SFL-member Dirk Schoenmaker has co-authored with colleagues of Erasmus University the report ‘Large Shareholders in Corporate Governance’. It is a background study for the Monitoring Committee Corporate Governance on the role of large shareholders in corporate governance in the Netherlands.

Over the period 2006-2016, the concentration of ownership has decreased, from 34.6% to 24.1% ownership by blockholders, shareholders with a stake of 5% or more. The report concludes that this reduced concentration may affect the potential for long-term oriented shareholders negatively.

A key barrier to long-term value creation is periodic benchmarking. Therefore respondents’ indication that they pursue long-term value creation is inconsistent with the wide-spread practice of measuring performance against a market return benchmark.

Schoenmaker recommends to incentivize long-term investors through loyalty shares, which provide an additional reward to shareholders if they have held on to their shares during a so-called loyalty period (three, five or ten years). New investment approaches can also be achieved through differently educating (young) finance professionals on new investment beliefs, which includes ESG-factors and longterm thinking. The prudential supervisor should avoid encouraging institutional investors to follow the market benchmark and allow active long-term portfolio strategies.