Corporate Governance Code
The Dutch Corporate Governance Code
(the 'Code') of the Corporate
Governance Committee (the 'Tabaksblat
Committee')
Under the Code, Dutch listed companies
are expected to include in their annual
report, starting with the 2004 edition,
a chapter outlining their Corporate
Governance structure and compliance
with the Code and disclosing any depar
tures from defined best-practice
provisions.
The Tabaksblat Committee also recom
mends that companies indicate, in their
2003 annual report, in a separate chapter,
how they intend to ensure compliance
with the Code and any problems
they foresee. This chapter is Heineken's
response to that recommendation.
While Heineken N.V. endorses the Code's
principles and will apply virtually all of
the best-practice provisions, the structure
of the Heineken 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,
as set out below.
Structure of the Heineken group
A 50.005% interest in Heineken N.V. is held
by Heineken Holding N.V. Both companies
are listed on the Euronext Amsterdam
stock exchange. LArche Holding S.A.,
a Swiss company owned by the Heineken
family, in turn holds a 50.005% interest
in Heineken Holding N.V.
Standing at the head of the Heineken
group, Heineken Holding N.V. is not an
ordinary holding company. Since its
formation in 1952, Heineken Holding N.V.'s
objective pursuant to its Articles of
Association has been to manage or
supervise the management of the
Heineken group and to provide services
for Heineken N.V.
The role Heineken Holding N.V. has
HEINEKEN N.V. ANNUAL REPORT 2003
performed for the Heineken group since
1952 has been to safeguard its continuity,
independence and stability and create
conditions for controlled, steady growth
of the Heineken group's activities. This
has allowed Heineken N.V. consistently to
pursue a long-term policy which serves
the interests of the entire Heineken group,
its shareholders, employees and other
stakeholders.
The stability provided by this structure
has enabled the Heineken group to rise
to its present position as the brewer with
the widest international presence and one
of the world's largest brewing groups.
Within the Heineken group, the primary
duties of Heineken N.V.'s Executive Board
are to initiate and implement corporate
strategy and to manage Heineken N.V. and
its related companies. It is supervised in
the performance of its tasks by Heineken
N.V.'s Supervisory Board.
Independence of the Supervisory Board
Heineken N.V. endorses principle III.2 of
the Code, which states that the Super
visory Board should be constituted such
that the members are able to act object
ively and independently of one another, of
the Executive Board and of any particular
interests. Best-practice provision III.2.1,
which is derived from it, states that all
the members of the Supervisory Board,
with the exception of not more than one
person, shall be independent. In a strictly
formal sense, three members of the
Supervisory Board do not meet the
applicable dependence criteria as set out
in best-practice provision III.2.2:
Mr. De Jong was a member of Heineken
Holding N.V. in 2002, the year before his
appointment to the Supervisory Board.
Mr. Das was a partner in a firm which
was appointed as a consultant to
Heineken N.V. in 1994, the year before
his appointment to the Supervisory
Board.
Mr. de Carvalho is married to
Mrs. C.L. de Carvalho-Heineken.
Given the nature and traditions of the
Heineken group, the Executive Board and
Supervisory Board do not consider this
as an impediment to Messrs. De Jong, Das
and de Carvalho in being independent.
Delegated Supervisory Board member
Best-practice provision III.6.6 defines a
delegated Supervisory Board member as
a member to whom a special task is
assigned. Such delegation may not go
beyond the duties of the Supervisory
Board itself and may not include manage
ment of the company. It may entail more
intensive supervision and advice and more
regular consultation with the Executive
Board. Delegation may only be temporary
and may not detract from the duties
and powers of the Supervisory Board.
The delegated person remains a member
of the Supervisory Board.
As regulated by the Articles of Associ
ation of Heineken N.V., the post of delegat
ed Supervisory Board member - a position
currently held by Mr. Das, who is also
Chairman of the Management Board of
Heineken Holding N.V. - is consistent with
the best-practice provision, except in so
far as the position is not temporary and is
held for the term for which the member
concerned is appointed by the general
meeting of shareholders of Heineken N.V.
The Executive Board and Supervisory
Board consider that, as regulated by the
Articles of Association of Heineken N.V.,
the post of delegated Supervisory Board
member, which has been in existence
since 1952, is consistent with the structure
of the Heineken group.
Term of office of Supervisory
Board members
According to best-practice provision
III.3-5, a member may not be appointed
to the Supervisory Board for more than
three terms of four years.
The Executive Board and Supervisory
Board take the view that, given the
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