The Dutch have had their own bonus brouhaha over the past few weeks, with bailed-out bank ING coming under fire for paying out 300 million euros in bonuses for 2008. It resulted in the bank’s chief executive asking his top 1,200 managers to give their bonuses back, and then a “gentleman’s agreement” (herenakkoord) between Finance Minister Wouter Bos and the heads of 12 top financial institutions.
I heard an interview with Bos on my favorite Dutch radio show last week in which he said that he and Tim Geithner had gotten to talking about bonuses at the G-20 summit in London (the Netherlands isn’t one of the G-20, but it and Spain were invited to the meeting anyway because they’re just so nice to have around). Bos said Geithner seemed pretty interested in the gentleman’s agreement, so he got his staff to translate it into English and send it to Geithner.
So what exactly did those Dutch gentlemen agree to? Could it be a model for the U.S.? Here are a few highlights, from the Dutch Finance Ministry website (translations mine):
* During the credit crisis, salary increases at the top of a company can’t be any bigger than those for the rest of the personnel.
* At companies getting government support, the managing board [the top 5-10 executives, usually] won’t get any variable pay [a.k.a. bonuses] for 2009.
* At government-supported companies, there should also be the greatest possible reticence regarding variable pay for other senior managers in 2009 and until a new compensation policy has been determined.
* As part of a more durable and moderate compensation policy, golden parachutes will not exceed one year’s salary and long-term variable compensation will play a greater role relative to short-term variable pay.
Hmmm. Seems awfully gentleman’s-agreementy. Which is probably a strength. Here, Congress passes laws that restrict compensation in more heavy-handed fashion, then Treasury looks for ways to get around them.