corporate governance  
     
  THE DUTCH CORPORATE GOVERNANCE CODE
In accordance with the Dutch Order of Council of December 23 2004, we apply all of the relevant provisions of the Dutch Corporate Governance Code, with the following deviations which, together with the reasons for those deviations, are set out below:		  
     
 
• for share options issued to Management Board members after 31 December 2005, we comply with best practice provisions II.2.1 and II.2.2, as all options granted to members of the Management Board during 2006 are subject to performance criteria. However, as previously disclosed, for share options granted to Management Board members prior to 31 December 2005, we partly deviate from best practice provisions II.2.1 and II.2.2. Best practice provision II.2.1 provides that options to acquire shares are a conditional remuneration component, and become unconditional only when the Management Board members have fulfilled predetermined performance criteria after a period of at least three years from the grant date. Best practice provision II.2.2 provides that, if a company, notwithstanding best practice provision II.2.1, grants unconditional options to Management Board members, it shall apply performance criteria when doing so. Options granted to Management Board members under the 2005 Share Option plan prior to 31 December 2005 vest unconditionally after a three year period. No predetermined performance criteria were established for these share options, as the industry for personal navigation was at a relatively nascent stage and we believed that setting credible (predetermined) performance criteria was not practical at that time.
   
• as previously disclosed, we do not apply best practice provision II.2.7, which provides that the maximum remuneration in the event of involuntary termination may not exceed the directors’ annual fixed remuneration. In the event of termination of employment initiated by the Company, the respective Management Board member will be entitled to compensation equal to 18 months of his or her fixed annual remuneration. This consists of a 12-month notice period and a fixed amount of 50% of annual base salary, including holiday allowance. Management Board members’ employment contracts, including the above terms and conditions, were entered into prior to the date of the Initial Public Offering of the Company in 2005.
   
• at our 2007 Annual General Meeting of Shareholders held in April 2007, two additional members to our Supervisory Board were appointed, thereby increasing the number of Supervisory Board members to five. Principle III.5 provides that, if the Supervisory Board consists of more than four members, it shall appoint from among its members an audit committee, a remuneration committee, and a selection and appointment committee. Owing to the changes in the composition of the Supervisory Board, it was not practical to establish the committees of the Supervisory Board in 2007. The duties and responsibilities of these committees were carried out by the entire Supervisory Board during 2007.The Supervisory Board intends to appoint an audit committee, a remuneration committee, and a selection and appointment committee during 2008.
   
• best practice provision IV.1.1 provides that a company’s General Meeting of Shareholders may pass a resolution to set aside the binding nature of a nomination for the appointment of a member of the Management Board or the Supervisory Board by an absolute majority of the votes representing at least one third of issued share capital. Our Articles of Association provide that a binding nomination for the appointment of members of our Management Board or of our Supervisory Board may only be set aside by a resolution of our General Meeting of Shareholders passed with a two-thirds majority representing more than 50% of our issued share capital. As previously disclosed, we deviate from this best practice provision because we believe that maintaining continuity in our Management Board and Supervisory Board is critical for delivering long-term shareholder value. We would like to protect our stakeholders against a sudden change in management by maintaining the qualified majority and voting quorum requirement, which is allowed under Dutch law.
 
     
  MANAGEMENT BOARD
General
The members of the Management Board have collective powers and responsibilities. They are responsible for the day-to-day management of our operations, under the supervision of the Supervisory Board.

Composition and appointment
The Articles of Association provide that the number of members of the Management Board will be determined by the Supervisory Board, and will consist of at least three members: a Chief Executive Officer, a Chief Financial Officer and a Chief Operating Officer. Each member of the Management Board is appointed for a maximum of four years, which can be renewed for another period of not more than four years at a time. A resolution of the General Meeting of Shareholders to suspend or dismiss members of the Management Board requires a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital.

The General Meeting of Shareholders appoints the members of the Management Board, subject to the right of the Supervisory Board to make a binding nomination. The General Meeting of Shareholders may at all times, by a resolution passed with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital, resolve that the nomination submitted by the Supervisory Board is not binding. In such cases, the General Meeting of Shareholders may appoint a member of the Management Board in contravention of the Supervisory Board’s nomination, by a resolution passed with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital. If the Supervisory Board fails to use its right to submit a binding nomination, the General Meeting of Shareholders may appoint members of the Management Board with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital.

Members of the Management Board
Currently, the Management Board consists of:
Harold Goddijn – Chief Executive Officer
Marina Wyatt – Chief Financial Officer
Alexander Ribbink – Chief Operating Officer

Further details on the members of the Management Board, and their biographies, can be found in the Management Board and Supervisory Board section.

Senior management
Our Management Board is supported by our senior management team:
Corinne Goddijn-Vigreux – Chief Commercial Officer
Peter-Frans Pauwels – Chief Technical Officer
Pieter Geelen – Director of Software Development
Mark Gretton – Engineering Director
Harry van de Kraats – Human Resources and Organisation Director

As of 1 January 2008, Clive Millington and Sean Fernback, were appointed as members of the Senior Management Team to further strengthen the team in the areas of Operations and Product Development respectively.

Remuneration
The Supervisory Board establishes the remuneration of the individual members of the Management Board, in accordance with the Management Board remuneration policy, as adopted by the General Meeting of Shareholders. The Supervisory Board presents to the General Meeting of Shareholders for approval any scheme providing for the remuneration of the members of the Management Board in the form of shares.

For further information about the remuneration of the members of the Management Board, see the notes included in the financial statements of TomTom NV in this annual report.

Conflicts of interest
Members of the Management Board must report and provide all relevant information regarding any conflict of interest or potential conflict of interest to the Chairman of the Supervisory Board. The Supervisory Board shall decide, without the member of the Management Board being present, whether there is a conflict of interest. No such conflicts of interest occurred during 2007.

SUPERVISORY BOARD
General
The Supervisory Board is responsible for supervising the conduct of the Management Board and the general course of our business, as well as for providing advice to the Management Board. In performing its duties, the Supervisory Board is required to act in the interests of the business as a whole. The Articles of Association require certain decisions of the Management Board to be approved by the Supervisory Board. These decisions include the issue of shares or granting of rights to subscribe for shares, and the exclusion of pre-emptive rights, to the extent that these rights are vested in the Management Board; proposals to amend the Articles of Association; proposals to merge or demerge; proposals to dissolve the Company; and proposals for capital reductions.

Composition and appointment
The Articles of Association provide that the number of members of the Supervisory Board will be at least three. Each member of the Supervisory Board is appointed for a maximum of four years. This appointment can be renewed for two additional periods of not more than four years at a time. The members of the Supervisory Board retire periodically in accordance with a rotation schedule.

The Supervisory Board appoints a Chairman and a Deputy Chairman from amongst its members. A resolution of the General Meeting of Shareholders to suspend or dismiss members of the Supervisory Board requires a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital.

The General Meeting of Shareholders appoints the members of the Supervisory Board, subject to the right of the Supervisory Board to make a binding nomination. The General Meeting of Shareholders may at all times, by a resolution passed with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital, resolve that the nomination submitted by the Supervisory Board is not binding. In such cases, the General Meeting of Shareholders may appoint a member of the Supervisory Board, in contravention of the Supervisory Board’s nomination, by a resolution passed with a majority of at least two-thirds of the votes cast, representing more than 50% of our issued share capital.

Rotation schedule
On 29 November 2007, the Supervisory Board adopted the following Rotation Schedule:

  
     
 
  Date of first
appointment		 End of
current term		 Date of possible
reappointmnet
spacer
Guy Demuynck 13 May 2005 AGM 2008 AGM 2008
Andrew Browne 13 May 2005 AGM 2009 AGM 2009
Karel Vuursteen 25 April 2007 AGM 2010 AGM 2010
Doug Dunn 13 May 2005 AGM 2011 AGM 2011
Rob van den Bergh 25 April 2007 AGM 2011 AGM 2011
spacer
       
 
     
  Members of the Supervisory Board
Andrew Browne – Chairman
Doug Dunn – Deputy Chairman
Guy Demuynck – Member of the Supervisory Board
Karel Vuursteen – Member of the Supervisory Board
Rob van den Bergh – Member of the Supervisory Board

Further details on the members of the Supervisory Board, and their biographies, can be found in the Management Board and Supervisory Board section.

Remuneration
The remuneration of the members of the Supervisory Board is determined by the General Meeting of Shareholders. Members of the Supervisory Board are not authorised to receive any payments under our pension or bonus scheme or under our option or share plans.

For detailed information about the individual remuneration of members of the Supervisory Board see the notes to the financial statements of TomTom NV included in this annual report.

Conflicts of interest
Members of the Supervisory Board must report and provide all relevant information regarding any potential conflict of interest to the Chairman of the Supervisory Board or, in the case of a conflict of interest of the Chairman of the Supervisory Board, to the Deputy Chairman of the Supervisory Board. The Supervisory Board shall decide, without the relevant member of the Supervisory Board being present, whether a conflict of interest exists.

No such conflicts of interest occurred during 2007.

Shareholding
Mr. Rob van den Bergh acquired 5,000 shares in the Company in 2007. These shares are held as a long-term investment within the meaning of best practice provision III.7.2 of the Corporate Governance Code and were not granted as part of his remuneration.

SHARES AND SHAREHOLDERS' RIGHTS
Issue of ordinary shares and pre-emptive rights
The Company may issue ordinary shares, or grant rights to subscribe for ordinary shares, pursuant to a resolution of the General Meeting of Shareholders, upon proposal of the Management Board, subject to the prior approval of the Supervisory Board.

If so designated by the General Meeting of Shareholders or our Articles of Association, we may issue ordinary shares, or grant rights to subscribe for ordinary shares, pursuant to a resolution of the Management Board, subject to the prior approval of the Supervisory Board. No resolution of the General Meeting of Shareholders or the Management Board is required for an issue of ordinary shares pursuant to the exercise of a previously granted right to subscribe for ordinary shares.

During the Annual General Meeting of Shareholders held in April 2006, a resolution was passed which grants the Management Board the irrevocable authority to issue ordinary shares, or grant rights to subscribe for ordinary shares, up to a maximum of 20% of our authorised share capital of ordinary shares, for a period of two years, starting on 13 May 2007 (i.e. expiration date of such authority previously granted) and ending on 13 May 2009.

Dutch company law and our Articles of Association in most cases give shareholders pre-emptive rights to subscribe on a pro rata basis for any issue of new shares. Exceptions to these pre-emptive rights include the issue of shares (i) to our employees, (ii) in return for non-cash consideration, or (iii) to persons exercising a previously granted right to subscribe for shares. Holders of ordinary shares do not have pre-emptive rights with respect to preference shares to be issued and holders of preference shares do not have pre-emptive rights with respect to ordinary shares.

A shareholder may exercise pre-emptive rights during a period of two weeks from the date of the announcement of the issue of shares. The Management Board, subject to the prior approval of the Supervisory Board, and if so designated by the General Meeting of Shareholders, may restrict or exclude shareholder pre-emptive rights. A resolution by the General Meeting of Shareholders to authorise the Management Board to exclude or restrict pre-emptive rights requires a majority of at least two-thirds of the votes cast, if less than 50% of our issued share capital is present or represented at the General Meeting of Shareholders. If the General Meeting of Shareholders has not delegated this authority to the Management Board, the General Meeting of Shareholders may itself vote to restrict or exclude pre-emptive rights, but only upon a proposal of the Management Board.

During the Annual General Meeting of Shareholders held in April 2006, a resolution was passed which grants the Management Board the irrevocable authority to restrict or exclude pre-emptive rights for a period of two years starting on 13 May 2007 (i.e. the expiration date of such authority previously granted) and ending on 13 May 2009.

General Meetings of Shareholders and voting rights
The Annual General Meeting of Shareholders must be held within six months of the end of each financial year. An Extraordinary General Meeting of Shareholders may be convened, whenever our interests so require, by the Management Board or the Supervisory Board. Shareholders representing alone or in aggregate at least one-tenth of our issued and outstanding share capital may, pursuant to the Dutch Civil Code and our Articles of Association, request that a General Meeting of Shareholders be convened. If such General Meeting of Shareholders has not been convened within 14 days, or is not held within one month following such a request, the shareholders are authorised to call such a General Meeting of Shareholders themselves.

The notice convening a General Meeting of Shareholders must include the agenda, indicating the items for discussion, as well as any voting proposals. Shareholders holding at least 1% of our issued and outstanding share capital, or shares representing a value of at least €50 million according to the Daily Official List, may submit proposals for the agenda. Provided we receive such proposals no later than the 60th day before the General Meeting of Shareholders, we will have the proposals included in the notice we publish in a national newspaper distributed daily in The Netherlands and also in the Daily Official List at least 15 days before the meeting.

The Management Board may determine a record date to establish which shareholders are entitled to attend and vote at the General Meeting of Shareholders. There is no attendance quorum.

Each of our ordinary shares and preference shares is entitled to one vote. Shareholders may vote by proxy. The voting rights attached to any of our shares held by us are suspended as long as they are held in treasury.

Resolutions of the General Meeting of Shareholders are adopted by a simple majority, except where Dutch law or our Articles of Association provide for a special majority. According to our Articles of Association, the following decisions of the General Meeting of Shareholders require a majority of at least two-third of the votes cast, representing more than 50% of our issued share capital: 		 
     
 
• a resolution to cancel a binding nomination for the appointment of members of our Management Board and Supervisory Board;
   
• a resolution to appoint members of the Management Board or Supervisory Board in contravention of the list of nominees submitted by the Supervisory Board;
   
• a resolution to dismiss or suspend members of the Management Board or Supervisory Board.
   
 
  In addition, our Articles of Association require a majority of at least two-thirds of the issued capital, if less than 50% of our issued share capital is represented for among other matters:  
     
 
• a resolution of the General Meeting of Shareholders regarding restricting and excluding pre-emptive rights, or decisions to designate the Management Board as the body authorised to exclude or restrict pre-emptive rights;
   
• a resolution of the General Meeting of Shareholders to reduce our outstanding share capital; and
   
• a resolution of the General Meeting of Shareholders to have us merge or demerge.
   
 
  REFERENCE SHARES AS PROTECTION MEASURE
General
On 26 May 2005, the Stichting Continuïteit TomTom (the “Foundation”) was established as an instrument of protection against hostile takeovers and to protect our interests in other situations. The purpose of the Foundation is to safeguard our interests and those of our subsidiaries in such a way that these interests as well as the interests of all those involved in the organisation, are safeguarded, and that influences, which in contravention with those interests could affect our continuity and/or corporate identity, are fended off. The Articles of Association of the Company provide for the possibility of issuing preference shares and granting rights to subscribe for preference shares. We believe that the issue of preference shares or the grant of rights to subscribe for preference shares to the Foundation, may have the effect of preventing, discouraging or delaying an unsolicited attempt to obtain (de facto) control and may help us to determine our position in relation to a bidder and its plans, and to seek alternatives.

There are currently no preference shares outstanding.

Composition of Continuity Foundation
The Management Board of the Foundation consists of one “A Board member” and two “B Board members”. The A Board member is appointed by the Management Board, from among the members of the Supervisory Board, subject to the approval of the Supervisory Board. The B Board members are appointed by the Board of the Foundation.

In 2007, the members of the Management Board of the Foundation were:
G.J.M. Demuynck A Board member
M.W. den Boogert B Board member
R.L. de Bakker B Board member

The Management Board of the Company and the Board of the Foundation declare that they are jointly of the opinion that the Foundation is independent of the Company.

Protection mechanism
We have granted the Foundation a call option (the “Call Option”), entitling it to subscribe for preference shares, up to a maximum of 50% of our total issued and outstanding share capital (excluding issued and outstanding preference shares). Under the terms of a separate agreement, entered into between the Company and the Foundation on 26 May 2005, we have the right to require the Foundation to exercise the Call Option in whole or in part if, for example, a hostile takeover has been announced or made. The foundation may also itself determine to exercise the Call Option in other situations. The issue of preference shares in this manner would cause substantial dilution to the voting power of any shareholder whose objective was to gain control of us.

Preference shares
During our Annual General Meeting of Shareholders held in April 2006, a resolution was passed which grants the Management Board the irrevocable authority to issue preference shares, or grant rights to subscribe for preference shares, up to a maximum of 50% of the outstanding share capital of ordinary shares, for a period of two years starting on 13 May 2007 (i.e. expiration date of authority previously granted) and ending on 13 May 2009, subject to the approval of the Supervisory Board.

The Management Board must provide a justification for such issue or grant of rights to subscribe for preference shares (but not for the issue of preference shares as a result of the exercise of rights) at the General Meeting of Shareholders, held within four weeks after the date of issue or grant, unless such a justification has been given at an earlier General Meeting of Shareholders.

A resolution of our Management Board to issue preference shares, or to grant rights to subscribe for preference shares, as a result of which the aggregate nominal value of the issued preference shares will exceed 50% of the outstanding capital of ordinary shares at the time of issue, will at all times require the prior approval of the General Meeting of Shareholders.

Upon the issue of preference shares, subscribers for preference shares must pay at least 25% of the nominal value of the preference shares. Each transfer of preference shares requires the prior approval of the Management Board and Supervisory Board.

No resolution of the General Meeting of Shareholders or the Management Board is required for an issue of preference shares pursuant to the exercise of a previously granted right to subscribe for preference shares (including the right of the Foundation to acquire preference shares pursuant to the Call Option).

The issue of preference shares is meant to be temporary. Unless the preference shares have been issued by a vote of the General Meeting of Shareholders, our Articles of Association require that a General Meeting of Shareholders be held within six months after the issue of preference shares to consider their cancellation and redemption. If the General Meeting of Shareholders does not resolve to redeem and cancel the preference shares, a General Meeting of Shareholders will be held every six months thereafter for as long as preference shares remain outstanding.

Obligations of shareholders to disclose holdings
Under the Dutch Financial Supervision Act (Wet op het financieel toezicht), any person who, directly or indirectly, acquires or disposes of an interest in the capital and/or the voting rights of a limited liability company, incorporated under Dutch law with an official listing on a stock exchange within the European Economic Area, or a company organised under the laws of a state that is not a member of the European Union or party to the European Economic Area with an official listing on Euronext Amsterdam, must give written notice of such acquisition or disposal if, as a result of such acquisition or disposal, the percentage of capital interest and/or voting rights held by such a person meets, exceeds or falls below one of the following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95% of a company's issued and outstanding share capital. Such notification must be given to the Dutch securities regulator (Autoriteit Financiële Markten) (the "AFM")
without delay.

Under the Financial Supervision Act, we are required to inform the AFM immediately if our issued and outstanding share capital, or voting rights, change by 1% or more compared with our previous notification. Other changes in our capital or voting rights need to be notified periodically. The AFM will publish such notification in a public register. If a person's capital or voting rights meets or surpasses the abovementioned thresholds as a result of a change in our issued and outstanding share capital or voting rights, that person is required to make such notification no later than the fourth trading day after the AFM has published our notification as described above.

The AFM keeps a public register of all notifications made pursuant to these disclosure obligations, and publishes any notification it receives.

As at 31 December 2007, we do not know of any person or legal entity holding an interest in our ordinary share capital and/or voting rights of more than 5% (also based on the AFM register of substantial holdings) other than:

  
     
 
Pieter Geelen/Stichting Beheer Moerbei
13.21%
Peter-Frans Pauwels/Stichting Beheer Pillar Arc
13.21%
The Corinne Goddijn-Vigreux 2005 Trust
13.21%
The Harold Goddijn 2005 Trust
13.21%
Capital Research and Management Company 5.45%
 
     
  These percentages do not take into account the impact of dilution on our ordinary shares, which we are not required to report to the AFM.