Dutch bank and insurance group ING announced cuts of up to 71 percent in executives’ bonuses and 56 percent in their total pay, after waiving a dividend for last year in a results statement on Wednesday.
Amid the continuing global furore over perceived excessive bonuses which some say encourage market undue risk taking, ING said it had decided to slash the chief executive officer’s bonus by up to 71 percent and that of board members by up to 68 percent.
The CEO’s total pay would be cut by as much as 56 percent and that of board members by about half.
“The world is changing, we felt that we had to follow,” CEO Jan Hommen told a press conference broadcast via the internet.
Bonuses would be linked to the company’s financial performance on a “no profit, no bonus” basis, and could later be retrieved for “inaccurate data or harmful behaviour”.
The bonus can longer be more than the fixed salary, which could be exceeded by as much as 350 percent under the existing policy. Severance pay could also not exceed a year’s pay.
The move was in line with an announcement by the Netherlands Bankers’ Association (NVB) last September that the executive bonuses and salaries of all banking executives in the Netherlands will be capped from January 1.
This followed threats by Finance Minister Wouter Bos that he would curb bonuses one way or another if the banks did not do so themselves.
Hommen said the new remuneration policy, which was “well below” the median pay rates of of ING’s international competitiors, would be presented to an annual general meeting in April for approval by shareholders.
ING earlier announced an unexpectedly big fourth-quarter net loss of 712 million euros (980 million dollars), and a worse annual result than in 2008 as it repays state aid.
