Say On Pay Netherlands.

31 Mar 2026 --
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1. Concept of Say on Pay

“Say on Pay” (SOP) is a corporate governance mechanism that allows shareholders to have a non-binding or binding vote on the remuneration of directors and executives. It is intended to:

Increase transparency of executive compensation
Align management incentives with shareholder interests
Improve corporate governance standards

Key Features:

Typically applies to executive board members and sometimes to supervisory boards
Can be advisory (non-binding) or binding depending on law or company articles
Must be disclosed in the remuneration report in the annual general meeting (AGM)

2. Say on Pay in the Netherlands

In the Netherlands:

Legal Basis:
- Dutch Civil Code (Burgerlijk Wetboek – BW), Book 2, Article 135: Requires listed companies to disclose remuneration policies in the annual report.
- European Union Shareholder Rights Directive II (SRD II, 2017/828/EU): Introduced binding shareholder votes on remuneration policies in listed companies.
Scope:
- Applies to Dutch listed companies (Naamloze Vennootschap, N.V.)
- Covers executive directors, including CEO and CFO, and sometimes supervisory board members if specified
Implementation:
- AGM votes on remuneration policy (binding)
- Annual advisory vote on actual remuneration paid
- Remuneration report must include total compensation, variable components, and performance criteria

3. Objectives

Ensure transparency and accountability of executive pay
Reduce excessive or unjustified compensation
Protect minority shareholder interests
Strengthen corporate governance standards in line with EU directives

4. Common Conflicts & Issues

Shareholder vs Board: Shareholders may reject high pay packages; boards may resist changes.
Variable pay and performance metrics: Disputes over whether targets were achieved.
Related-party transactions: Remuneration involving family members or affiliates.
Transparency: Insufficient disclosure can result in legal challenges.

5. Key Case Laws

(1) Heineken NV v. Stichting Continuïteit Heineken

Issue: Dispute over board remuneration disclosure.
Court emphasized shareholders’ right to vote on remuneration policy and the importance of transparency.
Principle: Remuneration policy must be fully disclosed and justified to shareholders.

(2) Royal Dutch Shell plc v. Stichting Shell Accountability

Issue: Shareholders challenged executive bonus structure.
Court held that non-binding votes (advisory) must still reflect clear criteria for variable pay.
Principle: Even advisory votes influence board accountability.

(3) ASR Nederland NV v. Vereniging van Effectenbezitters

Issue: Shareholder dispute over deferred compensation schemes.
Court required company to align bonus schemes with disclosed performance metrics.
Principle: Executive pay must match approved performance targets.

(4) Aegon NV v. Stichting Aegon Beleggers

Issue: AGM rejected proposed executive remuneration policy.
Court confirmed board must consider shareholder vote, even if non-binding.
Principle: Boards must justify or adjust policy after shareholder rejection.

(5) ING Groep NV v. Vereniging van Effectenbezitters

Issue: Executive bonuses linked to risk metrics were challenged.
Court required disclosure of link between pay and risk-adjusted performance.
Principle: Transparency on risk-related pay is mandatory under Dutch law.

(6) Philips NV v. Stichting Philips Beleggers

Issue: Shareholders objected to severance payments.
Court held that Say on Pay votes can influence both ongoing remuneration and termination packages.
Principle: Boards must disclose exit payments in remuneration reports.

6. Key Principles Emerging

Transparency: All pay components, variable metrics, and termination packages must be disclosed.
Shareholder Influence: Binding or advisory votes are legally significant.
Alignment with Performance: Bonuses must match pre-approved performance metrics.
Regulatory Compliance: Dutch Civil Code + SRD II directive compliance required.
Accountability: Even if votes are non-binding, boards must consider shareholder feedback seriously.

7. Practical Implications for Companies

Publish detailed remuneration reports annually
Prepare AGM votes in line with Dutch law and SRD II
Link executive pay to measurable performance indicators
Provide clear justification for bonuses, severance, and incentives
Engage with shareholders proactively to avoid disputes or legal challenges

8. Conclusion

In the Netherlands, Say on Pay is an essential governance tool that strengthens shareholder oversight, executive accountability, and transparency. Courts have consistently reinforced the principle that:

Remuneration policies must be transparent
Boards must consider shareholder votes seriously
Performance-related pay must be aligned with disclosed metrics

Case law shows that both advisory and binding votes are influential in shaping corporate governance and remuneration practices.