Remuneration of Dutch pension fund board members

This thesis research focusses on the remuneration of the board members of Dutch pension funds. Academic literature describes the existence of a principal-agent relationship between the stakeholders and/or shareholders of an organisation and its executive board members. According to the agency theory, conflicts of interests cause the agents (board members) not to act in the best interest of the principals (stakeholders and/or shareholders). Literature dictates that the most effective way to align the interests of the agents with the interests of the principal, and thereby improving the performance of the agent, is a combination of governance mechanisms that prevent the agent from acting in their own interests and pay incentives that stimulate the agent to act in the best interest of the principal. With the public debate on executive remuneration still going on, this thesis research aims to find out to what extent pay incentives are being used for the remuneration of Dutch pension fund board members and if this use is effective according to the literature on executive remuneration. The research concludes that plenty of governance mechanisms are used for managing the behaviour of the board members, but it appears that pay incentives are not being used. These findings are in contrast to what literature suggests and hence lead to the recommendation for pension funds and their stakeholders to investigate the possibilities for introducing incentive plans for the remuneration of pension fund board members, in order to maintain (or improve) the decision making performance of pension fund boards.