17 Two authorised bodies

When the division of powers in the Netherlands regarding the appointment of executives and the determination of executive compensation is compared to the investigated countries, we can see that the Dutch system possibly runs the risk of another problem. Prospective executives usually have to deal with two different bodies when being appointed and when setting their compensation, whereas prospective executives in Germany, the United Kingdom or the United States only have to deal with one body. The Dutch system therefore encompasses an inherent uncertainty for the executive. Even after all negotiations have resulted in a contract, appointment by the general meeting is needed to enable this contract to become legally valid.

One particular question that arises is what security can be offered to the executive if the general meeting refuses to ratify the appointment. Given the strict division of powers prevailing in the Netherlands in the light of the principle of protection of legal interests, and in order to prevent conflicts of interest, who can agree on remuneration with the prospective executive on behalf of the company if that prospective executive is not appointed and thus suffers damage? In practice such appointments usually go ahead, but this fact does not remove the uncertainty. The legislator would be well advised to find a solution for this. Until that happens, in practice supervisory boards should be recommended to allocate explicit statutory authority to agree such remuneration, or to ensure that the board of management is either a co-signatory, or that the board of management explicitly delegates this authority to the supervisory board.