Two topics of particular interest emerge from our findings in the 2024 Netherlands
Spencer Stuart Board Index: the representation of women in senior leadership positions,
and the appropriate level of pay for non-executive directors. In this article by Rob Miesen, we take a
closer look at both of these topics.
Gender diversity: glass half full or (half) empty?
In the past decade, female participation in non-executive director (NED) roles within our sample of companies has risen from one in five to—when viewed through an optimistic lens—approaching parity. However, to conclude that the situation is satisfactory would be premature, even if our sample of companies were representative of the broader non-executive landscape in the Netherlands.
A starkly different picture of gender diversity among top corporate positions emerges when examining the percentages of women in a variety of key roles: only 10% of chairs, 13% of nomination committee (NomCo) chairs, 6% of CEOs, and approximately 20% of executive directors (with that figure closer to 10% for positions with P&L responsibility) are female. These low percentages are all linked: CEOs are typically selected from the executive director cadre, CEOs in turn are overrepresented in the chair population, and in the accepted set-up of Netherlands boards, the board chair tends to double as the NomCo chair.
To effectively accelerate female representation in senior corporate roles more broadly, it is essential to address the disparities highlighted above. While the 2022 Diversity Act touches on these issues, it does so only indirectly. Relying on a “bottom-up” approach—where more women progress to executive director roles—could prove to be a generational challenge and is hindered by the lack of female role models in leadership.
Consequently, we should consider implementing more proactive measures, such as mandating that either the chair or the NomCo chair is a woman, at least until significant progress is evident. Enhancing female representation in these influential roles could positively impact overall female participation in senior corporate roles.
Is NED pay falling behind?
The 2024 Netherlands Spencer Stuart Board Index reveals that pay for non-executive directors (NEDs), excluding chairs, has increased by nearly 24% over the past decade, translating to an annual growth rate of approximately 2.1%. In contrast, chairs have seen a more substantial pay increase of 37%, or about 3.1% per year. Given that overall employee compensation in the Netherlands rose by roughly 20% in just the last four years, one might question whether NED pay is keeping pace. The data suggests that it is lagging, but only slightly: general pay saw moderate growth of around 30% over the past decade, meaning that NED pay is falling behind by about six percentage points.
While NED pay has indeed fallen behind—more so than the pay of chairs—the negative implications for board quality are up for debate. In our experience, compensation is not a primary motivator for most candidates considering board positions in companies like those in our sample. Although the overall sentiment towards increasing NED pay is generally unfavourable, aligning NED pay increases with general compensation trends seems prudent, especially considering the heightened expectations placed on NEDs over the years.
Anecdotal evidence suggests that the role of an NED has evolved in two notable ways. First, the reputational risks associated with being a non-executive director appear to have increased. Factors such as clearer corporate governance expectations, legal changes, and the heightened scrutiny of (social) media contribute to this shift. Second, the range of topics and the depth of involvement expected from NEDs have also expanded. An example is the increased complexity surrounding the Corporate Sustainability Reporting Directive (CSRD).