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Does the
banking sector
pay excessive
bonuses?
During the financial crisis, the salary
policy of specific financial institutions,
and in particular the bonuses of specific
traders and top managers, was highly
criticised. Large foreign institutions, in
particular, appeared to sometimes pay
bonuses to traders and management
that society considered to be “excessive”.
In the Belgian institutions, such high
amounts were never paid. This does
not mean, however, that the financial
sector in Belgium has not adapted its
remuneration policy where necessary.
Bonuses
In the coalition agreement of 1 December
2011,
it was stated that directors and mem-
bers of management boards are not entitled
to stock options, free shares, bonuses or any
other benefit if their financial institution re-
ceives governmental support. In various large
Belgian banks no such benefits were granted
to the members of the management board,
therefore.
In the next few years also, the bonus policy will
be subject to tough conditions. Any additional
bonuses, for instance, and we mean here the
extras on top of the customary salary, not the
variable remuneration that for example people
with a sales profile receive, must be paid over
a certain amount of time. Moreover, they may
not be granted based solely on financial crite-
ria, but an important criterion will also be cus-
tomer and employee satisfaction. In addition,
performance that is remunerated must also be
tested in terms of sustainability and linked to
long-term results.
A number of institutions has implemented so-
called claw back systems on a voluntary basis:
Board Members and specific senior managers
are paid bonuses, if any, which are not just
spread in time, but their reimbursement may
also be demanded if the results appear not to
justify them in the long term.
For 74% of the sector (4 out of the 19 institu-
tions surveyed), half the remuneration com-
mittee is made up of independent directors. For
another 18% (10 out of the 19 institutions sur-
veyed), there is at least one independent person.
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Ethical enterprise