March 13, 2015
The Netherlands Adopts 20% Bonus Cap for Bankers
– Robbert Gerritsen & Kevin De Pril, ISS Benelux Research
A mandate to cap variable remuneration at 20 percent of base salary for all persons working for a financial institution in the Netherlands was adopted on Jan. 27, 2015, by the Dutch Senate, despite some opposition at the end of 2014. In October 2014, the Dutch Parliament approved the bill and also added additional requirements. The bonus restrictions would not only be applicable to banks and insurers, but also to investment companies, investment managers, and UCTIS. Furthermore, half of the variable remuneration should be based on non-financial performance criteria, and severance pay cannot amount to more than 100 percent of the fixed base salary. The bill now also includes additional publication requirements on the payment of variable remuneration.
The approved bill then received considerable opposition in the Senate where various questions were raised concerning the ineffectiveness of the current regulation, whether circumstances have changed since the implementation, how this bill relates to European-wide regulations, and how the bill fits in the framework of labor laws.
Certain parties were not satisfied with the finance minister’s answers from early January. The bill was nevertheless adopted and will become effective on a date to be determined. Consequently, this new law might affect some of the Dutch AGM agendas.