A bill has been submitted to the Second Chamber of Parliament giving the supervisory board statutory powers to revise or claw back executive bonuses. The bill covers pay to directors of public limited liability companies (NVs) as well as directors of financial institutions, including banks, insurers, and investment companies.
If the bill becomes law, supervisory directors will be able to
- adjust the amount of a bonus to an appropriate level if payment of the proposed bonus were to be unacceptable according to the criteria of “reasonableness and fairness”
- if an imminent public offer were to make a bonus unconditional, revise the amount of the bonus if payment at the proposed level were unacceptable according to the criteria of reasonableness and fairness
- claw back all or part of a bonus on the company’s behalf if the bonus was based on incorrect information concerning (i) achievement of the targets underpinning the bonus or (ii) the circumstances on which the bonus was made conditional.
In financial institutions, these revisory and claw back powers apply not only to executive bonuses but to the wider group of day-to-day policymakers. In addition, the bill introduces an expertise requirement in these financial institutions for members of supervisory bodies. By way of transition, the bill proposes for the first four years after it becomes law to exempt existing supervisory directors from the expertise test.