HomeChapter 8: Two-Tier Board Attributes Netherlands8.4 About Board Leadership Structures

8.4 About Board Leadership Structures

The Civil Code does not provide the possibility to combine executive and non-executive positions at supervisory board level. Active management and employees of a structure corporation, or its dependent corporations, cannot act as supervisory directors. It is therefore not possible to find the combination of CEO and chairman roles in Dutch two-tier boards. Yet, the appointment of formerly affiliated managing directors to the chairman seat of the supervisory board remains an important issue in the contemporary corporate governance debate in the Netherlands.

The Peters Committee recommends that formerly affiliated managing directors should not be appointed to the chair of the supervisory board. The Committee states: “A point of consideration here should be the influence that a person’s former membership of the Board of Directors (the management boards, eds.) may have on that individual’s functioning on the supervisory board as well as on the functioning of the supervisory board and of the Board of Directors. This especially applies in cases where a former chairman of the board of directors is the intended chairman of the supervisory board” (Peters, 1997:11).

Maassen (1998a) asked thirty supervisory board chairmen about their opinion on the appointment of formerly affiliated managing directors to the chairman position of supervisory boards (see also table 8.4). With a vast majority of 88 percent, chairmen strongly disapprove of the appointment of formerly affiliated managing directors to the chairman seat of the supervisory board.

The study revealed that chairmen prefer independent supervisory board leadership:

  • to avoid the “danger” of active participation of formerly affiliated managing directors in operational matters of the company;
  • to secure the independence of the supervisory board;
  • because there is no need to appoint a formerly affiliated managing director to the position of supervisory chairman: expertise and knowledge of formerly affiliated managing directors become obsolete quickly;
  • to enable changes in the corporation’s structures, product lines, strategies and policies.

Source: Maassen (1998a).

 

Table 8.4

The Appointment of Formerly Affiliated Managing Directors to the Supervisory Board

 

Chair

 

Common Member

 

Favor appointment of formerly affiliated managing directors as:

0%

27%

Neutral position:

12%

40%

Disapprove appointment of formerly affiliated managing directors as:

88%

33%

 

Source: Maassen (1998a).

 


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Maassen, G.F. (2002). An International Comparison of Corporate Governance Models. A Study on the Formal Independence and Convergence of One-Tier and Two-Tier Corporate Boards of Directors in the United States of America, the United Kingdom and the Netherlands.

Maassen, G.F. (2002). An International Comparison of Corporate Governance Models. A Study on the Formal Independence and Convergence of One-Tier and Two-Tier Corporate Boards of Directors in the United States of America, the United Kingdom and the Netherlands. Amsterdam: Spencer Stuart Executive Search.