Research report - Rotterdam School of Management

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3.4. Sample characteristics Table 1 presents the summary statistics (after pooling the observations of the three survey years) for the three compensation components and the independent variables. Compensation sales have been transformed into 2008 euros using the harmonized price index of the Netherlands (HCIP) 41,42 . Compensation The CEO’s median base salary is EUR 497,578, while the average base salary equals EUR 583,466. The median variable compensation equals EUR 455,604. Mean variable pay is however substantially larger, EUR 973,480, which indicates the great variance of variable pay in our sample. Median total compensation of the CEO is equal to EUR 919,190 (mean: EUR 1,556,945). Economic determinants Panel B of table 1 shows that median sales are EUR 1.6 billion. The average sales amounts to EUR 10.4 billion euros, mainly caused by large cap companies as Royal Dutch Shell and ING Group that are part of the AEX index. Median stock returns are negative following the strong global declines in the stock markets as a result of the credit crisis. This also causes a strong increase in share price volatility from about 25% in 2006 to over 50% in 2008 (not reported). Average share price volatility is 35.2%. The return on equity, however, remains positive in our sample period. Finally, the median market-tobook ratio equals 2.0. Ownership structure Outside blockholders hold on average 31.2% of the shares outstanding (median 28.0%), which illustrates that the Netherlands lies between a fully dispersed ownership structure of Anglo-Saxon countries and strong ownership concentration like in Germany with dominant single blockholders. More than half of the companies (57.5%) use one or more anti-takeover measure and 28.5% have a “potentially active institutional investor” as largest blockholder. Almost twelve percent of the CEOs in our sample own at least 1% of the shares. This figure is 2.5% for other members of the management board (excluding the CEO). For eight percent of the companies in our sample, the combined supervisory board (all members including the Chairman) owns at least 1% of the shares outstanding at year-end. 41 http://statline.cbs.nl/StatWeb/publication/default.aspx?DM=SLNL&PA=71099ned&D1=a&D2=a%2c!0- 134%2c!142&HDR=T&STB=G1&VW=D. 42 We also used this HCIP index to convert return on equity and stock return from nominal returns to real returns.
Board characteristics Forty-five percent of the companies have a supervisory board consisting of more than 5 members, the latter representing the median for the sample. An interesting finding is also that thirty-eight percent of the companies have at least one supervisory board member that does not qualify as independent accordancing to the Dutch Corporate Governance Code. Note, however, that the Dutch CG Code allows one supervisory board members to be qualified as non-independent, so the 38 percent should not be interpreted as the percentage of companies that is not compliant with the Dutch Corporate Governance Code. About 26 percent of the CEOs have tenure of more than 6 years. This percentage is 42 percent for Chairman of the supervisory board and 12 percent with regard to the average tenure of the other supervisory board members (excluding the Chairman).
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Research report - Rotterdam School of Management

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