Aligned remuneration policies

The remuneration policies attach equal importance to investment and risk functions, by ensuring similar salary scale levels 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 such as bonuses. Our results are mainly based on team effort, innovation, knowledge sharing and collaboration between colleagues in different disciplines, which does not align well with offering substantial bonuses for individual performance.

FMO’s remuneration policy for the Management Board aims to attract, motivate and retain capable people 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 reward failing Board members for such behavior after they have been discharged. 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, considering financial sector remuneration regulation and principles applied by the Dutch Government as majority shareholder of FMO.

Employment contracts of members of the Management Board are awarded for a definite period (except for 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 is reviewed every three to four years and amendments are subject to approval at the AGM. During the April 2023 AGM, a few amendments to the remuneration policy were proposed or approved. These amendments were about indemnity for former, current and future Management Board members, to follow market practice, as other banks have similar arrangements. Furthermore, the appointment period of members of the Management Board has been adjusted to better align with the Memorandum State Participations, which was published in 2022. Management Board members can serve two terms of four years and thereafter - by exception only - two extra reappointments of two years are possible.

More details on the remuneration of the Supervisory Board, the Management Board and other (identified) staff members can be found on FMO’s website. Aspects of Management Board members' remuneration are also disclosed in the paragraph 'Related party information' in the 'Consolidated Financial Statements'.

The ratio between the remuneration of our CEO (the highest-paid individual) and the median of all other colleagues (including the other Management Board members) per 31 December 2023 was 0.28 (2022: 0.29). This means that the CEO receives a total fixed remuneration of 3.5 times the median of the fixed income paid to the rest of total staff population, which in comparison to the Dutch financial sector is relatively low.