Non-executive directors in the Netherlands: another expectations gap?

Notwithstanding the importance of non-executives as a control mechanism to reduce the potential divergence between corporate management and shareholders and the increasing attention they receive from both regulators as well as the media, research concerning non-executives is still in its infancy. This dearth of knowledge may account for the unrealistic expectations the public is said to have of non-executive directors. However, no study has previously looked into possible expectations gaps regarding non-executive directors. This study fills that lacuna and reports the results of a survey sent to more than 1,000 non-executive directors, employee representatives, and institutional investors from the Netherlands. Although we do not find an expectations gap regarding nonexecutive directorsʹ main function, gaps are found with respect to stakeholdersʹ satisfaction with current functioning of non-executive directors and non-executivesʹ roles concerning directorsʹ remuneration. Furthermore, a gap is also present with respect to the interests non-executive directors should serve. The results indicate that, notwithstanding the Cadbury and Peters Committees, the publicʹs confidence in corporate governance has not yet been fully restored.