A team from Stibbe has participated in the public consultation launched by the Minister of Finance on additional remuneration restrictions within the financial sector. In their response (in Dutch), the Stibbe team pointed out that there are several legal objections to the proposed measures. Furthermore, the team has raised questions regarding the necessity and legal justification for introducing these additional measures.
On 17 July 2018, the Dutch Minister of Finance published a consultation document regarding potential additional remuneration restrictions within the financial sector. The purpose of these restrictions is to help to restore trust within the financial sector.
As part of the consultation, market participants were invited to provide input on the following three statutory obligations regarding fixed remuneration:
- Extension clawback: partial clawback of fixed pay (above a certain minimum) of the management of a bank or insurer will apply if state aid (staatssteun) is received.
The purpose of this requirement is to hold the managers more personally accountable when the tax payer has to bail out a failing bank or insurer.
- Retention period: management and employees will be obliged to retain shares or components of their fixed pay, the value of which depends on the market value of the firm, for a certain period.
The purpose of this requirement is to align the interests of the management and the employees with the long-term interests of the firm.
- Social function: the remuneration policy of a financial firm must prescribe how the remuneration of management and employees relates to the social function of the firm. In addition, firms must hold themselves publicly accountable for their decision.
The purpose of this requirement is to ensure that firms, take their social function into account when making remuneration proposals and explain themselves afterwards.