Principles for a controlled remuneration policy

On 6 May 2009, DNB and the AFM presented to the financial sector the principles for a controlled remuneration policy (www.dnb.nl; www.afm.nl). The principles form the starting points for assessing the remuneration policy of financial institutions.

The principles for a controlled remuneration policy are aimed at all executive board members and employees whose pay for a considerable part consists, or may consist, of variable elements. Each financial institution is unique in terms of its nature and scope. Hence expectations are that the implementation of the principles will differ per company.

The principles relate to three levels in the remuneration policy:

The first level concerns the starting points. The remuneration policy of a financial institution must permanently support the integrity and soundness of the company and take into account the interests of clients and other stakeholders.

The second level concerns the governance of the remuneration policy. It is important that there is sufficient vigilance for possible undesired side effects as part of the setup, implementation and evaluation of a remuneration policy.

The third level concerns the design of variable remuneration structures. In those instances where variable pay can be substantial compared to the fixed salary, it is important that sufficient measures are built in to prevent undesired effects of incentives. This starts with setting an appropriate maximum for variable pay compared to the fixed salary. What maximum is appropriate depends on the job profile and the degree to which other measures can be built in to prevent undesired effects of incentives, among other things. Examples include a set of measureable performance indicators in which the interests of all stakeholders are included, correcting commercial performances for risks taken and assessing the performance over a period of multiple years.

During the 2010 annual general meeting, BinckBank will submit a new remuneration policy for the executive board for adoption. This policy will be in line with the principles and serve as a basis for the remuneration structure of the management of BinckBank.