Corporate governance in the Netherlands is a success story, even though this success story has a rather grim beginning. In 2001 the energy company Enron went bankrupt in the United States following an accounting scandal of unprecedented proportions. Executives of Enron – until 2001 regarded as a boring, safe investment – hid a loss of more than one billion euros. In the meantime, they sold their own shares. Enron went bankrupt, and 21,000 employees lost their jobs. The executives went to jail, and the fraud finally led to the implosion of Enron’s auditor Andersen.
The arrival of legislationTo prevent bad governance in the future or at least to focus on good governance, various initiatives arose worldwide. In the United States legislation was introduced: the Sarbanes-Oxley Act. This Act requires companies to have robust audit committees and internal controls and makes executives liable for the accuracy of reports. The Act also provides for higher penalties for white-collar crime.
The Netherlands chose a different route but, like the United States, it acted fast. As early as 1997, Jaap Peters had made 40 recommendations for good governance, in the ‘Peters Committee’ as it was called. This early focus on good governance is easily explained. The ‘polder model’ of consultative bodies is traditionally reflected in the stakeholder model and the two-tier model: the ‘executive board’ (also known as ‘management board’) determines the strategy, the supervisory board exercises supervision. The works council and other bodies give advice. In fact, Peters advised how this structure (also called the ‘Rhineland model’) could be used in the best possible manner.
The Rhineland model is characteristic of the Dutch system (among others). This model focuses not only on the company and its shareholders but also on other stakeholders, such as employees, customers, suppliers and society. The management board and supervisory board are separated in a ‘two-tier board’, as it is called.
In countries like the United States the Anglo-Saxon model dominates, with a greater focus on profits and shareholders. Here, executives and supervisors sit together on a board of directors, the ‘one-tier board’, as it is called. Read more about the differences between the Rhineland model and the Anglo-Saxon model here.
Genesis of the Dutch Corporate Governance Code In the wake of the Enron accounting scandal, the Netherlands had its own major accounting scandal. At supermarket group Ahold, the figures were fiddled with. Unlike Enron, Ahold was to survive, but it was clear: even the stakeholder model was not immune to large-scale abuses. In March 2003 Hans Hoogervorst, then Minister of Finance, set up a Dutch corporate governance committee, headed by Morris Tabaksblat.
The celebrated top executive (and later supervisory director) succeeded in persuading the business world to agree to self-regulation through a code of conduct for companies and their executive directors. The Dutch Corporate Governance Code, which was published as early as December 2003, contains over 100 recommendations for good governance. Companies undertook to apply the Corporate Governance Code or to explain why they departed from it on certain points. In 2004 the Dutch Corporate Governance Code, known as the ‘Tabaksblat Code’ among executive directors, was enshrined in the law. The Corporate Governance Code Monitoring Committee was also established. It has been monitoring compliance with the Code ever since.
Under Tabaksblat's successors, Jean Frijns and Jaap van Manen, the Code was revised. Frijns broadened the support base for the Code by, among other things, involving investors in the Code. Under Van Manen, who came up with the Revised Corporate Governance Code in 2018, the concept of ‘culture within the company’ became important. In 2018 Pauline van der Meer Mohr was appointed Chair of the Corporate Governance Code Monitoring Committee. In Management Scope she explained that she did not want to introduce a major revision of the Code but did want to update it.
From day one, there was much debate about recommendations on remuneration and remuneration policies: would transparency perhaps have the effect of forcing up top salaries? Many companies now have a remuneration committee responsible for reviewing remuneration policies, and remuneration has come under increasing scrutiny at shareholders' meetings.
Long-term value creation was also an important theme. This should be the main objective when the long-term strategy is drawn up. In addition, executive directors are expected to formulate a vision on the level of their own remuneration and how this fits in with long-term value creation.
Culture within the company is also considered increasingly important. For example, executive directors and supervisory directors are expected to encourage openness and accountability. In brief: good governance without accounting scandals.
Petri Hofsté is, for the seventh time, after an interlude, once again the most influential woman in Dutch business. What is more: a concentration of golden skirts prevents rejuvenation and diversification of the female contingent in Dutch boardrooms. In this year’s top 10, there is only one gatecrasher who is shaking things up, she is, also, at the bottom of the leader board.
As the fourth stakeholder - after employees, customers and shareholders - society is claiming an increasingly prominent place within the corporate world. To develop a more humane governance practice, according to the participants in this roundtable, we need a far more in-depth conversation about how to deal with this as a director or supervisor and as a company. 'It is crucial that ethics is on the boardroom’s agenda more often.'
An increasing number of board members experience a disconnect between their ‘personal’ and ‘professional’ integrity. Let us put the discomfort in words and initiate a systemic change. Because we have to get rid of ‘herd capitalism.’
As the fourth stakeholder - after employees, customers and shareholders - society is claiming an increasingly prominent place within the corporate world. To develop a more humane governance practice, according to the participants in this roundtable, we need a far more in-depth conversation about how to deal with this as a director or supervisor and as a company. 'It is crucial that ethics is on the boardroom’s agenda more often.'
An increasing number of board members experience a disconnect between their ‘personal’ and ‘professional’ integrity. Let us put the discomfort in words and initiate a systemic change. Because we have to get rid of ‘herd capitalism.’
Almost 30 years ago, Artie Debidien embarked on her career journey. Currently, she holds the position of CIO at KPN and serves as a supervisor at three organizations, including De Nederlandsche Bank. She advocates for renewal wherever she goes. ‘I pay attention to whether an organization is focused not only on current KPIs and the status quo, but also whether I recognize an underlying willingness to progress.’
Social issues permeate the boardroom. This leads to a clash between business considerations and personal conviction. The project In-Depth Governance (Verdiepte Governance) helps executives and supervisory directors find the personal balance between ethical issues and business interests. Professors Rob Blomme and Patrick Nullens: ‘From a shared social responsibility, we must come to an honest conversation, where there is room for vulnerability of one's position and disruptive ideas - in short, discomfort that can lead to exploration and cocreation.’
Chapter Zero brings together supervisory directors of Dutch companies concerned with the consequences of climate change. Board member Caroline Zegers gives an insight into what supervisory directors can expect. ‘Supervisory directors decide on content and form of discussions, Chapter Zero facilitates.’
Almost 30 years ago, Artie Debidien embarked on her career journey. Currently, she holds the position of CIO at KPN and serves as a supervisor at three organizations, including De Nederlandsche Bank. She advocates for renewal wherever she goes. ‘I pay attention to whether an organization is focused not only on current KPIs and the status quo, but also whether I recognize an underlying willingness to progress.’
Social issues permeate the boardroom. This leads to a clash between business considerations and personal conviction. The project In-Depth Governance (Verdiepte Governance) helps executives and supervisory directors find the personal balance between ethical issues and business interests. Professors Rob Blomme and Patrick Nullens: ‘From a shared social responsibility, we must come to an honest conversation, where there is room for vulnerability of one's position and disruptive ideas - in short, discomfort that can lead to exploration and cocreation.’
Chapter Zero brings together supervisory directors of Dutch companies concerned with the consequences of climate change. Board member Caroline Zegers gives an insight into what supervisory directors can expect. ‘Supervisory directors decide on content and form of discussions, Chapter Zero facilitates.’
Companies will inevitably face changes again in 2024, very often related to ESG goals. As the season of shareholder meetings approaches, the question is what the agenda of the next AGM will look like. During a seminar for company secretaries, organized by Management Scope in collaboration with Allen & Overy, the key issues were discussed.
Read more‘Managing a large family company has its benefits. You do not have to report to anonymous shareholders, and you have the freedom to work on long-term continuity. The latter is in fact the primary duty of Jeroen Drost, CEO of SHV Holdings. “We have the luxury of more time to fix and improve things.’
Sooner or later, linking remuneration to sustainability goals will be mandatory. Frederic Barge, Founder of non-profit research firm Reward Value, therefore argues in favor of a new remuneration model. Barge recently exchanged thoughts and ideas with Supervisory Board members about the options.
She does not rank very high in this year's Top 100 Corporate Women, but with an announced supervisory board position at ABN AMRO, we may well see Femke de Vries rise in subsequent editions of the list.
We speculated on a new No. 1 as we compiled last year's Top 100 Corporate Women. It turns out to indeed be the case: PostNL CEO Herna Verhagen succeeds Petri Hofsté as the most influential woman in Dutch business. For the first time, it is not a professional Supervisory Board member but an executive who leads the list of corporate women.
She does not rank very high in this year's Top 100 Corporate Women, but with an announced supervisory board position at ABN AMRO, we may well see Femke de Vries rise in subsequent editions of the list.
We speculated on a new No. 1 as we compiled last year's Top 100 Corporate Women. It turns out to indeed be the case: PostNL CEO Herna Verhagen succeeds Petri Hofsté as the most influential woman in Dutch business. For the first time, it is not a professional Supervisory Board member but an executive who leads the list of corporate women.