Philips : Report of the Remuneration Committee 2023

Annual Report 2023

Report of the Remuneration Committee

8.12 Report of the Remuneration Committee

8.12..1 Letter from the Remuneration Committee Chair

Dear Stakeholder,

On behalf of the Remuneration Committee, I am pleased to report on the Committee's activities in 2023 and to present the 2023 Remuneration Report, providing a comprehensive overview of the remuneration paid and owed to the individual members of the Board of Management and the Supervisory Board, respectively, in the financial year 2023.

Company performance in 2023 and incentive plan realization 2023 was a challenging as well as an encouraging year for Philips, as the company started to deliver on its three-year plan to create value with sustainable impact. Improved operational performance was driven by a strong focus on execution to enhance patient safety and quality, strengthen supply chain reliability, and establish a simplified operating model. The company succeeded in achieving its raised 2023 outlook with strong sales growth, improved profitability, and strong cash flow. All despite the uncertainties brought about by an increasingly volatile geopolitical environment. That said, order intake and the Respironics recall, including litigation and the investigation by the US Department of Justice, remain key areas of attention. Please refer to Financial performance, starting on page 26 and Environmental, Social and Governance, starting on page 42 of our 2023 Annual Report for a detailed review of the company's financial performance and its ESG performance in the year 2023.

For the awards granted under our Long-Term Incentive Plan in 2021, the company performance resulted in a realization significantly above target for the sustainability objectives. For the relative TSR and adjusted EPS metrics in our Long-Term Incentive Plan, however, there was a below-threshold realization based on the performance since the start of the performance period in 2021. In respect of the financial metrics 2023 Annual Incentive, performance was also significantly above target. Nevertheless, to acknowledge the decrease in order intake in 2023, the Supervisory Board decided (upon the proposal of the Remuneration Committee) to lower the Annual Incentive payout. Please refer to our 2023 Remuneration Report for more details.

Other remuneration matters prepared by the Remuneration Committee

Considering the fact that 2022 had been a disappointing year for Philips, the Supervisory Board followed the proposal of the Remuneration Committee to not apply any base salary increases for the members of the Board of Management during the 2023 compensation review in April 2023.

During the Annual General Meeting of Shareholders held in May 2023, our Chief Financial Officer Abhijit Bhattacharya was re-appointed, adding a two-year's term to his tenure as CFO that started in 2015, thereby ensuring continuity and enabling a smooth succession process in parallel. The company and Mr Bhattacharya entered into a new service agreement that was prepared by the Remuneration Committee and published on the company's website.

Proposed 2024 Remuneration Policies for the Board of Management and for the Supervisory Board

Starting in May 2023, the Remuneration Committee carried out a review of the Remuneration Policy and the Long-Term Incentive Plan for the Board of Management, and the Remuneration Policy for the Supervisory Board. Dutch law requires the renewal of our policies at least every four years, and we also considered this a good opportunity to test the alignment of our policies with our company's strategy, to review how they compare to market practice and to ensure our compliance with updated regulatory and corporate governance requirements. Building on our stakeholder engagements during the past years, we engaged with stakeholders through a dedicated remuneration roadshow and other interactions to solicit their feedback on, and support for the proposals. This process resulted in the proposals to adopt an amended Remuneration Policy for the Board of Management and an amended Remuneration Policy for the Supervisory Board, respectively, that will be submitted for adoption at the upcoming Annual General Meeting of Shareholders to be held on May 7, 2024. Upon convocation of the 2024 AGM (in March 2024), the proposals will be published on our website and the main changes following from these proposals, compared to each of the current 2020 Remuneration Policies, as well as other relevant information will be explained in the explanatory notes to the relevant agenda items. Please note that, subject to their adoption, the 2024 Remuneration Policies will have retrospective effect for the full year 2024, and for that reason our 2023 Remuneration Report includes certain ex-ante disclosures in respect of the performance metrics for the 2024 Annual Incentive and 2024 Long-Term Incentive.

The composition of the Remuneration Committee and its activities

The Remuneration Committee is chaired by Paul Stoffels. Its other members are David Pyott, Herna Verhagen and Feike Sijbesma. The Committee is responsible for preparing decisions of the Supervisory Board on the remuneration of individual members of the Board of Management and the Executive Committee, as well as the policies governing this remuneration. In performing its duties and responsibilities, the Remuneration Committee is assisted by an external consultant and an in-house remuneration expert. For a full overview of the responsibilities of the Committee, please refer to the Charter of the Remuneration Committee, as set forth in Chapter 3 of the Rules of Procedure of the Supervisory Board (which are published on the company's website). Our annual Remuneration Committee cycle enables us to have an effective decision-making process supporting the determination,

review and implementation of the Remuneration Policy. The Committee met eight times in 2023. All Committee members were present during these meetings.

I look forward to presenting our 2023 Remuneration report and our proposals for the renewed 2024 Remuneration Policies at our upcoming Annual General Meeting of Shareholders.

On behalf of the Remuneration Committee,

Paul Stoffels

Chairman of the Remuneration Committee

8.12.2 Remuneration report 2023

In this Remuneration Report, the Supervisory Board provides a comprehensive overview, in accordance with article 2:135b of the Dutch Civil Code, of the remuneration paid and owed to the individual members of the Board of Management and the Supervisory Board, respectively, in the financial year 2023. The report will also be published as a stand-alone document on the company's website after the 2024 Annual General Meeting of Shareholders, the agenda of which will include an advisory vote on this Remuneration Report.

Board of Management

Summary of 2020 Remuneration Policy

The Remuneration Policy and Long-Term Incentive Plan for the Board of Management have been adopted and approved, respectively, by the Annual General Meeting of Shareholders 2020, which took place on April 30, 2020.

The objectives of the Remuneration Policy for the Board of Management are: to focus them on delivering on our purpose and strategy, to motivate and retain them, and to create stakeholder value.

Thus, the Remuneration Policy:

• • Supports improving the company's overall performance and enhancing the long-term value of the company;

• • Directly supports our purpose by: a) linking a part of remuneration to achieving our strategic imperatives through the criteria and targets included in the Annual and Long-Term Incentives; b) offering market competitive compensation compared to a peer group of business competitors and companies we compete with for executive talent; c) enabling us to motivate, retain and attract world-class talent in order to support our purpose of improving people's health and well-being through meaningful innovation and our goal of addressing our customers' healthcare challenges (delivering on the Quadruple Aim);

  d) stimulating share ownership to create alignment with shareholders and encourage employees to act as stewards and ambassadors of the company;

• • Encourages the company and its employees to act responsibly and sustainably;

• • Delivers value for our stakeholders, such as shareholders, customers, consumers and employees, by continuously engaging with them and make a positive contribution to society at large;

• • Leads to fair and internally consistent pay levels by taking into account internal pay ratios.

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Main elements of the Remuneration Policy

Compensation element Total Direct Compensation

Purpose and link to strategy

Operation

Policy Level

To support the Remuneration Policy's objectives, the Total Direct Compensation includes a significant variable part in the form of an Annual Incentive

The Supervisory Board ensures that a competitive remuneration package for Board-level executive talent is maintained and benchmarked.

The positioning of Total Direct Compensation is reviewed against benchmark data

(cash bonus) and Long-Term Incentive in the form of on an annual basis and is recalibrated if and when required. To establish thisperformance shares. As a result, a significant proportion of pay is 'at risk'.

benchmark, data research is carried out each year on the compensation levels in the Quantum Peer Group.

Total direct remuneration is aimed at or close to, the median of the Quantum Peer Group.

Annual Base Compensation

Fixed cash payments intended to attract and retain executives of the highest caliber and to reflect their experience and scope of responsibilities.

Annual Base Compensation levels and any adjustments made by the Supervisory Board are based on factors including the median of Quantum Peer Group data and performance and experience of the individual member.

The annual review date for the base salary is typically before April 1.

The individual salary levels are shown in this Remuneration Report.

Annual Incentive

Variable cash bonus incentive of which achievement is tied to specific financial and non-financial targets derived from the company's annual strategic plan. These targets are set at challenging levels and are partly linked to the results of the company (80% weighting) and partly to the contribution of the individual member (20% weighting).

The payout in any year relates to the achievements of the preceding year. Metrics are disclosed ex-ante in the Remuneration Report and there will be no retroactive changes to the selection of metrics used in any given year once approved by the Supervisory Board and disclosed.

President & CEO On-target: 100%

Maximum: 200% of Annual Base Compensation.

Other BoM members

On-target: 80%

Maximum: 160% of Annual Base Compensation.

Long-Term Incentive

Our Long-Term Incentives form a substantial part of total remuneration, with payouts contingent on achievement of challenging EPS targets, relative TSR performance against a high-performing peer groupThe annual award size is set by reference to a multiple of base salary.

The actual number of performance shares to be awarded is determined by reference to the average of the closing price of the Royal Philips share on the day of publication of the first quarterly results and the four subsequent trading days.

and sustainability objectives that are directly aligned Dependent upon the achievement of the performance conditions, cliff-vestingwith our purpose to make the world healthier and more sustainable through innovation.

applies three years after the date of grant.

During the vesting period, the value of dividends will be added to the performance shares in the form of shares. These dividend-equivalent shares will only be delivered to the extent that the award actually vests.

President & CEO

Annual grant size: 200% of Annual Base Compensation.

Other BoM members

Annual grant size: 150% of Annual Base Compensation.

Maximum vesting opportunity is 200% of the number of performance shares granted.

Mandatory share ownership and holding requirement

To further align the interests of executives to those of stakeholders and to motivate the achievement of sustained performance.

The guideline for members of the Board of Management is to hold at least a minimum shareholding in the company.

Until this level has been reached the members of the Board of Management are required to retain all after-tax shares derived from any Long-Term Incentive Plan. All Board of Management members have reached the required share ownership level.

The shares granted under the Long-Term Incentive Plan shall be retained for a period of at least 5 years or until at least the end of their contract period if this period is shorter.

The guideline does not require members of the Board of Management to purchase shares in order to reach the required share ownership level.

The minimum shareholding requirement is 400% of annual base compensation for the CEO and 300% for other members of the Board of Management.

Pension

Pension plan and pension contribution intended to 1. result into an appropriate level at retirement.

Defined Contribution plan with fixed contribution (applicable to all executives in the Netherlands - capped at EUR 128,810).

• 2. Gross allowance of 25% of annual base compensation exceeding EUR 128,810.

• 3. Temporary gross transition allowance offsetting historical plan changes.

Additional arrangements

To aid retention and remain competitive within the marketplace

Additional arrangements include expense and relocation allowances, medical insurance, accident insurance and company car arrangements, which are in line with other Philips executives in the Netherlands.

The members of the Board of Management also benefit from coverage under the company's Directors & Officers (D&O) liability insurance.

The company does not grant personal loans to members of the Board of Management.

Peer Groups

We use a Quantum Peer Group for remuneration benchmarking purposes, and therefore we aim to ensure that it includes business competitors, with an emphasis on companies in the healthcare, technology-related or consumer products area, and other companies we compete with for executive talent. The Quantum Peer Group consists of predominantly Dutch and other European companies, plus a minority (up to 25%) of US-based global companies, of comparable size, complexity and international scope.

Philips Group

Quantum Peer Group 2023

In addition, we use a TSR Performance Peer Group to benchmark our relative Total Shareholder Return performance for LTI purposes and against our business peers in the health technology market and other markets in which we compete. The companies we have selected for this peer group include predominantly US-based healthcare companies. Given that a substantial number of relevant competitors are US-headquartered, the weighting of US-based healthcare companies is more notable than for the Quantum Peer Group.

Philips Group

TSR Performance Peer Group 2023

The Remuneration Policy and the LTI Plan allow changes to the peer groups to be made by the Supervisory Board without further approval from the General Meeting of Shareholders in respect of up to three companies on an annual basis (for instance: following a delisting of a company or, a merger of two peer companies), or six companies in total during the four years following adoption and approval of the Remuneration Policy and the LTI Plan respectively (or, if earlier, until the adoption or approval of a revised Remuneration Policy or revised LTI Plan).

Services agreements

The members of the Board of Management are engaged by means of a services agreement (overeenkomst van opdracht). Termination of the contract by either party is subject to six months' notice period. The severance payment is set at a maximum of one year's annual base compensation. No severance payment is due if the agreement is terminated early on behalf of the Board of Management member or in the case of urgent cause (dringende reden) as defined in article 7:678 and further of the Dutch Civil Code. The term of the services agreement is aligned with the term for which the relevant member has been appointed by the General Meeting of Shareholders (which is a maximum period of four years, it being understood that this period expires no later than at the end of the Annual General Meeting of Shareholders (AGM) held in the fourth year after the year of appointment).

Philips Group

Contract terms for current members 2023

The Supervisory Board has determined the 2023 pay-outs and awards to the members of the Board of Management, upon the proposal of the Remuneration Committee, in accordance with the 2020 Remuneration Policy and the 2020 LTI Plan. In addition, the Supervisory Board has determined the 2023 vesting of the 2021 LTI grant, of which the performance period ended on December 31, 2023. This was done in accordance with the LTI Plan as approved during the 2020 Annual General Meeting of Shareholders.

The Remuneration Committee annually conducts a scenario analysis. This includes the calculation of remuneration under different scenarios, whereby different Philips performance assumptions and corporate actions are examined. The Supervisory Board concluded that the relationship between the strategic objectives and the chosen performance criteria for the 2023 Annual Incentive, as well as for the 2021 LTI, were adequate.

Annual Base Compensation

The annual base compensation of the members of the Board of Management has been reviewed as part of the regular remuneration review. No increase was applied to acknowledge the disappointing company performance in 2022 and to reflect the limited budget available for the annual compensation review for the wider population. As a result, the annual base compensation of Roy Jakobs, Abhijit Bhattacharya and Marnix van Ginneken remained unchanged in 2023.

2023 Annual Incentive

The Annual Incentive performance has been assessed based on company financial results as well as individual results. Details are as follows:

Company financial results (80% weighting)

In line with the Remuneration Policy, the company sets financial targets in advance of the year for all members of the Board of Management. For the year 2023, the financial targets set at Group level cover Comparable Sales Growth*), Adjusted EBITA*) and Free Cash Flow*). The realized performance for all three metrics was above target. Realized performance levels presented in the table below include the financial impact connected with the Respironics consent decree, and excluding this impact the Comparable Sales Growth*) and Adjusted EBITA*) would have been 7.0% and 10.5% respectively. Reviewing these performance levels, the Supervisory Board decided to apply two downward adjustments. First, to acknowledge the decrease in comparable order intake reported over 2023, the Supervisory Board lowered the payout on the Comparable Sales Growth metric from 200% to 175% of target. Second, to account for the upward effect on Adjusted EBITA resulting from not excluding the financial impact connected with the proposed Respironics consent decree, the Supervisory Board also lowered the payout from 180% to 175% of target for this metric (corresponding to an Adjusted EBITA performance of 10.5% which excludes the financial impact referred to).**)

1) Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to Reconciliation of non-IFRS information, starting on page 289 of the 2023 Philips Annual Report.

**)

The word "not" in this sentence was erroneously not included in the version of the 2023 Remuneration Report that has been included in the 2023 Annual Report.

Individual targets based on area of responsibility (20% weighting)

The individual performance criteria and assessment targets set at the beginning of the year have been disclosed in the following table. To determine the payout levels for the individual goals, the Supervisory Board typically applies a holistic assessment as to the performance against the set goals as well as the relative weighting of the goal categories. These relative weightings are not in all cases equal, but such that any goal category remains relevant and aligned with the strategic priorities for the year.

Board of Management

Member

Individual Performance criteria Assessment of performance

Weighted pay-out as% of target Annual Incentive

• • On track to deliver on plan to create value with sustainable impactStrategy execution

• • Strong progress made on establishing a simplified, more agile operating model and generating productivity savings

Quality & operational excellence

• • Delivered on the targeted reduction of Quality Management Systems to increase focus, reduce complexity, and minimize risk

• • Progress made on the Patient Safety & Quality culture and mindset

Roy Jakobs

• • Employee engagement within target range, showing significantly step-up in the year, however behind on target and high-performance norms

  People & organization

• • Progress made on driving the broader talent agenda, with a strong focus on ExCo successor identification and development. This resulted in two internal ExCo appointments and two external ExCo appointments.

Customer results ESG/Sustainability

• • Significant step-up achieved in on-time delivery of orders as per customer expectations

• • Delivered ahead of annual ESG targets, advancing towards the Philips 2025 ESG commitments

22.0%

• • On track to deliver on our plan to create value with sustainable impact

• • Significant results delivered from Cash program

  Strategy execution

• • Strong progress made on establishing a simplified, more agile operating model and generating productivity savings

Quality & operational excellence

• • Delivered on the targeted reduction of Quality Management Systems to increase focus, reduce complexity, and minimize risk

  Abhijit Bhattacharya

• • Progress made on the Patient Safety & Quality culture and mindset

People & organization

• • Employee engagement within target range, showing significantly step-up in the year, however behind on target and high-performance norms

• • Progress made on succession planning for own scope

Customer results ESG/Sustainability

• • Significant step-up achieved in on-time delivery of orders as per customer expectations

• • Delivered ahead of annual ESG targets, advancing towards the Philips 2025 ESG commitments

21.0%

• • On track to deliver on our plan to create value with sustainable impact

  Strategy execution

• • Strong progress made on establishing a simplified, more agile operating model and generating productivity savings

Quality & operational excellence

• • Delivered on the targeted reduction of Quality Management Systems to increase focus, reduce complexity, and minimize risk

• • Progress made on the Patient Safety & Quality culture and mindset

Marnix van GinnekenPeople & organization

• • Employee engagement within target range, showing significantly step-up in the year, however behind on target and high-performance norms

• • Strong progress made on building succession pipeline for own scope

Customer results

• • Strong performance on managing litigation with major legal cases under management and settlement reached in US economic loss class action

ESG/Sustainability

• • Delivered ahead of annual ESG targets, advancing towards the Philips 2025 ESG commitments

23.0%

Overall, this leads to the following total Annual Incentive realization:

Annual Incentive realization 2023 in EUR unless otherwise stated

Annual incentive opportunity

Target as a % of base compensation

Roy Jakobs

100% 1,200,000

Abhijit Bhattacharya

80%

Marnix van Ginneken

80%

1) Note that figures may not add up due to rounding.

*) Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to

Reconciliation of non-IFRS information, starting on page 289 of the 2023 Philips Annual Report.

2024 Annual Incentive

Realized annual incentive

Annual IncentiveTargetFinancial performance (weighted pay-out %)Individual performance (weighted pay-out %)Payout as % of target

Annual Incentive 1)Realized annual incentive

145.0%

22.0%

167.0% 2,004,480

648,000

145.0%

21.0%

166.0%

1,075,939

504,000

145.0%

23.0%

168.0%

846,922

This section presents incentive performance metrics under the proposed 2024 Remuneration Policy for the Board of Management. In the event that the proposed 2024 Remuneration Policy would not be adopted by the 2024 AGM, the current 2020 Remuneration Policy would continue to apply.

In the proposed 2024 Remuneration Policy, the weighting of the non-financial element has increased to 30% (from 20%) and, correspondingly, the weighting of the financial element has decreased to 70% (from 80%). This change reflects the increased relative importance of factors relating to strategic priorities (such as patient safety and quality, supply chain reliability, and a simplified operating model), as well as our Environmental, Social and Governance (ESG) performance.

Financial element (70% weighting):

For the year 2024, the following financial performance metrics are selected to ensure alignment with the key (strategic) priorities in the year:

• • 25% weighting: Comparable Sales Growth*)

• • 25% weighting: Adjusted EBITA*) margin

• • 20% weighting: Free Cash Flow*)

Non-Financial element (30% weighting):

At the start of each year, two to four performance categories are selected from the following list, whereby each selected category receives an equal weighting:

• • Patient Safety & Quality

• • Customer

• • Strategy and Execution

• • ESG

For each selected category, one or more performance objectives are determined at the start of the year for each of the members of the Board of Management.

For the year 2024, the following categories and objectives are selected to ensure alignment with the key (strategic) priorities in the year:

Performance PerformancecategoryobjectiveApplicable forWeighting Measurement description

Patient Safety & QualityDrive Patient Safety & Quality as highest priority in the organizationAll members of Board of Management

7.5%This objective measures delivery on our company-wide program to strengthen our Patient Safety & Quality culture, capabilities and performance. Additionally, we measure the progress on the Respironics recall and delivery of the proposed consent decree commitments.

Improve customer experienceRoy Jakobs; Abhijit Bhattacharya

Improve supply chain reliability

Roy JakobsCustomerThis objective is measured by the improvement of the customer NPS.

7.5%

This objective is measured by the on-time delivery of orders as per customer expectations.

Improve financial forecasting

Abhijit Bhattacharya

Deliver Reliable Forecast as per plan.

Manage legal issuesMarnix van GinnekenDevelop and manage litigation strategy and potential liabilities.

Roy JakobsDrive focused strategy to win in the market

Abhijit BhattacharyaStrategy and ExecutionThis objective measures delivery on our value creation plan and market share gain.

This objective measures delivery on our value creation plan and delivery on cash program and productivity targets.

Marnix van Ginneken

7.5%

This objective measures delivery on our value creation plan and delivery on legal & compliance commitments as per plan.

Establish simplified, more agile operating model

All members of Board of Management

This objective measures delivery on the operating model simplification and our headcount reduction plan.

This objective measures:

ESGDeliver on ESG

All members of Board ofCommitments Management

7.5%

- Performance on our ESG index (which includes various elements such as emission-and diversity targets)

- Our employee engagement score

- Talent and succession development ofsenior roles in the organization

*) Non-IFRS financial measure. For the definition and reconciliation of the most directly comparable IFRS measure, refer to

Reconciliation of non-IFRS information, starting on page 289 of the 2023 Philips Annual Report.

2021 Long-Term Incentive

The 3-year performance period of the 2021 LTI grant, consisting of performance shares, ended on December 31, 2023. The realization of this grant is based on TSR achievement, adjusted EPS growth and sustainability objectives. The following performance achievement and vesting levels have been determined by the Supervisory Board in respect of the 2021 grant of performance shares:

Philips Group

Performance achievement and vesting levels

Philips Group

Performance-incentive zone for TSR in %

The TSR achieved by Philips during the performance period was -51.10%, using a start date of October 2020 and end date of December 2023. This resulted in Philips being positioned at rank 20 in the TSR performance peer group shown in the following table, resulting in a TSR achievement of 0%.

Following Oracle's acquisition of Cerner (completed June 2022), the Supervisory Board adopted the approach of recognizing Cerner's performance through the delisting date. As a proxy for future performance, reinvestment in an index of the remaining 19 peer companies was assumed (effectively retaining a peer group of 20 companies).

TSR results LTI Plan 2021 grant: (51.10%)

Canon General Electric Boston Scientific Siemens Healthineers Stryker

Getinge Alcon

Johnson & Johnson Cerner

Becton Dickinson Terumo Danaher Hologic

Reckitt Benckiser Elekta

ResMed Medtronic Smith & Nephew Fresenius Medical Philips

Adjusted EPS growth (40% weighting)

total return

rank number

119.99% 109.08%

1 2

48.10%

3

35.00%

4

28.06%

5

18.79%

6

16.73%

7

12.57%

8

11.12%

9

10.29%

10

8.71%

11

7.33%

12

(1.37)%

13

(11.46)%

14

(20.67)%

15

(21.05)%

16

(24.84)%

17

(27.58)%

18

(45.30)%

19

(51.10)%

20

The LTI Plan EPS payouts and targets set at the beginning of the performance period were as follows:

Philips Group

LTI Plan EPS payouts

Below thresholdThreshold

TargetMaximumActual

LTI plan EPS (euro) Vesting %

<1.38 0%

1.38 40%

1.54 100%

1.72 200%

0.26 0%

proceedings (positive impact). Overall, this resulted in an LTI Plan EPS of EUR 0.26 based on adjusted net income from continuing operations, leading to a realization of 0% of target.

Philips Group

LTI Plan EPS realization in millions of EUR unless otherwise stated

• 1) Profit and loss impact of acquisitions and divestments made after the start of the performance period is excluded.

• 2) Impact of variations of unhedged volatile currencies compared to the performance period plan.

• 3) Costs include the provision of EUR 575 million for the settlement to resolve all economic loss claims in the US Multidistrict Litigation (MDL) related to Philips Respironics' voluntary recall of certain sleep and respiratory care devices and legal fees related to the recall. The adjustment also includes legal releases.

Sustainability objectives (10% weighting)

In order to further align the remuneration package for the Board of Management with our purpose and our ESG commitment, a sustainability criterion was introduced in the 2020 LTI Plan. Philips believes that ESG performance will improve the company's performance as a whole and, therefore, that it should be explicitly linked to (long-term) remuneration. The criteria are based on three Sustainable Development Goals (SDGs) as defined by the United Nations that are included in Philips' strategy on sustainability (no. 3, 12 and 13). These three SDGs are translated in five underlying objectives, which are measured against a specific target range.

At the beginning of the performance period, challenging target ranges are set for each of the five objectives. Based on a point-to-point method, performance achievement is measured at the end of the performance period (i.e., 3 years) versus the beginning of the performance period. The vesting level is determined based on the following scheme:

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Royal Philips NV published this content on 22 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 March 2024 15:00:05 UTC.