Frans van Houten

Royal Philips Electronics NV boosted Chief Executive Officer Frans van Houten's total compensation to 3.4 million euros ($4.5 million) as his revamp of the world's largest lighting manufacturer boosted earnings.

Van Houten will get a 1.28 million-euro variable cash bonus, or 116 percent of his 1.1 million-euro base salary, Philips said in the annual report published on its website today. The total figure includes stock options, pension costs and other items. The CEO, who took over in April 2011, got a total of 1.9 million euros for that year.

Royal Philips Electronics NV reported second-quarter profit that exceeded analyst estimates as Chief Executive Officer Frans van Houten considers options for the unit making MP3 players and consumer multimedia devices.

Earnings before interest, taxes, amortization and one-time items were 504 million euros ($609 million) compared with 395 million euros a year earlier, the Amsterdam-based company said in a statement today. The average estimate of three analysts surveyed by Bloomberg was 434 million euros. Philips shares jumped the most in three months in the Dutch capital.

Royal Philips Electronics NV will deepen cost cuts as Chief Executive Officer Frans van Houten seeks to streamline the portfolio of the world’s biggest maker of light bulbs and make the organization more responsive.

The Dutch company is targeting savings of 800 million euros ($1.09 billion), up from an earlier target of 500 million euros, van Houten told analysts in London today. Philips reiterated sales growth and profitability goals for 2013.

Turning around Philips won’t be a “quick fix,” and the company needs to become faster at bringing ideas to the market, van Houten said.

Philips is hiving off its loss-making television business as its former flagship products can no longer compete with lower-cost rivals and have dragged down profit at Europe's biggest consumer electronics maker.

Philips said on Monday it is transferring its TV business to a 30/70 joint venture with its partner, global monitor maker TPV and has the option to sell out. The Dutch group has struggled to compete against players like Samsung and LG Electronics

Dutch electronics group Philips said licensing deals for its troubled television business were a good way to retain brand value as it struggles to restore profitablity at the loss-making division.

Incoming chief executive Frans van Houten said he would revive profit growth but gave no clues as to his preferred solution for the TV business, at a packed annual general meeting on Thursday.

Philips, the world's biggest lighting maker, a top three hospital equipment maker and Europe's biggest consumer electronics producer, said earlier this week it was studying various ways to fix the TV operations

More Blogs