Aligned remuneration policies
Remuneration policies are fully aligned with the principle of attaching equal importance to investment and risk functions, by ensuring similar salary scales for both functions and avoiding bonus structures that incentivize excessive risk taking. FMO discontinued variable remuneration for members of the Management Board and Directors (as well as for staff whose professional activities have a material impact on FMO’s risk profile, so called Identified Staff) in 2012.
FMO’s remuneration policy for the Management Board aims to offer a competitive remuneration that allows us to attract, motivate and retain capable directors with sufficient knowledge and experience in international development finance. The remuneration policy is aligned with the mission of FMO, the corporate values, the strategy, the risk appetite as well as with the expectations of the various stakeholders. The remuneration policy does not incentivize directors to act in their self-interest or to take risks that do not fit within FMO’s risk appetite. Furthermore, the policy aims not to reward this behavior after the event upon discharge of failing directors. The remuneration policy is based on a market median, composed of two equal proportions of a private benchmark (Dutch financial sector) and a public benchmark, taking into account the principles as applied by the State of The Netherlands as majority shareholder of FMO.
In principle, with effect from 2017, employment contracts of members of the Management Board are awarded for a definite period of time (with exception of internal appointments). In the event the employment contract is terminated before the expiry date, the maximum severance payment will amount one year’s salary, unless the board member resigns voluntarily or the termination is the result of his or her actions.
The remuneration policy for the Management Board will be reviewed periodically (every three to four years) and amendments will be subject to approval of the AGM. During the May 2019 AGM a few elements of the remuneration policy were adjusted to be more in line with updated regulations and with policies applicable to the rest of the staff of FMO. In summary, the following items have been amended:
Discontinuation of the profit-sharing scheme (for Management Board members, already effective from 1 January 2016 and for the entire FMO staff as from 1 January 2017);
For commuting in The Netherlands, members of the Management Board may also opt for a lease car, an NS business card or a fixed gross mobility allowance;
Discontinuation of individual Pension allowance and mortgage allowance for all employees joining FMO as from 1 January 2016. (Grandfathering existing allowances granted before 1 January 2016, applicable to one of the current Management Board members);
Alignment of the applicable notice period.
More details on the remuneration of Management Board members and other specific staff members can be found on FMO’s website. Remuneration aspects of Management Board members are also disclosed in the paragraph Related Party Information of the Annual Accounts. The ratio between the remuneration of our CEO (being the highest-paid individual) and the median of all other colleagues (including the other Management Board members) in December 2019 was 3.5 (2018: 3.5). Compared to what is seen in the financial sector in The Netherlands this ratio is relatively low.