EX-4(B)







Exhibit 4 (b)




Employment contract between the Company and P-J. Sivignon




 











 









 





Employment contract between the Company and Mr P-J. Sivignon



The following contract is the employment contract of Mr P-J. Sivignon, containing the terms of
employment and other arrangements that apply with effect from April 1, 2009 as a member of the
Board of Management of Royal Philips Electronics (“Koninklijke Philips Electronics N.V.”
hereinafter also referred to as “the Company”).




1. Continuation of employment



Your employment with the Company as a member of the Board of Management will be continued after
March 31, 2009 subject to appointment by the General Meeting of Shareholders of the Company.



The Supervisory Board (hereinafter also referred to as “the Supervisory Board”) undertakes to
submit to the General Meeting of Shareholders to be held on March 27, 2009 a proposal for your
re-appointment as a member of the Board of Management and Chief Financial Officer of Royal Philips
Electronics as of April 1, 2009.



In the event of such re-appointment the terms and conditions stated in this letter agreement and
its annexes replace all terms and conditions laid down in your contract of employment dated January
19, 2005 and all oral and written understandings reached with you and any company belonging to the
Philips Group.




2. Duration of employment





	A.	 	The contract of employment (hereinafter referred to as the “Contract”) with the
Company connected with your membership of the Board of Management shall be entered
into for a period of four years commencing on April 1, 2009 and shall terminate ipso jure,
without any notice being required, on March 31, 2013.
	 
	B.	 	No later than six months before March 31, 2013 the parties will discuss a possible
extension of the Contract. The parties agree that the Company at least every four years
will review whether your position, and subsequent Contract, will be
continued. The
Contract will ultimately be terminated at the first day of the month following the month
in which you have reached the age of 62.5.
	 
	C.	 	Both parties shall have the right to terminate this agreement before March 31, 2013 or
before any later Contract expiration against the end of a calendar month. In this respect,
you will adhere to a written notice period of three months and the Company will give no
less than six months prior written notice.
	 
	D.	 	If the Contract is terminated at the request of the Company before March 31, 2013, or
before any other expiration date if the Contract has been renewed, other than for a
compelling reason (“dringende reden”), within the meaning of Dutch labour law, we agree
with you already now that in that case you shall be entitled to an once-only payment by
way of compensation in the amount of one month of salary as mentioned in paragraph 3




 









 









 








	 	 	 	 	 
	 
	 	 	 	 
	Employment contract between the Company and Mr P-J. Sivignon

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	 	 	for every full year of service within the Philips Group, provided that the maximum is the lower of
(a) twelve months, and (b) the number of months to serve before the first day of the month
following the month in which you reach the age of 62.5. You shall not be entitled to such payment if
the Contract is terminated immediately following a period in which the Company made industrial
disability payments to you under paragraph 13.
	 
	E.	 	In case of termination of the Contract you will resign ultimately per the effective date
of such termination as member of the Board of Management.





3. Salary



Your annual salary as of April 1, 2009 amounts to EUR 700,000 (gross), which amount includes
mandatory holiday allowances, to be paid in twelve monthly instalments. Annual review and
subsequent upwards adjustment, if any, of your annual salary, will be determined at the discretion
of the Supervisory Board of the Company on the proposal of the Remuneration Committee of the
Supervisory Board (hereinafter also referred to as “the
Remuneration Committee”). You shall be
informed in writing, on behalf of the Supervisory Board, of any salary increases awarded to you in
this way. Only salary increases determined and approved by the Supervisory Board will replace the
salary amount mentioned above.




4. Application of 30%-rule



The “so-called 30%-ruling” will continue to be applicable to you under the current tax regulations.
The 30% ruling allows the Company to pay to you approximately 30% of practically all remuneration
in the form of a tax-free compensation for so-called “extra territorial costs”. Consequently, your
legal and taxable wage is reduced by the same percentage. So your total remuneration is for
approximately 30% paid as a tax-free cost compensation and for approximately 70% as taxable wage.



The termination or amendment of the 30%-ruling will not result in any financial obligation on the
part of the Company.




5. Annual Incentive



In addition to the salary referred to under paragraph 3, you shall be eligible each year for an
annual incentive. This incentive shall be determined annually by the Supervisory Board on the advice
of the Remuneration Committee.



The annual incentive to be awarded relates to the preceding financial year and is based on criteria
to be determined annually. You shall be notified in writing of these annual incentive targets.



The on-target (= 100% score) annual incentive amount to be realized by you is currently set by the
Supervisory Board at 60% of your annual salary as mentioned under paragraph 3. It can become 120%
of your annual salary if the stretched targets are realized (= 200% score).




6. Long-Term Incentive Plan



The Supervisory Board, within the framework approved by the Company’s General Meeting of
Shareholders and on the advice of the Remuneration Committee, can decide by discretion to grant
Royal Philips Electronics restricted share rights, stock options and/or other equity related
incentives to members of the Board of Management on a year-to-year
basis. The conditions of such
incentives, if any, are also approved by the General Meeting of Shareholders and may be changed on
a yearly basis.



As a member of the Board of Management you are in principle eligible to participate in such plan.
In April 2009 you will be eligible for a grant of restricted share rights and stock options



 






 









 








	 	 	 	 	 
	 
	 	 	 	 
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according to the level applicable to members of the Board of Management.
For the period you will be a member of the Board of Management you will not be eligible to
participate in any other Philips share purchase or equity related scheme than approved by the
Supervisory Board for members of the Board of Management.



The Long Term Incentive Plan is designed to stimulate long-term investment in Philips shares. To
further align the interests of members of the Board of Management and shareholders, all restricted
shares shall be retained for a period of at least five years or until at least the end of
employment, if this period is shorter. The same applies for restricted shares granted before the
starting date of this Contract.




7. Claw-back



If any of the Company’s financial statements are (required to be) restated, resulting from errors,
omission, or fraud, the Supervisory Board may (in its sole discretion, but acting in good faith),
direct that the Company recover all or a portion of any Annual Incentive made to you with respect
to any fiscal year of the Company the financial results of which are negatively affected by such
statement. This right also applies in other cases of any Annual Incentive having been made to you
on the basis of incorrect financial or other data.



If equity-related incentive has been awarded to you on the basis of incorrect financial or other
data, the Supervisory Board may, in its sole discretion but acting in good faith, resolve to recoup
some or all of such incentive compensation in all appropriate cases (taking into account all
relevant factors, including whether the assertion of a recoupment claim may in its opinion
prejudice the interests of the Company in any related proceeding or investigation), granted to you,
if and to the extent that:





	•	 	the size of the equity-related incentive was calculated based upon the achievement of
certain financial or other data that were subsequently reduced or changed due to a
correction thereof resulting from errors, omissions, fraud or otherwise, and
	 
	•	 	the size of such incentive that would have granted to you, had the financial or other data
been properly reported would have been lower than the size actually granted.





8. Pension Rights



You are entitled to a pension in conformity with the conditions contained in the Philips Executives
Pension Plan of “Stichting Philips Pensioenfonds”. The pension plan is a combination of average pay
(annual accrual percentage: currently 1.25%) and defined contribution (employer contribution:
currently 20%). The target retirement age under this plan is 62.5. No employee contribution is
required.



The pension base is your annual gross salary, as mentioned in paragraph 3 hereof, minus the offset
(so-called “franchise”).



For further information, please refer to the plan rules with “Stichting Philips Pensioenfonds”.




9. Company Car



You are entitled to a leased company car according to the conditions valid for Philips Executives.
In principle, a personal contribution is not required if the monthly lease price does not exceed
the standard lease price of EUR 2,700 excl. VAT at the moment of ordering of the lease car. In case
the monthly lease price exceeds the standard lease price of EUR 2,700, a personal contribution for
the private use of the car has to be paid. You are not entitled to conclude a new lease agreement
before the expiration date of the present lease agreement.



 






 









 








	 	 	 	 	 
	 
	 	 	 	 
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10. Allowances





	•	 	For business entertainment expenses
	 
	 	 	With respect to your position within the Company you may be eligible for a fixed allowance for
business entertainment expenses. Currently the tax-free allowance in your case is EUR 23,920 per
annum. This sum is meant to enable you amongst others to cover the expenses you incur in
entertaining business guests on behalf of the Company.
	 
	•	 	For the use of a home for representative purposes
	 
	 	 	Members of the Board of Management may be eligible for a fixed allowance of EUR 6,800 tax-free to
cover the use of their own home for representative purposes.




The above-mentioned allowances will be paid at the end of each quarter.



Parties agree that changes in fiscal legislation could make it necessary or desirable for the
Company to change the above arrangements.




11. Senior Executive Ambassador Program



You are invited to participate in the Senior Executive Ambassador Program to use Philips products
that will be made available to you at your home.




12. Insurances





	•	 	Accident insurance
	 
	 	 	You will be covered by a 24-hours accident insurance policy. The maximum sum insured is three times
your gross annual salary as mentioned under paragraph 3. Details of this arrangement are given in
Annex A.
	 
	•	 	Directors and Officers Liability Insurance
	 
	 	 	You will be covered by a Directors and Officers liability insurance with regard to “wrongful acts”.
As of the date hereof, under the terms of the policy, “wrongful acts” include any actual or alleged
breach of trust, breach of duty, neglect, error, misstatement, misleading statement, omission or
other act wrongfully committed by the Assured or any matter claimed against them solely by reason
of their being a member of the Board of Management.




13. Industrial disability



For a maximum period of three years from the start of disablement, but at the very latest up to the
end of the Contract, the balance between your annual salary, as stated in paragraph 3, at the start
of the total disability and the aggregate amount of any statutory allowance distributed because of
your total disablement together with possible allowances distributed for the same reason by
“Stichting Philips Pensioenfonds” as referred to in paragraph 8 of this letter, will -subject to
your compliance with the Company’s directives — be paid by the Company.



The Company shall not be bound by the aforesaid obligation if you have a claim against third
parties in respect of your disablement. Upon surrender to the Company of such claim — in so far as
it relates to loss of salary — an amount equal to the aforesaid balance shall — but for no longer
than the period stated in the foregoing paragraph — be paid by the Company in advance.



However, should this policy change, the new policy will apply in full to you. No concessions will
be made if the new policy is less favorable than the present policy.




14. Holidays



The holiday entitlement for members of the Board of Management is 25 working days per calendar
year.



 






 









 








	 	 	 	 	 
	 
	 	 	 	 
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15. Rules governing Internal and External directorships



For the rules with respect to directorships, which may be amended from time to time, we refer to
Annex B




16. Rules of Conduct with respect to Inside Information



The Philips’ Rules of Conduct with respect to Inside Information, which may be amended from time to
time, are applicable to you (Annex C). The Compliance Officer with respect to Inside Information
will contact you, as you are designated as “Qualified Insider”.




17. General Terms of Employment of Philips



Annex D contains the General Terms of Employment of the Philips Group, which also apply to you.



As evidence of your approval of the contents of the General Terms of Employment, Annex D will be
signed by you.




18. General Business Principles



For the General Business Principles, which apply to you, we refer to Annex E-1. In Annex E-2 and
E-3 you will find the Financial Code of Ethics and the Supply Management Code of Ethics, which are
applicable to you.




19. Personnel Registration



Your data will be recorded in one or more personnel registration systems.




20. Applicable law



All terms of the employment and this Contract are governed by the laws of the Netherlands.



Parties agree that all the above compensation elements are subject to the corporate governance
framework applicable to members of the Board of Management and can be changed, abolished or
replaced by other elements at any time at the sole discretion of the Supervisory Board of the
Company.



If you agree to these proposals, you are requested to sign both the enclosed copy of this letter
and Annex D and return them no later than February 18, 2009 to [contact detail ommitted], Secretary
Remuneration Committee, Royal Philips Electronics, HBT 10.19, P.O. Box 77900, 1070 MX Amsterdam,
the Netherlands.



Needless to say, you may contact [contact detail ommitted] if you require further information about
these arrangements.



 





 









 








	 	 	 	 	 
	 
	 	 	 	 
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Looking forward to receiving your reply, we remain


With kind regards,




J-M. Hessels

(Chairman Supervisory Board)




Agreed and signed: 

P-J. Sivignon




Annexes:




	 	 	 
	Annex A -

	 	Accident Insurance
	 
	Annex B -

	 	Rules governing Internal & External Directorships
	 
	Annex C -

	 	Rules of Conduct with respect to Inside Information
	 
	Annex D -

	 	General Terms of Employment
	 
	Annex E -

	 	General Business Principles (E-1), Financial Codes of Ethics (E-2) and Supply Management Code of Ethics (E-3)