Analysis of Heineken Group
Heineken Group consists of three entities: L'Arche Green N.V., Heineken Holding N.V., and Heineken N.V. N.V. stands for Naamloze Vennootschap. In Dutch it means "Nameless Partnership" which is a public limited liability corporation.
L'Arche Green is a recently established Swiss company. Heineken's principal long term shareholders decided to combine their shares in this new company. Currently, 88% of L'Arche Green is owned by the Heineken Family, L'Arche Green owns 59% of Heineken Holding, and Heineken Holdings own 50.005% of Heineken. All the remaining shares are free float. This structure keeps the original Heineken Company in the control of the Heineken family. However, keeping Heineken under family control has been a consistent critique of the Heineken group for the last few years.
Heineken holding is the head of the Heineken group. According to its Articles of Association, they manage, supervise, and provide services for Heineken as well as all of Heineken's subsidiaries. Heineken Holding does not have a Supervisory Board or an internal risk management and control system. Also, it does not engage in any operational activities and does not employ staff. It is made up of a Board of directors whose salaries are exclusively the dividends paid on the 50.002% of shares they own in Heineken. These shares are directly attached to Heineken's shares. Heineken Holding's goals, since 1952, have been to safeguard Heineken's continuity, independence, and stability and create conditions for controlled, steady growth. They claim the stability provided by this structure has enabled steady growth of the Heineken group to rise to its present position as the brewer with the widest international presence and as one of the world's largest brewing groups. This business structure has other purposes which go beyond the scope of Heineken's productivity. More specifically, Heineken Holdings endorses the principals of the Dutch corporate governance codes. However, the structure of Heineken group, in particular the relationship between Heineken Holding and Heineken, allows Heineken Holding to not comply with a number of the principals and best practice provisions stated in the Dutch Cooperate Governance Codes. For example: best practice provision II.1.1. limits the period of appointment and reappointment of a member of the board of directors to a maximum of four years, but Heineken Holding's Board of Directors are appointed for an undetermined period. Also, best practice provision II.1.7. limits the number of supervisory directorships of listed companies which may be held by a member of the Board of directors to a maximum of two and does not permit a member of the Board of Directors to be the chairmen of the supervisory board of a listed company. Heineken has its own hierarchy and structure for its Board of Directors.
In short, Heineken Holding, as it has no...