Aligned remuneration policies
The remuneration policies are 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. As a purpose-driven organization, FMO does not offer Identified Staff (senior management and staff whose professional activities have a material impact on FMO’s risk profile) any form of variable remuneration. Results are mainly based on team effort, innovation and knowledge sharing between colleagues in different disciplines, which does not align very well with offering variable remuneration, like individual bonuses.
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 the expectations of various stakeholders. The remuneration policy does not incentivize directors to act in their self-interest or to take risks that do not fit with FMO’s risk appetite. Furthermore, the policy does not aim 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.
Employment contracts of members of the Management Board are awarded for a definite period of time (with the exception of internal appointments). In the event the employment contract is terminated before the expiry date, the maximum severance payment will amount to 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 April 2020 AGM, no amendments to the remuneration policy were proposed or approved.
More details on the remuneration of Management Board members and other specific staff members can be found on FMO’s website. Aspects of Management Board members' remuneration are also disclosed in the paragraph Related Party Information of the Annual Accounts.
The ratio between the remuneration of our CEO a.i. (being the highest-paid individual) and the median of all other colleagues (including the other Management Board members) in December 2020 was 3.5 (2019: 3.5). Compared to the financial sector in The Netherlands this ratio is relatively low.
In April 2020, FMO conducted quantitative research to compare men’s and women’s salaries, correcting for part-time work, salary scale, age, and tenure to have a fair comparison. The outcome of this (multiple linear regression) analysis on gender pay differences (gender pay gap analysis) showed that, at a 5% significance level, there is no sufficient evidence to support the claim that at FMO for equal work the salaries of women are significantly different from the salaries of men. Therefore, it is fair to claim that FMO awards women and men equally for similar work (SDG 5: Gender Equality).