The boards of the 75 largest Dutch listed companies have been put on notice by the country’s institutional shareholders that reporting of their own supervisory activities must be improved in the coming months or they will face specific resolutions at their 2013 annual general meeting (AGM).
Eumedion, the powerful corporate governance forum, which represents around 70 Dutch and foreign institutional investors with more than €1trn in combined assets, said its focus on pushing boards to deliver clearer reports focused particularly on areas such as transparency around the company audit, director pay deals and director nominations. It said it expected satisfactory company responses to the issues outlined in its “Spearheads” letter – effectively a shareholder wants list – in its informal discussions, or at the 2013 shareholders’ meeting. Rients Abma Executive Director of Eumedion said in the letter: “In the last five years we have seen substantial progress in the overall quality of financial and non- financial reporting by listed companies.
“Compared with six years ago shareholders have received more meaningful information and insight on e.g. the company’s strategy, the company’s risks, risk management, corporate governance and the company’ssustainability policy. However, the quality of the report of the supervisory directors did not fully keep pace with this positive development.”
The letter cites the Dutch Corporate Governance Code Monitoring Committee’s 2011 report, which said the contents of the reports of supervisory directors are “of little informative value”.
Eumedion added that as corporate governance has evolved, the duties and responsibilities of the supervisory board have become more onerous and that the heavier role should also be reflected in the board’s accountability. The letter gives a list of suggestions to companies on topics where it wants to see improvement.
In addition, the shareholder body has called on companies to avoid so-called “boilerplate” language in the Annual Report and Accounts such as stock repetition of IFRS/IAS accounting standards, which it says can give shareholders problems in identifying the actual accounting decisions that companies make within the legally available options. It says companies should also avoid publishing an extensive list of possible future corporate risks, but confine these to the most important business risks.
Link to Eumedion Spearheads letter