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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It is High Time to Professionalize the Nomination Committee

The main responsibility of a Supervisory Board is to ensure adequate succession and evaluation of the Management team and Supervisory Board members. However, the Nomination Committees that should play a key role in this process often fail to fulfil their potential. This was the outcome of research conducted by Professor Hélène Vletter-Van Dort and consultant Rob Miesen from Spencer Stuart.

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The experienced Supervisory Board members we invited to discuss board effectiveness in times of turbulence and transition, all have one thing in common: they wish to challenge Boards of Directors to maintain their connection to society and create a positive impact even in turbulent times. Bottom line: this cannot be achieved unless strategy sessions start at the beginning. ‘What do we actually mean by sustainability, social responsibility and inclusion? You will notice the answers will not be identical. How, then, can we know that we share the same ambitions?’

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. Companies do not need to jump in at the deep end straight away: ‘Draw up a separate policy alongside the existing remuneration policy.’

Board Effectiveness in Turbulent Times: 'Are We Actually Talking About the Same Thing?'

The experienced Supervisory Board members we invited to discuss board effectiveness in times of turbulence and transition, all have one thing in common: they wish to challenge Boards of Directors to maintain their connection to society and create a positive impact even in turbulent times. Bottom line: this cannot be achieved unless strategy sessions start at the beginning. ‘What do we actually mean by sustainability, social responsibility and inclusion? You will notice the answers will not be identical. How, then, can we know that we share the same ambitions?’

Remuneration Policies Need Rethinking

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. Companies do not need to jump in at the deep end straight away: ‘Draw up a separate policy alongside the existing remuneration policy.’

Having gained extensive board-level experience as CEO of Randstad, as well as in the role of supervisory director, currently at Vopak and Aegon, Ben Noteboom shares his best practices for ensuring effective collaboration in the boardroom, both within the Supervisory Board itself and between supervisory board members and directors. ‘We don’t always have to agree with each other, but we do take each person’s viewpoint seriously.’

Amy Wilson is the lead of the European engagement team at EOS, a stewardship service provider that is part of the investment manager Federated Hermes, aimed at more sustainable results for both society and environment. A critical view on executive pay is part of that. Wilson sees that there is support amongst directors for simpler pay schemes, more focus on the long term, more fixed salary and higher shareholdings. ‘But we find that in practice, it is difficult.’  

Secretaries can be important advisors and confidential counsellors to executive and supervisory board members. In practice, however, these roles are often underutilized, states experienced company secretary Elise Stevens-Fokkens in her recent Handboek Secretaris (Company Secretary's Handbook). While primarily intended for her fellow secretaries, this book may prove instructive to board members as well. ‘To be able to offer each other optimal support, communication must go both ways.’

Ben Noteboom Talks About Board Effectiveness

Having gained extensive board-level experience as CEO of Randstad, as well as in the role of supervisory director, currently at Vopak and Aegon, Ben Noteboom shares his best practices for ensuring effective collaboration in the boardroom, both within the Supervisory Board itself and between supervisory board members and directors. ‘We don’t always have to agree with each other, but we do take each person’s viewpoint seriously.’

Amy Wilson (EOS): 'Simplify Pay Structures'

Amy Wilson is the lead of the European engagement team at EOS, a stewardship service provider that is part of the investment manager Federated Hermes, aimed at more sustainable results for both society and environment. A critical view on executive pay is part of that. Wilson sees that there is support amongst directors for simpler pay schemes, more focus on the long term, more fixed salary and higher shareholdings. ‘But we find that in practice, it is difficult.’  

Elise Stevens-Fokkens: 'Make Time for Your Company Secretary'

Secretaries can be important advisors and confidential counsellors to executive and supervisory board members. In practice, however, these roles are often underutilized, states experienced company secretary Elise Stevens-Fokkens in her recent Handboek Secretaris (Company Secretary's Handbook). While primarily intended for her fellow secretaries, this book may prove instructive to board members as well. ‘To be able to offer each other optimal support, communication must go both ways.’

Kitty Koelemeijer: ‘Make Supervisory Board Members Earn Education Credits’

Professor and Supervisory Board member Kitty Koelemeijer does not mind being the ‘odd one out’ in some organizations. On the contrary, the role suits her very well. “It is easier to work for an organization where everything is in order, but when that is not the case, that is where you can truly make a difference.” Ultimately, that is what Koelemeijer is doing it for: To have an impact on both business and society.

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Petri Hofsté is the most influential corporate woman in the Netherlands for the sixth time now, but will that still be the case next year? There is stiff competition in the Top 10. Plus: twice the number of international ladies in Dutch boardrooms, the cautious advance of chairwomen and time for rejuvenation.

The current system for directors’ remuneration is outdated and inhibits the sustainability of business. That is the opinion of Frederic Barge, founder of Reward Value, Management Scope’s new expert partner. The development of a new model for responsible remuneration can act as a catalyst for social change. ‘We want to make an impact.’

Analysis Top 100 Corporate Women 2022: Moving Towards a New Number 1?

Petri Hofsté is the most influential corporate woman in the Netherlands for the sixth time now, but will that still be the case next year? There is stiff competition in the Top 10. Plus: twice the number of international ladies in Dutch boardrooms, the cautious advance of chairwomen and time for rejuvenation.

Frederic Barge (Reward Value) Wants to Change the Remuneration Culture

The current system for directors’ remuneration is outdated and inhibits the sustainability of business. That is the opinion of Frederic Barge, founder of Reward Value, Management Scope’s new expert partner. The development of a new model for responsible remuneration can act as a catalyst for social change. ‘We want to make an impact.’

Diversity and Inclusion in the New Corporate Governance Code

The recently proposed revision of the Dutch corporate governance code in the area of diversity and inclusion (D&I) goes quite far, says Stefan Duran, head of sales Benelux at life insurer elipsLife. Many organizations will have to work hard to comply with the revised code, but it will also give us opportunities, for example in the field of ESG. 

The Road to an Updated Corporate Governance Code

Next50 Non-executive Directors 2022: These are the Upcoming Supervisors

Remuneration Requires New Knowledge

Linda Hovius Sees Professionalization In Supervision

Roderick Munsters: From Investing Superpower to Professional Non-Executive Director

Joëlle Frijters: The Digital Non-executive Director

The Dutch corporate governance code is being updated this year. In its monitoring report, the Corporate Governance Code Monitoring Committee will make recommendations to improve the quality of substantive reporting on compliance. Allen & Overy partner Charles Honée provides the necessary clarification of the committee's requirements.

He is now in 29th place in the Top 100 Non-Executive Directors: Former KPN CEO Eelco Blok has found his calling as a non-executive director. According to Blok, non-execs play a crucial role in the most important current theme: ‘You can only speak of a meaningful sustainability policy once you have set out an aggressive timeline. Non-executive directors have to convince the Board that this is the best strategy.’ 

From Process-Oriented to Meaningful Reporting

The Dutch corporate governance code is being updated this year. In its monitoring report, the Corporate Governance Code Monitoring Committee will make recommendations to improve the quality of substantive reporting on compliance. Allen & Overy partner Charles Honée provides the necessary clarification of the committee's requirements.

Eelco Blok: ‘Greenwashing is Unacceptable’

He is now in 29th place in the Top 100 Non-Executive Directors: Former KPN CEO Eelco Blok has found his calling as a non-executive director. According to Blok, non-execs play a crucial role in the most important current theme: ‘You can only speak of a meaningful sustainability policy once you have set out an aggressive timeline. Non-executive directors have to convince the Board that this is the best strategy.’ 

Jeroen Drost (SHV): 'There is Leeway for Strong Wills'

‘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.’

Corien Wortmann-Kool: ‘Challenging Management to Achieve Sustainable Value Creation’

online only Corien Wortmann-Kool is the second biggest climber in the Top 100 Non-Executive Directors. A new non-exec role at DSM in addition to her position as CEO of ABP and Vice Chair of the Supervisory Board of Aegon ensured that she climbed from the 61st to the 11th position.

Love and Pain in the Boardroom

online only Tjahny Bercx is number 30 in the Top 100 Non-Executive Directors, and that makes him a high ranking newcomer. He is Chief People & Performance Officer at LeasePlan and was already a non-exec of ProRail. This year, he also took on a non-executive position with Achmea.

This Innovation Non-Exec Wants To Make Companies Sustainable, Inclusive and Future Proof

online only At number 72 in the Top 100 Non-Executive Directors, we find Mariken Tannemaat. A newcomer, and one of the younger non-execs on the list. She was Chief Innovation Officer at Robeco until 2019. Since her departure there, she has filled her supervisory portfolio with Supervisory Directorships at Wehkamp, CM.com, VLC & Partners and ABN AMRO.
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