Information on remuneration

Remuneration of the Executive Committee

In 2018, the total remuneration costs relating to the members of the Executive Committee (consisting of 13 members, including the members of the Board of Management) amounted to EUR 26,755,003 (2017: EUR 25,848,741; 2016: EUR 22,433,827) consisting of the elements in the following table.

Philips Group

Remuneration costs of the Executive Committee¹

in EUR

2016-2018

	2016	2017	2018
Base salary/Base compensation	6,388,667	8,089,063	8,370,406
Annual incentive²	5,746,347	6,345,576	5,651,996
Performance shares³ ⁴	5,943,782	6,371,297	8,896,369
Stock options³	-	-	-
Restricted share rights³	764,311	885,343	492,237
Pension allowances⁵	1,854,129	1,886,963	1,919,839
Pension scheme costs	180,077	408,695	411,028
Other compensation⁶	1,556,514	1,861,803	1,013,128

¹ The Executive Committee consisted of 13 members as per December 31, 2018 (2017: 12 members; 2016: 12 members)

² The annual incentives are related to the performance in the year reported which are paid out in the subsequent year.

³ Costs of performance shares, stock options and restricted share rights are based on accounting standards (IFRS) and do not reflect the value of stock options at the end of the lock up period and the value of performance shares and restricted share rights at the vesting/release date

⁴ For 2018, a release of EUR 1,740,520 (2017: EUR 2,469,670; 2016: EUR 0) is included due to non-vesting of performance shares

⁵ Pension allowances are gross taxable allowances paid to the Executive Committee members in the Netherlands. These allowances are part of the pension arrangement

⁶ The stated amounts mainly concern (share of) allowances to members of the Board of Management that can be considered as remuneration. In a situation where such a share of an allowance can be considered as (indirect) remuneration (for example, private use of the company car), then the share is both valued and accounted for here. The method employed by the fiscal authorities is the starting point for the value stated

At December 31, 2018, the members of the Executive Committee (including the members of the Board of Management) held 333,670 (2017: 541,400; 2016: 750,631) stock options at a weighted average exercise price of EUR 18.99 (2017: EUR 19.82; 2016: EUR 21.17).

Remuneration of the Board of Management

In 2018, the total remuneration costs relating to the members of the Board of Management amounted to EUR 9,848,153 (2017: EUR 7,808,117; 2016: EUR 8,904,859), see table below.

Philips Group

Remuneration costs of individual members of the Board of Management
in EUR

2016-2018

base compensation/salary

annual incentive¹

performance shares²

stock options²

restricted share rights²

pension allowances³

pension schemecosts

other compensation

total costs

2018

F.A. van Houten

1,205,000

1,264,286

2,319,460

-

588

537,181

25,708

39,042

5,391,265

A. Bhattacharya

718,750

637,536

942,220

-

129

217,823

25,708

53,522

2,595,688

M.J. van Ginneken

557,500

362,611

711,806

-

66

168,210

25,708

35,299

1,861,200

2,481,250

2,264,433

3,973,486

-

783

923,214

77,124

127,863

9,848,153

2017

F.A. van Houten

1,205,000

1,270,166

1,975,277

-

4,034

537,621

25,278

84,053

5,101,429

A. Bhattacharya

687,500

553,392

669,396

-

888

210,450

25,278

100,918

2,247,822

P.A.J. Nota

606,250

429,886

(1,203,992)

-

(188)

236,208

21,065

63,576

152,805

M.J. van Ginneken

91,667

69,168

100,022

-

75

27,796

4,213

13,120

306,061

2,590,417

2,322,612

1,540,703

-

4,809

1,012,075

75,834

261,667

7,808,117

2016

F.A. van Houten

1,197,500

1,354,227

1,423,538

-

12,041

536,195

24,838

126,703

4,675,042

A. Bhattacharya

650,000

540,072

362,758

-

3,341

201,524

24,838

73,642

1,856,175

P.A.J. Nota

702,500

619,745

683,101

-

9,251

277,649

24,838

56,558

2,373,642

2,550,000

2,514,044

2,469,397

-

24,633

1,015,368

74,514

256,903

8,904,859

¹ The annual incentives are related to the performance in the year reported which are paid out in the subsequent year. For more details on the annual incentives refer to 2018 Annual Incentive

² Costs of performance shares, stock options and restricted share rights are based on accounting standards (IFRS) and do not reflect the value of stock options at the end of the lock up period and the value of performance shares and restricted share rights at the vesting/release date

³ The stated amounts mainly concern (share of) allowances to members of the Executive Committee that can be considered as remuneration. In a situation where such a share of an allowance can be considered as (indirect) remuneration (for example, private use of the company car), then the share is both valued and accounted for here. The method employed by the fiscal authorities is the starting point for the value stated.

For further information on remuneration costs, see Remuneration costs.

The tables below give an overview of the performance share plans and the stock option plans of the Company, held by the members of the Board of Management:

Philips Group

Number of performance shares (holdings)

in number of shares

2018

January 1, 2018

awarded 2018

awarded dividend shares 2018

realized 2018

December 31, 2018

vesting date

F.A. van Houten

60,112

-

-

100,207

-

05.05.2018

62,880

-

1,423

-

64,303

04.29.2019

74,878

-

1,693

-

76,571

05.11.2020

-

69,005

1,561

-

70,566

04.27.2021

A. Bhattacharya

12,790 ¹

-

-

21,312

-

05.05.2018

28,265 ¹

-

640

-

28,905

04.29.2019

32,623

-

738

-

33,361

05.11.2020

-

31,138

704

-

31,842

04.27.2021

M.J. van Ginneken

19,185 ¹

-

-

31,981

-

05.05.2018

22,243 ¹

-

503

-

22,746

04.29.2019

19,030 ¹

-

431

-

19,461

05.11.2020

-

24,052

544

-

24,596

04.27.2021

Performance shares (holdings)

332,006

124,195

8,237

153,500

372,351

¹ Awarded before date of appointment as a member of the Board of Management

At December 31, 2018, the members of the Board of Management held 333,670 stock options (2017: 333,670; 2016: 476,200) at a weighted average exercise price of EUR 18.99 (2017: EUR 18.99; 2016: EUR 19.47).

Philips Group

Stock options (holdings)

number of shares

2018

January, 1 2018

granted

exercised

expired

December 31, 2018

grant price (in euros)

share (closing) price on exercise date

expiry date

F.A. van Houten

20,400

−

−

−

20,400

22.88

−

10.18.2020

75,000

−

−

−

75,000

20.9

−

04.18.2021

75,000

−

−

−

75,000

14.82

−

04.23.2022

55,000

−

−

−

55,000

22.43

−

01.29.2023

A. Bhattacharya

16,500

−

−

−

16,500

22.88

−

10.18.2020

16,500

−

−

−

16,500

20.9

−

04.18.2021

20,000

−

−

−

20,000

15.24

−

01.30.2022

16,500

−

−

−

16,500

14.82

−

04.23.2022

M.J. van Ginneken

5,250

−

−

−

5,250

12.63

−

04.14.2019

6,720

−

−

−

6,720

24.9

−

04.19.2020

8,400

−

−

−

8,400

20.9

−

04.18.2021

10,000

−

−

−

10,000

15.24

−

01.30.2022

8,400

−

−

−

8,400

14.82

−

04.23.2022

Stock options (holdings)

333,670

−

−

−

333,670

−

See Notes for further information on performance shares and stock options as well 2018 Long-Term Incentive Plan.

The accumulated annual pension entitlements and the pension costs of individual members of the Board of Management are as follows (in EUR):

Philips Group

Accumulated annual pension entitlements and pension-related costs

in EUR

2018

age at December 31, 2018

accumulated annual pension as of December 31, 2018

total pension related costs

F.A. van Houten

58

298,470

562,889

A. Bhattacharya

57

27,383

243,531

M.J. van Ginneken

45

39,552

193,918

Pension costs

1,000,338

When pension rights are granted to members of the Board of Management, necessary payments (if insured) and all necessary provisions are made in accordance with the applicable accounting principles. In 2018, no (additional) pension benefits were granted to former members of the Board of Management.

Remuneration of the Supervisory Board

The remuneration of the members of the Supervisory Board amounted to EUR 1,088,375 (2017: EUR 950,500; 2016: EUR 1,037,209). Former members received no remuneration.

At December 31, 2018 the members of the Supervisory Board held no stock options, performance shares or restricted shares.

The individual members of the Supervisory Board received, by virtue of the positions they held, the following remuneration (in EUR):

Philips Group

Remuneration of the Supervisory Board

in EUR

2016-2018

membership

committees

other compensation¹

total

2018²

J.A. van der Veer

140,000

27,500

12,000

179,500

C. Poon

96,250

36,625

22,000

154,875

H. von Prondzynski

85,000

36,625

14,500

136,125

J.P. Tai

85,000

34,625

22,000

141,625

N. Dhawan

85,000

14,250

24,500

123,750

O. Gadiesh

85,000

14,250

22,000

121,250

D.E.I. Pyott

85,000

25,250

32,000

142,250

P.A. Stoffels

38,333

-

8,333

46,667

A.M. Harrison

31,667

-

10,667

42,333

731,250

189,125

168,000

1,088,375

2017²

J.A. van der Veer

135,000

25,000

7,000

167,000

C. Poon

90,000

32,500

17,000

139,500

H. von Prondzynski

80,000

32,500

19,500

132,000

J.P. Tai

80,000

32,500

32,000

144,500

N. Dhawan

80,000

13,000

27,000

120,000

O. Gadiesh

80,000

13,000

19,500

112,500

D.E.I. Pyott

80,000

23,000

32,000

135,000

625,000

171,500

154,000

950,500

2016²

J.A. van der Veer

135,000

26,667

7,000

168,667

C. Poon

90,000

32,500

22,000

144,500

C.J.A. van Lede (Jan.-May)

33,333

4,375

2,000

39,708

E. Kist (Jan.-May)

40,000

4,167

2,000

46,167

H. von Prondzynski

80,000

25,000

19,500

124,500

J.P. Tai

80,000

34,167

32,000

146,167

N. Dhawan

80,000

13,000

27,000

120,000

O. Gadiesh

80,000

13,000

19,500

112,500

D.E.I. Pyott

80,000

23,000

32,000

135,000

698,333

175,876

163,000

1,037,209

¹ The amounts mentioned under other compensation relate to the fee for intercontinental travel, inter-European travel (effective 2015) and the entitlement of EUR 2,000 under the Philips product arrangement

² As of 2013, part of the remuneration of members of the Supervisory Board living in the Netherlands is subject to VAT. The amounts mentioned in this table are excluding VAT

Supervisory Board members’ and Board of Management members’ interests in Philips shares

Members of the Supervisory Board and of the Executive Committee are prohibited from writing call and put options or similar derivatives of Philips securities.

Philips Group

Shares held by Board members¹

in number of shares

2018

December 31, 2017

December 31, 2018

J. van der Veer

18,366

18,366

H. von Prondzynski

3,851

3,937

J.P. Tai

3,844

3,844

F.A. van Houten

233,119

292,302

A. Bhattacharya

53,974

66,794

M.J. van Ginneken

30,246

47,856

¹ Reference date for board membership is December 31, 2018.