The Supervisory Board Report: Little Insight About Oversight

30 Pages Posted: 28 Jan 2011

Date Written: January 26, 2011

Abstract

This article investigates to what extent the report by the Supervisory Board (hereafter: the SB-report) provides the reader with useful information. We investigate this for sixty companies testing all requirements regarding the SB-report. First of all, we investigate whether the SB-report fulfils the formal requirements. Furthermore, a judgment is being rendered regarding the degree of insight that the report provides to the user. Our investigation shows that little insight can be obtained about the way in which the SB monitors the Management Board (hereafter: MB), even though the Dutch Corporate Governance Code (hereafter: the Code) requires this. Thus, we plead for the Code to become more descriptive in this respect. At the same time, we give examples of SB-reports that, in our view, do provide adequate insight, albeit occasionally. This article contributes to the discussion about the openness that Bs are prepared to give regarding their work. The way in which SBs operate is often felt as being a “black box”. Even though shareholders may query the SBs about the execution of their Supervision of the MB at the Annual Meeting of Shareholders, they – like other stakeholders – have little information at hand to form themselves a reasonable impression thereof. This article not only contains a theoretical section regarding the use of transparency and legal requirements, but also takes a look at current practices. The article closes with some recommendations that may contribute to the quality of SB-reports.

Keywords: Supervisory Board Report, Corporate Governance, Transparency

Suggested Citation

Lückerath-Rovers, Mijntje and Scheltema, Margot, The Supervisory Board Report: Little Insight About Oversight (January 26, 2011). Available at SSRN: https://ssrn.com/abstract=1748485 or http://dx.doi.org/10.2139/ssrn.1748485

Mijntje Lückerath-Rovers (Contact Author)

Tilburg University / TIAS ( email )

Warandelaan 2
Tilburg, North-Brabant 5071HS
Netherlands

Margot Scheltema

Erasmus University Rotterdam ( email )

3000 DR Rotterdam
Netherlands

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