Labour and SP call for ban on bonuses for all banks and insurers
Labour and SP call for ban on bonuses for all banks and insurers
The PvdA (Labour Party) and the SP are urging a ban on bonuses for all banks and insurance companies in the Netherlands. In order to realize such a ban, the two parties will bring forward a legislative proposal.
Labour Member of Parliament Ronald Plasterk, commenting on the proposal, says: “Bonuses in the financial sector give the wrong performance incentives and set a bad example. At the same time, the bonuses are bad for the financial sector’s reputation. The financial sector has to a large extent a utility function. That was a reason to jump in during the banking crisis with tax moneys when things went awry, and then in the public interest to put a stop to wrongheaded incentives, such as the bonuses.”
The proposed act consists of the following elements:
- The ban on bonuses for the financial sector will be included in the law.
- The ban on bonuses will apply to all executives and members of staff employed in the financial sector in the Netherlands.
- A ceiling for variable salary payments of a maximum 20% of the basic fixed salary, so that the ‘13th month’ and other elements of a normal salary policy will remain possible.
This initiative goes further than the existing Code of Conduct for banks, the ‘Code Banken’:
- A ceiling for variable salary payments of a maximum 20% of the basic fixed salary goes further than the maximum bonus of 100% of the basic fixed salary for executives in the existing ‘Code Banken’.
- It is not voluntary.
- It does not only apply to members of the Board of Directors, but to all members of staff.
- There is no ‘comply-or-explain’ get out clause, which under the current Code of Conduct allows exceptions, provided an explanation is given.
SP Member of Parliament Ewout Irrgang says that “the proposal also goes further than the government’s legislative proposal shortly to be considered in Parliament for a ban on bonuses in banks enjoying state financial support. That proposal concerns exclusively bonuses for executives and applies only to the period that banks are receiving state support.”