Miriam van Dongen: ‘Anticipating Seismic Changes’
Miriam van Dongen’s supervisory portfolio is diverse. Insurance cooperative Achmea, the Dutch Land Registry, fast-growing online payment provider Mollie, international derivatives trading firm Optiver, and the list goes on. The opportunity to be involved in different companies simultaneously was one of the reasons why, after CFO roles at Delta Lloyd Belgium and Achmea Zilveren Kruis, she decided to focus on only supervisory positions starting 2009. ‘What I like about the role of Supervisory Board member is that you get to help formulate a company’s strategy. Everything you do adds to your experience and improves your supervisory capabilities. You carry this over to other companies in your portfolio. Certain issues are similar, but I approach them from different perspectives.’
The diversity of different types of companies also adds value, she finds. ‘At a well-established company with solid governance and a good corporate secretary, many things ‘just work.’ There, a Supervisory Board member’s role is often to help them break out of old habits or introduce new ways of thinking. At a startup or scale-up, rapid growth can result in greater risks and the Supervisory Board is likely to be more concerned with checks and balances and with getting their governance to a higher level, for example. Here the emphasis is more on your advisory role. The cross-pollination between my various supervisory positions in my current portfolio is extensive. Mollie is a good example of this. They have not been around long, but they have much to teach larger companies when it comes to acting dynamically. If Mollie decides to set up a tech hub in Lisbon, they can have it operational in three weeks. That is hugely inspiring. Mollie’s offices were basically fully Covid-proof before the pandemic even started. They thought about the concepts of work and remote work differently much earlier. Their stakeholder landscape is different too, with private equity on board with prior experience with other growth companies. That can really focus the debate.’
The times that Supervisory Boards existed to mainly watch the shop are apparently gone for good. What has caused supervisory duties to change?
‘The environment has become more complex, with more obligations and increased requirements and legislation. We are being forced to deal with energy and food crises and a difficult geopolitical situation, and financial crises before that. Evolving social interests also affect our supervisory duties. There have recently been examples of Supervisory Board members who failed to perceive the changing voice of society, and of executive and Supervisory Board members who received harsh judgment in the press or even politically. Whether or not that is justified, it is something Supervisory Boards must take into account, more than previously. Executive and Supervisory Board members are more in the spotlight overall, and that changes their jobs as well. The intrinsic changes were already happening, but they have been accelerated by external pressures.’
Dutch law has assigned Supervisory Boards three duties: to supervise, to advise and to act as the executive board’s employer. While these duties remain the same, to what extent are they being fulfilled differently?
‘Our employer’s role continues to evolve, mainly with regard to remuneration, with increased rules and governance, the complexity of compensation systems and the effects of social opinions about directors’ remuneration. The issues we address in our supervisory capacity have also grown in scope. Their potential impact has increased — take cybersecurity and ransomware for example. More attention is paid to risks, to risk management and risk appetite, and that makes for more demanding supervisory duties. Finally, supervisory board members become and are more involved in the advisory role than before. This primarily relates to the strategy, which the Dutch governance code now lists as a shared concern of executive and Supervisory Board members. Supervisory Board members are expected to think with and challenge their Executive Board. When I look at those three duties, I do think Supervisory Boards often spend too much time monitoring the past on figures, risk and compliance reports and similar. In the financial sector, there are strict requirements in these areas, with many reports to be discussed and approved by the Supervisory Board. That can detract attention from business issues on the agenda and discussions of the future, innovations, new revenue models and the company’s role in society. It is important to keep re-assessing the balance between past, present and future.’
Do Supervisory Board members’ duties and responsibilities align with what is expected from them in practice?
‘Behind the scenes, much more happens than what’s in the job description. To be able to fulfill our duties properly, we need to spend a lot of time with the company, build our knowledge and stay up to date. Much of the preparatory work is done in committees, but ultimate responsibility is with the Supervisory Board. Assuming something is fine just because the audit committee looked into it, which was not unheard of before, is simply unacceptable and does not happen any longer. All committee chairs should report back to the entire Board and additionally, together with the board chair, encourage the other Supervisory Board members to ask critical questions. This can occasionally result in duplicate discussions, which is not a problem, as different questions, opinions and perspectives always transpire. That makes for a more comprehensive picture. You can sometimes feel that everything needs urgent attention, but you have to know how to deal with this as a Supervisory Board member. Where should the focus be? What should be looked into in more detail?’
What developments do you see in the duties of committees? It seems as though they keep on increasing.
‘One of a Supervisory Board’s most important tasks is to fill executive positions and work on succession planning. As I mentioned, especially remuneration has become much more complex in recent years. A supervisory board must thoroughly consider all the financial and non-financial KPI’s - sustainability for example, if you want it linked to the compensation system. That requires solid knowledge of the subject matter. We also need to be attuned to society’s feelings in this regard. You have to know what is justifiable and what not, and be intrinsically convinced of it as a board. The remuneration committee does the preparatory work on these issues for the Supervisory Board.
As to the other committees: audit committees often handle risk and compliance too, but particularly in finance, there may also be a separate risk committee. New committees emerge too, for example technology or strategy committees. Several AEX/AMX companies have set up sustainability committees now. These committees can help raise the awareness of the topic and add more depth to the discussion, but sometimes I wonder if that in-depth discussion especially should not be the responsibility of the entire Supervisory Board. After all, you cannot separate ESG from strategy, from current and future profit models and who you want to be as a company. To what social role do you aspire as a company and what do you want your impact to be?
So, on the whole, the number of committees has grown and the number of positions to populate has increased, but this can complement the Supervisory Board in fulfilling all its responsibilities.’
You are the audit committee chair at many of your Supervisory Boards. Has this role changed over the years?
‘Before, we prioritized hard controls. I remember that at one of my companies where I headed the audit committee, I added soft controls and conduct and culture to the agenda as a separate item. The Supervisory Board chair disagreed; it was his opinion that these fell outside the audit committee’s purview. Yet culture and behaviour always emerge as important causes in root cause analyses of incidents – of course they are relevant to audit committees.
In addition to finance, most audit committees’ scope also covers risk, compliance and internal auditing. These three lines of defense are, along with an external auditor as the fourth, part of a company’s control framework and are the audit and risk committees’ specific concern. Besides financial information and risks, non-financial information and - risks are increasing, for example with regard to technology, data, IT, and cyber - and information security and sustainability. These, too, must be incorporated into your risk management framework and risk appetite. As audit committee chair, you are close to the CFO/CRO and in direct contact with your internal – and external auditors. Those duties have become more important and prominent, requiring a lot of time and preparations. Still, it is a wonderful role to fulfil.’
What does the social responsibility that companies are assigned mean for Supervisory Boards?
‘ESG has increased companies’ external accountability regarding sustainability policies – case in point the EU Taxonomy CSRD and ESRS. While there is still a lot of confusion, this is no reason not to act now and start thinking about your strategy in relation to ESG. Many companies have been working on this for years and have made great progress, but others have yet to act. ESG should not be treated as a separate issue, but be an integral part of your strategy: what impact do you want to and have to have as a company? It has to be entrenched in the company’s objectives, values and norms, the governance, innovations and decision-making.
This should also be linked to long-term value creation. It is important to demonstrate sustainable leadership and to be convinced yourself that making a greater social impact also creates more value. If you fail to do this, you may lose the war for talent, miss out on competitive advantages and be reprimanded by your stakeholders.
Sustainable leadership is not limited to the executive; it applies to Supervisory Board members too. The considerable volume of regulations and reporting obligations is no excuse for a box-ticking exercise. As Supervisory Board member you have to demonstrate sustainable leadership yourself and remind Executive directors of and challenge them on their responsibility to lead the company, to make a positive impact.’
Earlier this year, Dutch legislation introduced a diversity quota to improve gender equality in Supervisory Boards of listed companies. How does this affect changing duties?
‘Diversity allows for different perspectives and approaches. A range of backgrounds and mindsets produces a different dynamic and leads to better decision-making and implementation. On a diverse board – and to my mind diversity goes much wider than just gender – more items may be covered which can lead to more and different discussions. I believe people should be given room to express themselves freely and present unconventional ideas. That reduces the chance of blind spots and ensures that you use the available talent to its full potential.
I myself find it inspiring and instructive to have different backgrounds and cultures at the table, especially in light of companies’ changing role in society. It makes me a better supervisory board member and furthermore the job becomes way more enjoyable.’
Speaking of diversity: Supervisory Board membership is increasingly international, and many of those members come from a one-tier board tradition. How challenging is this?
‘Again, it is actually good to have a mix of Dutch and non-Dutch Supervisory Board members in order to promote diversity. That applies especially at companies with extensive international operations or where international shareholders have a substantial interest. International Supervisory Board members can help bridge the gap and inspire confidence in our Dutch governance and supervisory model. At the same time, it remains important to include Dutch Supervisory Board members, as they will be more attuned to social and local sensitivities and expectations regarding remuneration, climate and such.’
The role of the Supervisory Board has changed significantly in the past decade. What does the future look like? In which directions might the profession develop in years to come?
‘I think ethics will continue to gain importance: how to safeguard the integrity of information and the decision-making processes. Developments such as self-learning algorithms, big data, innovative processes and products can be useful, but we should be cautious of unintended long-term consequences – especially when it comes to artificial intelligence and robotics. Ethics is an important prerequisite for socially responsible organizations.
Another element will be preparing for the unknown and unthinkable; for possible seismic changes that can erupt unbelievably fast and the risks they can pose to business continuity. Who would have predicted that Covid would have such enormous effects? The same applies to our current geopolitical situation. It is tricky, because no-one can see the future. We will, increasingly, have to use scenario-thinking about the future and what can, however unthinkable, transpire and how we will deal with it.’
What advice do you have for new Supervisory Board members?
‘Be aware that a supervisory position is time intensive and that you will need to grow into the role. Learn all you can about the company and everything related to it, not from a distance, as an abstract exercise, but by showing your face and familiarizing yourself with the culture and behavior in the company. Every Supervisory Board member should be guided by certain core principles: know your duties, be transparent and independent. It is important to ask many questions, stay critical and dare to say what you think, even if you are the only person on the Supervisory Board with a dissenting opinion. That is your duty and that is what is expected of you.’
This interview was published in Management Scope 01 2023.
This article was last changed on 14-12-2022