Netherlands Plans to Limit Banker Bonuses Further With Lock-Up
(Bloomberg) -- The Dutch aren’t done with regulating banker pay in a country that already has one of the strictest remuneration laws in the European Union.
In a letter to parliament, Finance Minister Wopke Hoekstra proposed making bankers hold on to shares and similar financial instruments in their fixed salary for five years. They would also be compelled to explain how their pay relates to their role in society.
Hoekstra also said he is investigating the legality of possibly clawing back a part of a bank executive’s fixed salary when a financial institution receives state aid. Existing clawback legislation is limited to the variable part of a pay package.
The Netherlands limited bonuses in the banking sector to 20 percent of base salary, much stricter than the European norm of 100 percent. The Dutch bonus cap makes an exception for staff that aren’t part of the sector’s collective labor agreement, but Hoekstra plans to tighten the law.
Public anger over bankers was on display in the Netherlands this year after the country’s largest bank, ING Groep NV, proposed raising the pay of its Chief Executive Officer Ralph Hamers by about half to a total of 3 million euros ($3.4 million). The bank’s supervisory board withdrew the proposal after facing a political backlash.
Despite the earlier steps by the government, public trust in the financial sector is still low, ten years after the financial crisis.
“The recent uproar over remuneration and negligence in preventing money laundering, broke down society’s trust in the sector again,” Hoekstra said in the letter. “And trust is important for the financial sector to operate well.“
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