Departures from the Code

Best practice provision II.1.1: Management Board members are appointed for a maximum period of four years. A member may be reappointed for a term of not more than four years at a time.

The contracts of employment of the members of the Management Board in office as at 1 January 2004 are not in compliance with this provision and are to be honoured. The contracts of employment with Management Board members appointed on or after 1 January 2004 are in conformity with this provision, however.

Best practice provisions II.2.1 to II.2.5: About options to acquire shares as a remuneration component.

Nuon does not apply these provisions because its Articles of Association do not allow natural persons to be shareholders of the company.

Best practice provision II.2.6: Regulations concerning the ownership of and transactions in securities by Management Board members.

Nuon applies this provision with the proviso that no separate regulations have been drawn up. For practical reasons, however, rules concerning the notification by Management Board members regarding all changes in their ownership of and transactions in securities relating to Dutch listed companies are integrated in the regulations of the Management Board.

Best practice provision II.2.7: The maximum remuneration in the event of dismissal is one year’s salary (the ‘fixed’ remuneration component). If the maximum of one year’s salary were to be manifestly unreasonable for a Management Board member who is dismissed during his first term of office, such a board member shall be eligible for severance pay not exceeding twice the annual salary.

The contracts of employment of Management Board members in office as at 1 January 2004 are not in compliance with this provision and are to be honoured. The contracts of employment with Management Board members appointed on or after 1 January 2004 are in conformity with this provision, however.

Principle III.5: If the Supervisory Board consists of more than four members, it appoints from among its members an Audit Committee, a Remuneration Committee and a Selection and Appointment Committee.

Nuon has put in place an Audit Committee, whereas the tasks of the Remuneration Committee and Selection and Appointment Committee, since these are closely linked, have been combined in a joint Selection, Appointment and Remuneration Committee.

Best practice provision III.7.2: Any shares held by a Supervisory Board member in the company on whose board he sits are long-term investments.

This provision also concerns shareholdings of a supervisory board member.
This is not applicable within Nuon.

Principle III.8. Single-board company.

Best practice provisions III.8.1 to III.8.4 that deal with this matter are not applicable since Nuon, being a statutory two-tier company, has a separate Supervisory Board in addition to a Management Board.

Principle IV.1: To the extent that the company is able to do so, it provides all shareholders with distance-voting facilities and the means to communicate with each other.

A significant part of Nuon’s shareholders have attended the General Meeting of Shareholders for a number of years. Written powers of attorney are sent together with the notice to convene the General Meeting. In addition, all shares are registered. Because of and with due regard to the above, distance voting makes hardly any contribution towards the realisation of this provision.

Best practice provision IV.1.1: The General Meeting of Shareholders of a company other than a dual-board company may pass a resolution rescinding the binding nature of a nomination for the appointment of a Management Board or Supervisory Board member and/or of a resolution to dismiss a Management Board or Supervisory Board member by absolute majority of the votes cast.

The provision does not apply to a statutory two-tier company such as Nuon.

Best practice provision IV.1.2: The voting rights of holders of financing preference shares are based on the fair value of the capital contribution. This is in any event the case upon the issue of financing preference shares.

This provision is not applicable since Nuon does not have any financing preference shares.

Best practice provision IV.1.7: The company sets a registration date for the exercise of voting rights and the right to attend meetings.

This provision is not applicable since Nuon has no freely negotiable shares.

Principle IV.2: Depositary receipts for shares.

Best practice provisions IV.2.1 to IV.2.8 which deal with this do not apply since Nuon’s Articles of Association do not allow the issue of depositary receipts for shares.

Best practice provisions IV.3.1 to IV.3.4: About analysts' meetings and reports.

These do not apply since the Nuon shares are not listed, are not freely marketable and/or are not prone to price-sensitive information. Despite the fact that Nuon is not a listed company, meetings are held with rating agencies, bond investors and (majority) shareholders following the publication of interim and annual financial reports. After publishing its annual figures, Nuon also organises a press conference, which is announced in advance via the website and is available in full this year with the aid of a webcast on Nuon’s website. Nuon endorses the principle of simultaneous dissemination of information to all shareholders but deems it too costly to put in place facilities that would enable all shareholders to follow simultaneously all the meetings and presentations as envisaged in the Code. Nuon does ensure, however, that after the end of the meetings concerned, the presentations are posted on the website of Nuon.

Best practice provision IV.3.9: The Management Board provides an overview in the company’s Annual Report, setting out all existing or potential measures protecting it against moves designed to acquire control of the company, and indicates in what circumstances these measures might be expected to be used.

This provision does not apply because Nuon’s Articles of Association -quite apart from the quality requirement- excludes this possibility.

Principle IV.4: Responsibility of institutional investors.

Principle IV.4 and best practice provisions IV.4.1 to IV.4.3 apply to institutional investors and not to Nuon.