notification in a public register. If a person's capital or voting rights meets or surpasses the abovementioned thresholds as a result of a change in our issued and outstanding share capital or voting rights, that person is required to make such notification no later than the fourth trading day after the AFM has published our notification as described above. The AFM keeps a public register of all notifications made pursuant to these disclosure obligations, and publishes any notification it receives. As at 31 December 2008, we do not know of any person or legal entity holding an interest in our ordinary share capital and/or voting rights of more than 5% (also based on the AFM register of substantial holdings) other than: |
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