Dutch bank and insurance group ING announced cuts of up to 71% in executives' bonuses and 56% in their total pay, after waiving a dividend for last year in a results statement today.
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% and that of board members by up to 68%.
The CEO's total pay would be cut by as much as 56% and that of board members by about half. 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% 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.
ING earlier announced an unexpectedly big fourth-quarter net loss of €712m and a worse annual result than in 2008 as it repays state aid.
It also said that it would pay no dividend for 2009 'given the uncertain financial environment'. This was mainly owing to 'an accrual of additional future payments' to the Dutch state in return for a guarantee on US mortgage securities, it said in a statement.
The latest quarterly figure, although a big improvement on a loss of €3.7 billion loss in the fourth quarter of 2008, was a reversal from profit of €500m in the third quarter and €71m in the second.
The quarterly figure helped drag the annual result to a total loss of €935m, worse than the figure for 2008 of €729m.
'2009 was a tumultuous year for financial markets, and for ING,' chief executive officer Jan Hommen said.
'Yet even in this challenging environment, we made great strides to improve our operating performance, cut expenses and return to profit on an underlying basis,' he added.
The group's underlying performance showed a profit of €74m in the last three months of 2009 from a loss of €3.09 billion a year earlier when results were impacted by impairments on US mortgage-backed securities. Total underlying income was €11.4 billion for the fourth quarter, down from €12.7 billion a year earlier.
