Report of the Supervisory Board
To the shareholders
The Executive Board has submitted its
financial statements for 2003 to the Super
visory Board. These financial statements,
which can be found on pages 52-84 of this
annual report, have been audited by KPMG
Accountants N.V., whose report appears
on page 86.
The Supervisory Board recommends
that the shareholders adopt these finan
cial statements and, as proposed by the
Executive Board, appropriate €157 million
of the profit as dividend and add the
remainder, amounting to €641 million, to
the retained profits. The proposed divi
dend amounts to €0.40 per share of €2.00
nominal value, of which €0.16 was paid as
interim dividend on 22 September 2003.
The dividend for 2002 was €0.40.
A proposal to split the shares by issuing
five new shares of €1.60 nominal value for
every four existing shares of €2.00 nom
inal value will be presented to the General
Meeting of Shareholders. The new shares
will carry full entitlement to dividend as
from 1 January 2004.
Executive and Supervisory Board changes
Messrs. J. Loudon and M.R. de Carvalho
retired by rotation from the Supervisory
Board at the Annual General Meeting
of Shareholders on 24 April 2003. Mr. de
Carvalho was eligible for immediate
reappointment and was duly reappointed.
We thank Mr. Loudon, who chose not to
seek reappointment, for his many years
of service to the Board.
Messrs. H. de Ruiter and A.H.J. Risseeuw
are due to retire by rotation from the
Supervisory Board at the Annual General
Meeting of Shareholders on 29 April 2004.
Mr. Risseeuw will be eligible for immediate
reappointment, but Mr. De Ruiter will not,
having reached the age limit of 70 stipulat
ed in the Supervisory Board's by-laws.
The Supervisory Board thanks Mr. De Ruiter
for his contribution to its work, including
his service as Chairman of the Audit
Committee. The Supervisory Board
proposes to reappoint Mr. Risseeuw and
a binding nomination for his appointment
will be submitted to the Annual General
Meeting on 29 April 2004. After Mr. De
Ruiter's departure, the Supervisory Board
will have six members.
With effect from 30 April 2004, chair
manship of the Supervisory Board will
pass to Mr. C.J.A. van Lede. At the time of
his appointment as a member of the
Supervisory Board in 2002, Mr. Dejong
agreed to take on the chairmanship to
enable Mr. Van Lede, who had been
appointed at the same time as Mr. Dejong,
to combine his former duties as Chairman
and CEO of Akzo Nobel with his member
ship of the Supervisory Board. As from
30 April 2004, Mr. Dejong will assume
the vice-chairmanship of the Supervisory
Board and chairmanship of the Audit
Committee.
Mr. Van Lede will chair the Preparatory
Committee as from the same date.
The Supervisory Board proposes to
appoint Mr. K. Büche as a member of the
Executive Board with effect from 1 May
2004. A binding nomination for his
appointment will be submitted to the
Annual General Meeting of Shareholders
on 29 April 2004.
Corporate Governance
The Dutch Corporate Governance Code
was discussed at length in 2003 (in its
draft form) and early in 2004 (in its final
form). At the meeting on 24 February
2004, the Supervisory Board discussed
the final Code and its underlying principles
in relation to the structure of the Heineken
group. The timetable for dealing with the
various issues was also discussed. While
the company endorses the code's princi
ples, the structure of the Eleineken group,
and in particular the relationship between
Heineken Holding N.V. and Heineken N.V.,
prevents Heineken N.V. from complying
with a small number of the best-practice
provisions. This is explained in greater
detail in the chapter on the Dutch
Corporate Governance Code on page 9
of this report.
Consultation and decision-making
The Supervisory Board held seven joint
meetings with the Executive Board
in 2003. The agenda of these meetings
included a number of regular items,
such as consideration of the company's
strategy, financial position and results,
the operating companies' policies and
business plans, acquisitions and other
investment proposals and management
development. Other items on the agenda
included evaluation of completed
investment projects, interest-rate and
exchange-rate risks, financing, pensions
and internal risk management and control
systems. Meetings convened to consider
the year's results were attended by the
external auditors.
Particular attention was devoted in
2003 to the new International Financial
Reporting Standards. An extra meeting
was convened to approve the acquisition
of BBAG (Austria). One meeting was
held at the brewery in 's-Hertogenbosch,
where new developments within the
brewery and product innovations were
discussed. A meeting was also held in
Strasbourg, where the Heineken France
management team gave a presentation for
the Supervisory Board on developments in
France.
At two of the meetings, the Executive
Board withdrew while the Supervisory
Board discussed the functioning
and composition of the Executive and
Supervisory Boards.
Committees
The Supervisory Board has two com
mittees, the Audit Committee and
Preparatory Committee. Six meetings
were held last year by the Preparatory
Committee, which is responsible
HEINEKEN N.V. ANNUAL REPORT 2003