Good Governance: From Corporate Governance to Culture

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

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.

Important themes in the Dutch Corporate Governance Code

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.

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Rients Abma (Eumedion): ‘The European Capital Markets Union Needs to Urgently Get Off the Ground’

Shareholders could absolutely be expected to feel co-responsible for solving major social problems, believes Rients Abma, director of institutional investor advocate Eumedion. It concerns him that European laws and regulations on ESG objectives are increasingly out of sync with those in Anglo-Saxon countries. ‘But Europe itself can do something about that. Consolidation in the capital market is crucial to strengthen our competitiveness.’

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Companies will be facing significant challenges in 2025. What items will be on the agenda of the shareholders' meeting? At a seminar for company secretaries, organized by Management Scope and A&O Shearman in cooperation with Computershare, the principal issues were discussed.

Appreciating that a company must play a sustainable and lasting role in society does not require codes or legislation, according to Jeroen Drost, a member of several supervisory boards and former CEO of SHV Holdings. He argues that more laws and rules only create a false sense of security. ‘Addressing excesses is more a matter of enforcement.’

Issues on the AGM's Agenda in 2025

Companies will be facing significant challenges in 2025. What items will be on the agenda of the shareholders' meeting? At a seminar for company secretaries, organized by Management Scope and A&O Shearman in cooperation with Computershare, the principal issues were discussed.

Jeroen Drost: ‘An Extensive Legislative does not Automatically Produce Superior Supervisors’

Appreciating that a company must play a sustainable and lasting role in society does not require codes or legislation, according to Jeroen Drost, a member of several supervisory boards and former CEO of SHV Holdings. He argues that more laws and rules only create a false sense of security. ‘Addressing excesses is more a matter of enforcement.’

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.’

On the future of the role of CSO, Robert Metzke (Philips) says: ‘We need to start with the next two years, because there is a significant challenge on the road, called CSRD and CSDDD.’

‘Crucial That Ethics Is on the Boardroom’s Agenda More Often’

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.' 

Jeroen Smit about Discomfort and 'Herd Capitalism'

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.’

Robert Metzke on the Future of the CSO

On the future of the role of CSO, Robert Metzke (Philips) says: ‘We need to start with the next two years, because there is a significant challenge on the road, called CSRD and CSDDD.’

Analysis Top-100 Corporate Women: The Grande Dame of Dutch Supervision is Back Again

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.

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Kuldip Singh: ‘Ask Yourself How It Can Be Done Ten Times Faster and Better’

Kuldip Singh is No. 1 on the Next50-list of non-executive directors. An open conversation about backbone, the importance of diversity and the power of digital transformations with an upcoming non-executive director who does not want to let go of the executive side. 

Essimari Kairisto: ‘Productively Sparring Supervisory Director Makes All The Difference’

Essimari Kairisto is the highest-ranking woman and highest-ranking foreigner on the list of emerging top supervisory directors, the Management Scope Next50 2024. She entered the list out of nowhere. It is therefore a good time for a closer acquaintance with this TenneT and Fugro supervisory director.

Essimari Kairisto: ‘Productively Sparring Supervisory Director Makes All The Difference’

Essimari Kairisto is the highest-ranking woman and highest-ranking foreigner on the list of emerging top supervisory directors, the Management Scope Next50 2024. She entered the list out of nowhere. It is therefore a good time for a closer acquaintance with this TenneT and Fugro supervisory director. ‘The value of a supervisory director lies in his or her talent for sparring with managers. And fortunately, more and more supervisory directors are good sparring partners - perhaps also because of the rise of women.’ 

Kuldip Singh: ‘Ask Yourself How It Can Be Done Ten Times Faster and Better’

Next 50 2024: A Good Deal Of Emerging Top Supervisory Directors, But Where Is Gen Z?

Artie Debidien: ‘Willingness To Change Has To Be Mobilized’

Project In-Depth Governance: ‘Ethical dilemmas lead to tension’

How Chapter Zero Is Helping Supervisory Directors With Sustainability

Michiel Lap: ‘The No-Goes of a Supervisory Director’

When Bram Schot was ‘approached from several directions’ for supervisory roles after intensive years as director in the automotive industry, he decided to focus exclusively on non-executive roles. Now he draws parallels and builds connections for the various boards where he is involved. ‘This is how I like to operate, as a person and as non-executive. You have a responsibility to leverage your network and cross-pollinate.’

Pauline van der Meer Mohr has seen the inside of a considerable number of boardrooms over the past 15 years. But even though she belongs to the old guard, she is not afraid of modernization. She has no objection to a board that ‘ employs’  an AI device in addition to Supervisory Directors of flesh and blood. ‘ That could be very valuable.’  However, she does worry about (potential) colleagues who would no longer be interested in being a Supervisory Board member because of legalization.

Bram Schot: ‘Make Use of The Competences Of Non-Executives’

When Bram Schot was ‘approached from several directions’ for supervisory roles after intensive years as director in the automotive industry, he decided to focus exclusively on non-executive roles. Now he draws parallels and builds connections for the various boards where he is involved. ‘This is how I like to operate, as a person and as non-executive. You have a responsibility to leverage your network and cross-pollinate.’

Pauline van der Meer Mohr: ‘A Virtual Colleague On The Board, Why Not?’

Pauline van der Meer Mohr has seen the inside of a considerable number of boardrooms over the past 15 years. But even though she belongs to the old guard, she is not afraid of modernization. She has no objection to a board that ‘ employs’  an AI device in addition to Supervisory Directors of flesh and blood. ‘ That could be very valuable.’  However, she does worry about (potential) colleagues who would no longer be interested in being a Supervisory Board member because of legalization.

Gerdi Verbeet and Marguerite Soeteman-Reijnen (Siemens): ‘A Breath of Fresh Air for the Board’

Gerdi Verbeet and Marguerite Soeteman-Reijnen (Siemens): ‘A Breath of Fresh Air for the Board’

One member departs, another arrives. Gerdi Verbeet will bid farewell to the supervisory board of Siemens Netherlands at the end of this year after two terms. Marguerite Soeteman-Reijnen steps into her shoes. The departing board member offers valuable advice to her successor: ‘You must create a safe space for your executives, but also challenge them.’
Jeanine Helthuis on Board Effectiveness

Jeanine Helthuis on Board Effectiveness

Jeanine Helthuis has substantial experience as an executive but nowadays dedicates her time exclusively to supervisory board positions. She notes that the members of these two bodies need each other and strengthen each other. ‘You consult with each other more, more frequent and in more depth about what governance, ESG, stakeholder interests, and digital developments mean for the company and its strategy.’
Masterclass Remuneration: ‘Take The Shareholder By The Hand’

Masterclass Remuneration: ‘Take The Shareholder By The Hand’

A clearly worded remuneration report, proactively updating investors, following new laws and regulations, and having an eye for social support - company secretaries can help ensure that shareholders approve their company’s remuneration policy and report. During a masterclass, they were updated on current developments and trends. ‘Of all agenda items, the remuneration report is the one that most often receives a ‘no’.’
The Nomination Committee is No Longer Inferior to the Audit Committee

The Nomination Committee is No Longer Inferior to the Audit Committee

One of the most important tasks of a Supervisory Board is to ensure that the company is managed correctly, now and in the future. The nomination committee (Nomco), which arranges the succession of the CEO, plays a special role here. A challenge, say experienced Nomco chairpersons Heleen Kersten and Jan van der Zouw, but: ‘Collaborating with a search agency ensures that sufficient consideration is given to strategy and diversity.’
Alexandra Reich: Highest Foreign Entrant in the Top 100 Corporate Women 2023

Alexandra Reich: Highest Foreign Entrant in the Top 100 Corporate Women 2023

online only Her new supervisory position at ING brought Austrian Alexandra Reich in at number 22 in the Top 100 Corporate Women 2023. This makes her the highest non-Dutch entrant, and the second highest foreign woman on the list.
Femke de Vries: Up-and-Coming in the Top 100 Corporate Women 2023

Femke de Vries: Up-and-Coming in the Top 100 Corporate Women 2023

online only 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.
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