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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Annet Aris: ‘Time for a Hard Reset of the Remuneration System’

The focus on compliance and box ticking in the remuneration file seems to have become an end in itself, says INSEAD professor and top Supervisory board member Annet Aris. She advocates stepping back to build a new paradigm for an effective and transparent remuneration system from the bottom up and together with all governance players. ‘Shareholders and proxy advisors have rules that they strictly enforce, while these often turn out not to have the effect they think. Academic research on compensation measures can shed new light on their effectiveness.’

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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 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.’

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 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.’

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.

In The Council series, top experts address a current Boardroom topic. This time: stakeholder engagement. A professor and three sustainability directors present five best practices for optimizing the relationship with a wide circle of internal and external stakeholders. But note: ‘Stakeholder management is different from management by stakeholders.’

Multi-Supervisory Board member Willem Cramer wants to bring the outside world into companies, 'stir up' the board and, above all, interpret the social noise - emphasizing that it is a mistake to operate too cautiously and want to avoid all risks. To keep an open mind, he deliberately chooses to supervise multiple companies: ’Those who focus too much on a single company may miss the external antennae.

Analysis Top 100 Corporate Women 2023: For the First Time, Not a Professional Supervisory Director

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.

Five Best Practices for Stakeholder Engagement

In The Council series, top experts address a current Boardroom topic. This time: stakeholder engagement. A professor and three sustainability directors present five best practices for optimizing the relationship with a wide circle of internal and external stakeholders. But note: ‘Stakeholder management is different from management by stakeholders.’

Willem Cramer: 'Underboarding is a Danger'

Multi-Supervisory Board member Willem Cramer wants to bring the outside world into companies, 'stir up' the board and, above all, interpret the social noise - emphasizing that it is a mistake to operate too cautiously and want to avoid all risks. To keep an open mind, he deliberately chooses to supervise multiple companies: ’Those who focus too much on a single company may miss the external antennae.

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‘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.’

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.

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What should, want and can companies do effectively now in order to still be doing ’the right thing’ five to ten years from now? This question is the focus of a new series by Management Scope in collaboration with Allen & Overy. Directors, entrepreneurs, representatives from civil society and other experts will have their say. Allen & Overy partners Hilde van der Baan and Gijs Linse kick off with an introductory essay on doing business now and in the future.

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Jos Nijhuis, former CEO of accounting firm PwC and Schiphol Airport, is marching up the supervisory ranks: as of this year, he is supervisory board chair at both energy supplier Enexis and asset manager Bouwinvest, amongst other positions. Nijhuis consciously sought out supervisory positions where he would be of value to the executive board. He is convinced that his own previous experience ‘on the other side’ is an asset. ‘A supervisory board should always include people who know what it is like to be at the helm.’

Former Ahold Delhaize CEO Dick Boer is the new most influential Supervisory Board member in the Netherlands. Hereby the top position is filled, ‘as usual’, by a man with a traditional profile, but the other positions on the podium went to two women who earned their spurs. Also: The majority of newcomers are still men and boardrooms still mainly comprise people in their 60s and 70s. Where are the millennials?

Jos Nijhuis: ‘A Supervisory Director Should Know What it is Like at the Helm’

Jos Nijhuis, former CEO of accounting firm PwC and Schiphol Airport, is marching up the supervisory ranks: as of this year, he is supervisory board chair at both energy supplier Enexis and asset manager Bouwinvest, amongst other positions. Nijhuis consciously sought out supervisory positions where he would be of value to the executive board. He is convinced that his own previous experience ‘on the other side’ is an asset. ‘A supervisory board should always include people who know what it is like to be at the helm.’

Analysis Top 100 Non-Executive Directors 2023: A new No. 1, many boomers

Former Ahold Delhaize CEO Dick Boer is the new most influential Supervisory Board member in the Netherlands. Hereby the top position is filled, ‘as usual’, by a man with a traditional profile, but the other positions on the podium went to two women who earned their spurs. Also: The majority of newcomers are still men and boardrooms still mainly comprise people in their 60s and 70s. Where are the millennials?

Bram Schot: Fast Climber in Top 100 Non-Executive Directors 2023

Bram Schot: Fast Climber in Top 100 Non-Executive Directors 2023

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Jurgen Stegmann: 'Non-Executives Hardly Ever Realize Just How Influential They Are'

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Chantal Vergouw: Youngest in Top 100 Non-Executive Directors 2023

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Dick Boer: New Number 1 in Top-100 Non-Executive Directors

Dick Boer: New Number 1 in Top-100 Non-Executive Directors

online only After three years, the Top 100 Non-Executive Directors has a new number 1: former Ahold Delhaize CEO Dick Boer (1957). He was already a supervisory director at Shell and SHV, among others, and was already in the top-10, but his new chairmanship of the supervisory board of Just Eat Takeaway gave him the top spot in the list.
Board Effectiveness in Turbulent Times: 'Are We Actually Talking About the Same Thing?'

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?’
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