Increasing responsibility to Supervisory Boards
Supervisory boards should take action when remuneration to executives is out of proportion. They should enclose provisions to do so in the employment contracts of the executives.
According to Jean Frijns, the president of the monitoring committee to the Dutch corporate governance code, supervisory boards currently use to little means to prevent disproportionate payments to executives. They should ensure that bonuses are directly linked to performance and should prevent pay for failure at all times. Whenever remuneration to executives is out of proportion supervisory boards should be able to take action based on provisions enclosed in the employment contracts of the executives.
Frijns states that supervisory boards should make analyses of potential bonus payouts for different scenarios and publish these scenarios in the annual report. In addition, Frijns wants supervisory boards to not only account for the pay-performance relation in advance, but at the moment of actual payment as well.
It is expected that the above mentioned governance issues will be presented in an adjusted corporate governance code in December 2008.
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