10.5.1 Definition of independence

Chapter 2 has already concluded that independence is a situation in which a supervisor is independent in fact and in appearance and there are no facts and circumstances that are so significant that a reasonable and informed third party would question the supervisor’s independence. Such a supervisor has an independent mindset that leads to unbiased work. The second part of this study has shown that in order to have independence, all three building blocks of independence are important. The chain of independence is only as strong as its weakest link, which means that all three building blocks – person, composition/ structure and preconditions – need to be well constructed in order to guarantee independence in a company.

(Consideration 10.12) Independence is defined as a situation with a strong person building block, which is characterised by an assessment of all the relationships or circumstances that impair independence in order to determine the supervisor ’s independence. These independent supervisors must operate in a strong composition/structure building block of independence, which is characterised by a healthy balance between people with executive tasks and monitoring tasks. Furthermore, the independent supervisors must constitute a majority of the (supervisory) board and board committees. Diversity must be considered in the composition of the (supervisory) board. Additionally, the preconditions building block must be well developed. This entails: no CEO duality, an appointment and removal procedure without one dominant stakeholder, a regular thorough evaluation process, provisions for conflict of interest situations and strong enforcement of independence requirements.