corporate governance

Principles

At Randstad, sound corporate governance has always been a key component of our culture and behavior. Our business processes throughout the organization incorporate transparency for both external reporting and the sound management of our activities around the world. This transparency has been achieved through the consistent application of our core values, described on page 5. This culture has been actively developed for many years, and this process continues today. Randstad therefore has a strong focus on integrity, transparency and clear and timely communication. Good corporate governance and adequate supervision are important prerequisites for trust in Randstad and its management. Decisions taken on corporate governance must be seen in the context of an ongoing process. National and international developments are closely monitored. Given the increased international exposure of Randstad and its businesses, the international context is of vital importance.

Following the introduction of the Dutch corporate governance code (the ‘code’) in 2005, Randstad’s corporate governance structure was discussed at the Annual General Meeting of Shareholders in May 2005. Randstad is in compliance with the code and has adopted all relevant recommendations. As the code is based on the ‘comply or explain’ principle, we explained a number of so-called ‘deviations’ to shareholders, which are noted below. No changes to the corporate governance structure have occurred since.

In December 2008, the revised code was introduced. The suggested amendments and new provisions, included in the revised code, were extensively discussed by the executive board and supervisory board during their joint meeting on February 25, 2009. Randstad will implement any of these changes and additions where feasible and relevant. In our 2009 annual report, we will again report on our corporate governance structure and compliance with the revised code and submit corporate governance as a separate agenda item for discussion with shareholders during the Annual General Meeting in 2010.

Our governance in practice

Randstad operates a two-tier board structure. The supervisory board comprises the non-executive directors, while the executive board comprises the executive directors of the company. Both boards have their own unique responsibilities, which focus on Randstad’s general interests and take into account the interests of all stakeholders. Both boards are accountable to shareholders, who should at all times be provided with a clear view on corporate decisions and the decision-making process. Any conflict of interest between Randstad and a board member should be avoided. A (potential) conflict of interest must be reported immediately to the other board members and/or the chairman of the supervisory board. Any shareholding in the company must be for the purpose of long-term investment. Board members must at all times comply with the provisions contained in the Randstad insider dealing rules. The rules include, amongst other items, a policy that Randstad share and option dealings by board members, as well as senior corporate staff, should normally be restricted to the two weeks following the publication of quarterly financial results, provided the person involved has no inside information at that time.

Executive board

Tasked with the management of the company, the executive board is accountable for developing, driving, executing and achieving the approved Group strategy and strategic targets. The executive board is also responsible for sound business and financial controls, while respecting policies that have been set. The responsibility for the management is vested collectively in the executive board. Since 2005, board members have been appointed for a maximum term of four years. The division of tasks between the board members requires the approval of the supervisory board. Any board position at another company requires the prior approval of the supervisory board. In any event, a member of the executive board may not be a member of the supervisory board of more than two listed companies or serve as chairman of the supervisory board of another listed company.

Supervisory board

The supervisory board, acting in the interests of the company, supervises and advises the executive board in performing its management tasks, setting the direction of the Randstad business and guiding the general development of the company, including its financial policies and corporate structure. It evaluates the strategy, development of results, operating model and internal control mechanisms established under the executive board’s management. It is empowered to recommend to general meetings of shareholders persons to be appointed as members of the supervisory board and executive board. Major management decisions, including those involving Group strategy, require the approval of the supervisory board. The supervisory board further supervises the structure and management of systems of internal business controls and the financial reporting process. It determines the remuneration of the individual members of the executive board within the remuneration policy adopted by general meetings of shareholders.

Appointments and reappointments to the supervisory board are considered on the basis of a profile, taking into account the nature of the business and activities of Randstad as well as the desired background and expertise of candidates. A member of the supervisory board should limit the number of supervisory board memberships and other positions at listed and non-listed companies in such a way as to guarantee the proper performance of his or her duties and may not hold more than five supervisory board memberships in Dutch listed companies, with a chairmanship counted twice. Supervisory board remuneration is determined by general meetings of shareholders and is not dependent on the company’s results.

While the supervisory board as a whole retains overall responsibility, it assigns some of its tasks to three permanent committees: the audit committee, the strategy committee and the nomination & compensation committee. Their well-grounded advice and recommendations support the full supervisory board’s decision-making.

The audit committee assists the supervisory board in fulfilling its supervisory responsibilities for the integrity of the financial reporting process, the system of internal business controls and risk management, the external audit process, the external auditors’ qualifications, independence and performance, as well as Randstad’s process for monitoring compliance with laws and regulations.

The strategy committee acts as sparring partner for the executive board and produces an annual strategy paper for discussion with the full supervisory board. It works with the executive board on updates to strategic targets and monitors and evaluates growth criteria.

The nomination & compensation committee makes proposals for the remuneration of members of the executive board and supervisory board. It also reviews the size, composition and performance of both boards and their members.

Both boards, including the committees of the supervisory board, have their own regulations, which set rules with regard to objectives, composition, duties, responsibilities and working methods. These regulations are posted on the corporate website.

Annual General Meeting of Shareholders

The Annual General Meeting of Shareholders appoints the members of the supervisory and executive boards based on non-binding recommendations from the supervisory board. Other important matters which require the approval of shareholders are:

• adoption of the annual accounts
• adoption of profit appropriation
• additions to reserves
• dividends
• remuneration policy
• discharge of the executive board for the management
• discharge of the supervisory board for the supervision of the management appointment of the external auditor
• appointment, suspension and dismissal of the members of the executive board and supervisory board
• remuneration of the supervisory board
• authorization to purchase, issue or sell shares in the Group’s capital
• adoption of amendments to the Articles of Association.

As of 2009, the timing of the Annual General Meeting of Shareholders will be advanced to the end of March or early April. Within three months after the meeting, the draft report of the meeting is made available for three months for comments. The final report is posted on the corporate website.

Voting rights

The issued share capital of Randstad Holding nv currently consists of approximately 169.5 million ordinary shares and 25.2 million Type-B preferred financing shares. The ordinary shares have equal voting rights (‘1 share, 1 vote’). As per December 31, 2008, the holders of approximately 95.4% of ordinary shares have been able to make unrestricted use of their voting rights at the Annual General Meeting of Shareholders. The other 4.6% of ordinary shares has been converted into depository receipts. A foundation, Stichting Administratiekantoor Randstad Optiefonds, holds those shares to which the attached voting rights are vested. The depository receipts issued by Stichting Administratiekantoor Randstad Optiefonds are fully exchangeable into ordinary shares, and are held by Stichting Randstad Optiefonds and by employees who have obtained depository receipts by exercising options. Frits Goldschmeding, the company’s founder, is the sole board member of Stichting Administratiekantoor Randstad Optiefonds.

The foundation Stichting Administratiekantoor Preferente Aandelen Randstad Holding holds Type-B preferred financing shares. The voting rights attached to these shares are vested in this foundation. The board comprises Bas Kortmann, Bram Anbeek van der Meijden and Ton Risseeuw. The board members are fully independent of both the company’s management and other shareholders. The foundation’s Articles of Association were compiled in accordance with Annex X, Euronext Amsterdam Rule Book, Book II. Depository receipts issued by the foundation are held by ING Groep N.V., Fortis N.V. and Randstad Beheer bv. Effective August 4, 2008, the number of voting rights on the Type-B preferred financing shares, has been aligned with the historical capital contribution. The total number of votes on these shares has been reduced from 25.2 million to 3.6 million. Following an amendment to the Articles of Association, the preferred shares are now classified as equity.

Auditor

The executive board ensures that the external auditors can properly perform their audit work and encourages both the external auditors and the company to properly pursue and perform the role and the policy of the company regarding the external auditor. The Annual General Meeting of Shareholders charges the external auditors with the task of auditing Randstad’s annual accounts.

Internal risk management and control systems

You will find a detailed description of Randstad’s risk & control framework here. This section also includes specific actions taken in this area in 2008, including the effective working of control systems and compliance with relevant regulatory environments.