Corporate governance
NV Nederlandse Spoorwegen is a public limited company under Dutch law. Its registered office is in Utrecht. NV Nederlandse Spoorwegen is the holding company of NS Groep N.V. NS is a state-owned company.
The governance of NS is based on the modified two-tier company regime. NS is managed by the Executive Board, which consists of the same people for NS Groep N.V. and NV Nederlandse spoorwegen (a common board). The Supervisory Board oversees the Executive Board.
Governance framework
Laws and regulations
NS’s governance structure is based on Book 2 of the Dutch Civil Code and the Corporate Governance Code. The structure is detailed in NS’s Articles of Association and various internal regulations. The Railways Act, the Competition Act and the Policy document on state-owned companies also contain provisions that are relevant to NS’s governance. The Articles of Association and various regulations can be found on the NS website.
Corporate Governance Code
As a major enterprise with a significant role in Dutch society, NS attaches great value to a high-quality governance structure. Although not a listed company, it still applies the Dutch Corporate Governance Code 2022 (“the Code”), partly in light of the Policy document on state-owned companies. Given that NS is not a listed company and does not have a one-tier management structure, several elements of the Code do not apply to it. The NS website presents an overview of how NS complies with the provisions of the Code.
Shareholder
The sole shareholder of NV Nederlandse Spoorwegen is the Dutch State. The role of shareholder is performed by the Minister of Finance. The Annual General Meeting takes place within six months after the close of the financial year. The Annual General Meeting discusses the annual report and adopts the financial statements, approves the profit appropriation (if applicable), decides whether to discharge the members of the Executive Board from liability for their policy work and the members of the Supervisory Board from liability for their supervision. The Executive Board, the Supervisory Board and the shareholder are free to convene extraordinary general meetings as often as they wish. Resolutions can also be adopted outside of meetings.
Key powers of the shareholder under the Dutch Civil Code include appointing and dismissing members of the Supervisory Board and, under the mitigated structure regime, appointing and dismissing members of the Executive Board on the recommendation of the Supervisory Board, determining the remuneration policy, approving major investments, adopting the financial statements and approving the proposed profit distribution/transfer to reserves. Additionally, NS’s Articles of Association stipulate that the shareholder is to be consulted in the formation of the strategy.
Executive Board
Tasks and responsibilities
The Executive Board is responsible for the continuity and sustainable long-term value creation of the company and its affiliated enterprise. To that end, the Executive Board develops the vision and the associated mission, strategy and objectives of NS. The Supervisory Board is involved in a timely manner and adopts the strategy after consulting the shareholder. The Executive Board is also charged with and responsible for managing the business and implementing its strategy. In addition, the Executive Board is responsible for compliance with all relevant laws and regulations, risk management and financing of the company. Annually, the Executive Board evaluates the risk appetite, which is set by the Supervisory Board.
In carrying out its duties, the Executive Board takes the sustainability aspects of the business and the impact of sustainability issues on NS into account. NS discusses these issues with stakeholders and carefully weighs their interests. This means that when developing strategy and making decisions, in addition to finance, the Executive Board also considers aspects such as safety, impact on people and the planet, and NS’s role in the provision of sustainable mobility. The Executive Board reports to the Supervisory Board and the General Meeting.
Regulations of the Executive Board
In addition to legal requirements and the Articles of Association, the Executive Board is bound by its own regulations. These regulations include provisions on its composition, duties and powers, and on meetings and decision-making. In addition, the regulations contain provisions on conduct and culture, on its relationship with the Supervisory Board and how information is provided, and procedures in the event of actual or potential conflicts of interest.
Pursuant to the Articles of Association of NV Nederlandse Spoorwegen, the Executive Board Rules of Procedure and the Supervisory Board Rules of Procedure, certain decisions by the Executive Board must be submitted for approval to the Supervisory Board and/or the General Meeting.
Appointment and dismissal
Executive Board members are appointed by the General Meeting on the recommendation of the Supervisory Board. The Supervisory Board decides on the number of members of the Executive Board and the distribution of portfolios. Members of the Executive Board can be suspended or dismissed by the General Meeting. Members of the Executive Board are appointed or reappointed for a period of no more than four years. The Executive Board and Supervisory Board strive to achieve a level of diversity appropriate for NS, in terms of expertise, experience, skills, other personal qualities, gender or gender identity, age, nationality and cultural or other background. Both the Executive Board as a whole and each individual Executive Board member are authorised to represent NS. On 15 October 2023, Anneke de Vries stepped down as a member of the NS Executive Board due to the expiry of her term. The Supervisory Board expects to be able to appoint a replacement soon. Angelique Magielse will be appointed to the Executive Board as Finance Director effective 1 March 2024. She succeeds Bert Groenewegen, who will step down as Finance Director on that date.
Interests
The Articles of Association and Executive Board regulations contain instructions on how to deal with conflicts of interest. Decisions by the Executive Board to enter into transactions involving, among other things, conflicts of interest that are of material significance to NS and/or a member of the Executive Board require the prior approval of the Supervisory Board. Such transactions are published in the report of the Executive Board, stating the conflicting interests. There were no such transactions in 2023.
Remuneration
The remuneration and terms of employment of Executive Board members are established by the Supervisory Board with due regard for the remuneration policy adopted by the General Meeting.
Supervisory Board
Tasks and responsibilities
The Supervisory Board’s tasks include supervising the Executive Board’s policies and the general affairs of the company and its affiliated enterprise. It also advises the Executive Board. In performing its duties, the Supervisory Board focuses on sustainable long-term value creation for the company and its affiliated enterprises, taking into consideration the interests of the company’s stakeholders. The Executive Board promptly provides the Supervisory Board with the information and resources it requires in order to properly perform its role. If the Supervisory Board or one of its members consider it necessary, they can obtain information from the Executive Board, NS Audit, the external auditor, NS Risk & Compliance, the Central Works Council or other officials and external advisers to NS. Every year, the Supervisory Board evaluates the performance of the Executive Board as a collective and that of the individual directors. The Supervisory Board reports to the General Meeting.
Regulations of the Supervisory Board
The division of duties within and working methods of the Supervisory Board are laid down in the Supervisory Board Regulations. These regulations also cover its relationship with the Executive Board, the General Meeting and the employee participation bodies, the relationship with NS Audit and the external auditor, and procedures in the event of actual or potential conflicts of interest. The Supervisory Board is bound by these regulations as well as by statutory regulations and NS’s Articles of Association.
The Supervisory Board as a whole is responsible for the proper implementation of its tasks. The Supervisory Board conducts an annual self-assessment, periodically under the guidance of an external expert.
Appointment and dismissal
Supervisory Board members are appointed by the General Meeting, on the recommendation of the Supervisory Board, with due observance of the job profile and after consulting the Central Works Council. The Central Works Council has enhanced powers of recommendation covering the nomination of one-third of the Supervisory Board members. The Supervisory Board has at least five members and no more than nine. The Supervisory Board had six members as at 31 December 2023.
The Supervisory Board has drawn up a profile for its size and composition, taking account of the nature and activities of the company and the desired expertise and backgrounds of its members. The Supervisory Board aims for a mixed composition of its members with regard to, among other things, expertise, experience, skills, other personal qualities, gender or gender identity, age, nationality and cultural and other background. Supervisory Board members can be appointed for two terms of four years each. After that period, they can be reappointed for a maximum of two terms of two years each. Reappointment after a period of eight years must be justified by the Supervisory Board in its report. In 2023, Supervisory Board Chair Gerard van de Aast and Supervisory Board member Nebahat Albayrak stepped down due to the expiry of their respective terms. Herman Dijkhuizen was appointed Chair of the Supervisory Board in 2023. Ron Teerlink and Pamela Boumeester were appointed to the Supervisory Board last year, the latter subject to the enhanced powers of recommendation of the Central Works Council. Pamela Boumeester previously served as Director of NS Stations. The Supervisory Board’s retirement schedule is published on the NS website.
Interests
Members of the Supervisory Board will not participate in discussions and decision-making around any matter or transaction where their direct or indirect personal interests conflict (or could potentially conflict) with the interests of NS. In 2023, this situation occurred once.
Committees of the Supervisory Board
In view of its size and the diversity and complexity of the matters it has to handle, the Supervisory Board has set up a Risk and Audit Committee and a combined Remuneration and Appointments Committee. The Supervisory Board can also establish temporary committees. In 2023, the Supervisory Board worked with such a committee in connection with the new franchise. The composition of these committees is determined by the Supervisory Board. The committees advise the Supervisory Board and prepare its decisions. The Supervisory Board as a whole remains responsible for the decisions that have been prepared by a committee.
For each of its two standing committees, the Supervisory Board has adopted regulations which lay down the responsibilities, duties, working methods and composition.
Risk and Audit Committee
The Risk and Audit Committee (RAC) advises the Supervisory Board and prepares the Supervisory Board’s decisions with respect to monitoring the integrity and quality of NS’s financial and sustainability reporting and assessing the effectiveness of NS’s internal risk management and control systems. The RAC Rules of Procedure stipulate that the RAC must have at least three members who are also members of the Supervisory Board. The RAC had six members as at 31 December 2023.
Remuneration and Appointments Committee
The Remuneration and Appointments Committee (Renomco) prepares the decisions of the Supervisory Board in areas such as the appointment of Executive Board and Supervisory Board members, the performance of the Executive Board and the Supervisory Board, and the formulation, implementation and monitoring of the remuneration policy for the Executive Board. The Renomco Rules of Procedure stipulate that the Renomco must have at least three members who are also members of the Supervisory Board. The members of the Supervisory Board appointed on the recommendation of the Central Works Council as referred to in Book 2, Article 158(6) of the Dutch Civil Code are automatically part of the Remuneration Committee and thus of Renomco. On 31 December 2023, the committee consisted of five Supervisory Board members.
External auditor
The General Meeting appoints the external auditor on the recommendation of the Supervisory Board. The external auditor reports to the Supervisory Board and the Executive Board with regard to the audit it has conducted. After the examination and audit, the external auditor issues an opinion on the integrity of NS’s annual report and financial statements.
The RAC reports annually to the Supervisory Board on the functioning of and developments in the relationship with the external auditor. The external auditor attends the meetings of the Supervisory Board in which its report on the audit of the financial statements is discussed, and is also available for the General Meeting at which the financial statements are adopted. The external auditor also attends the meeting of the Supervisory Board held to discuss the six-monthly figures. In principle, the external auditor attends RAC meetings, unless the RAC determines otherwise. EY has been NS’s external auditor since the 2014 financial year. In 2020, the appointment of EY in that role was extended by two years to cover the period up to and including the 2023 financial year, in line with the rule regarding the maximum term of office of an external auditor. KPMG is the new external auditor of NS with effect from 1 January 2024.
Three lines of defence
NS has designed its risk governance approach using the ‘three lines of defence’ model. The guiding principle in this model is that the first line of defence (line management) is responsible for risk management by properly embedding it in processes and clearly assigning responsibilities. The second line of defence, comprising Risk & Compliance, provides support and advice and makes sure that line managers are fulfilling their responsibilities as intended. Furthermore, partly due to advice from the second line, risks are explicitly and demonstrably considered in decision-making. The third line of defence, comprising NS Audit, carries out independent audits to make sure that the risk management and internal control system is working properly. Finally, safeguards have been put in place to ensure that NS will learn from incidents, thus promoting the continuous improvement of risk management processes.
NS Audit
NS Audit provides independent and objective assurance and advice on the adequacy of governance, risk management and internal control measures in view of the need to support NS’s objectives and promote continuous improvement. Every year, NS Audit draws up an annual audit plan that is adopted by the Executive Board and the Supervisory Board. NS Audit is immediately subordinate to the Executive Board. The NS Audit Director reports to the Chair and CEO. The NS Audit Director also reports to the chair of the RAC. The NS Audit Director has direct access to the NS Chair and CEO, the chair of the RAC, the members of the Executive Board, the members of the Supervisory Board and the external auditor. The NS Audit Director attends RAC meetings.
NS Risk & Compliance
NS Risk & Compliance (R&C) supports the Executive Board and management in achieving business objectives by providing insight into risks and compliance issues in relation to NS’s strategy and operations and by issuing advice on control and other measures to be taken.
R&C is immediately subordinate to the Executive Board. The R&C Director reports to the Chair and CEO. In addition, the R&C Director has regular meetings with the RAC chair. R&C provides high-quality quarterly risk reports to the Executive Board and the RAC. The R&C Director attends RAC meetings.
Regulators
NS has to deal with external regulators who, among other things, monitor NS’s compliance with specific laws and regulations. The most relevant of these regulators for NS are:
The Netherlands Authority for Consumers and Markets (ACM), which monitors compliance with the Competition Act and, specifically in relation to NS, compliance with the Railway Act and the Passenger Transport Act 2000.
The Dutch Data Protection Authority (AP), which monitors compliance with statutory rules on the protection of personal data.
The Human Environment and Transport Inspectorate (ILT), which oversees the safety of passenger transport and maintenance operations.
The Netherlands Labour Authority, which monitors compliance with laws and regulations of the Ministry of Social Affairs and Employment, including working conditions.
The Dutch Authority for the Financial Markets (AFM), which supervises insurers and other financial service providers. With its internal insurance business, NS falls under the Financial Supervision Act and AFM supervision.
The Netherlands Food and Consumer Product Safety Authority (NVWA), which monitors compliance with laws and regulations of the Ministry of Agriculture, Nature and Food Quality (LNV), including the Commodities Act.
Sustainable enterprise
The CSR (Corporate Social Responsibility) Council is NS’s policy preparation body for sustainable enterprise. The Council comprises the business unit and staff department directors and its meetings are chaired by the Commerce & Development Director. Where necessary, proposed decisions and policies are submitted for approval to the Executive Board. Progress and development in sustainability results are monitored and managed through the regular planning, control and reporting cycle. Every two months, the CSR Council discusses the KPI reports on sustainability performance. In accordance with the Code, the Executive Board is responsible for the aspects of Corporate Social Responsibility that are relevant to NS. The Executive Board reports on these matters to the Supervisory Board and the General Meeting.