On 17 December 2018, the Minister of Finance announced in a letter to Parliament a number of statutory measures to tighten up the remuneration policy in the financial sector. These measures result from the public consultation on this topic on 17 July 2018 and the subsequent round table meeting with stakeholders.
Legislative measures to be introduced
- An obligation for (management) board members and employees of financial undertakings to hold shares and (certain) other components of their fixed remuneration, the value of which depends on the market value of the undertaking, for a period of 5 years. The purpose of this measure is to restrict short-term risks and to harmonize the interests of board members and employees with the long-term interests of the enterprise. The measure concerns the fixed remuneration of board members and employees of financial undertakings, regardless of whether they are listed.
- An obligation for each financial undertaking to describe in its remuneration policy the manner in which the undertaking renders account of the relationship between the remuneration of its (management) board members and employees to the undertaking's function in the financial sector and its position in society. This should ensure that supervisory boards take greater account of the function and position of the undertaking prior to establishing remuneration proposals, and provide insight into the involvement of stakeholders such as the works council and shareholders. The measure aims to foster public support and trust in the financial sector as a whole and will therefore apply to the remuneration policy for (management) board members and employees of financial companies, whereby the size and internal organization of the enterprise and the nature, scope and complexity of its activities shall be taken into account.
- The limitation of the exception to the bonus cap for persons that fall outside of a collective labour agreement. According to the minister, the exception will only remain available for exceptional cases. In addition, the exception may not be applied to persons in an internal control function or for persons directly involved in the provision of financial services to consumers.
Legislative measure to consider
The minister is further considering a statutory obligation to reclaim part of the fixed remuneration of board members of systemically important banks in the event of state aid (also referred to as claw back). Since many stakeholders indicated during the public consultation that this measure will encounter objection under European law, the minister requested advice from the Council of State. Such advice is scheduled for Q1 of 2019. Upon receipt of the advice, the minister intends to share his decision on this topic by means of a subsequent letter to Parliament.
It is expected that these measures will be included in the Financial Supervision Act (Wft), which would entail a legislative amendment. The minister has not given a concrete timetable for this. New domestic legislation generally comes into effect on 1 January or 1 July. If a bill is submitted in Q2 of 2019 - after the aforementioned advice from the Council of State has been obtained - it will enter into force on 1 January 2020 at the earliest.