ING Direct 2009 Annual Report Download - page 80

Benefits
Executive Board members will continue to be eligible for a range of
additional benefits (e.g. the use of company cars, contributions to
company savings plans and, if applicable, expatriate allowances).
Executive Board members may obtain banking and insurance
services from ING Group subsidiaries in the ordinary course of
their business and on terms that apply to most other comparable
employees of ING. In addition, tax and financial planning services
will be provided to ensure compliance with the relevant legislative
requirements.
Employment contracts
The contract of employment for Executive Board members provides
for an appointment for a period of four years and allows for
reappointment by the General Meeting. In the case of an
involuntary exit, Executive Board members are entitled to an exit
arrangement limited to one-year base salary.
Other items for Supervisory Board discretion
Claw back and adjustments
The Supervisory Board will have the authority to reclaim variable
remuneration allocated to a member of the Executive Board based
on inaccurate data and/or behaviour that led to significant harm to
the company. The Supervisory Board will also have the authority to
adjust variable remuneration if application of the predetermined
performance criteria results in undesired outcomes. Accordingly,
the Supervisory Board will have decision authority in situations not
addressed in the policy.
Special employment conditions
Special employment conditions, such as commitments made to
secure the recruitment of new executives, may be used in
exceptional circumstances subject to strict control by the
Supervisory Board.
Supervisory Board discretion to review the policy
and the remuneration paid
ING as a company is expected to undergo significant changes
during the next two years. Moreover, the relevant international
employment market is very much in flux. In order to ensure that
ING can adapt to these two uncertain factors, the Supervisory
Board will evaluate in 2012 whether the new remuneration policy
(adopted in 2010) is in line with the long term objectives of the
company, the relevant international context, as well as the societal
perception of ING as a company. Should it become clear, after such
evaluation, that the new remuneration policy has led to an
unintended or inequitable outcome, the Supervisory Board,
including its state-nominated members, will have the discretion to
correct the previously allocated variable remuneration. However, it
is understood that any such correction could not lead to a deviation
from the requirement that variable compensation cannot exceed
100% of base salary during any year, as required under the Dutch
Banking Code.
The proposed remuneration policy is leading in the international
financial markets in terms of moderation of pay. The Supervisory
Board and the Executive Board also have an obligation to safeguard
the continuity of the company. The Supervisory Board will therefore
evaluate from time to time how these two responsibilities relate to
each other. If and when appropriate, it can make adjustments.
EXECUTIVE BOARD REMUNERATION STRUCTURE 2010
EXECUTIVE BOARD BASE SALARY 2010
An important objective of the new remuneration policy is to design
a more balanced and moderate compensation package for the
future. Immediate implementation of some of the amendments
proposed to achieve this would however lead to a conflicting
outcome. The proposed change of the ratio between fixed and
variable compensation would require a significant increase in the
fixed component (of more than 50%) in 2010 in order for total
compensation levels for the Executive Board to be slightly below
market median, in line with the new policy.
Under the current circumstances, the Supervisory Board does not
deem such an increase of the base salary appropriate. It has thus
determined that for the year 2010 the increase of base salary levels
should be limited to 13% for the members of the Executive Board
with the exception of the CEO position. This 13% increase is in
accordance with the cumulative increases received by employees
subject to ING’s Collective Labour Agreement in the Netherlands
over the last seven years minus the modest rate of increase that has
applied to the base salaries of ING’s Executive Board members over
the same period (only 5%). For the CEO position it was decided not
to increase the base salary at all. The 2010 base salary for members
of the Executive Board amounts to EUR 750,000 and for the CEO
EUR 1,353,500.
EXECUTIVE BOARD VARIABLE COMPENSATION 2010
The target variable compensation is set at 80% of base salary. The
actual payout may vary between 0% and 125% of the target level
(i.e. between 0% and 100% of base salary). In connection
herewith, the Supervisory Board performed an analysis of various
scenarios which were considered relevant. Financial and non-
financial performance indicators will be individually set for each
Executive Board member and agreed by the Supervisory Board.
There will be financial parameters for each Executive Board
member to measure the performance at Group, Bank and
Insurance levels. These financial parameters are underlying net
result ING Group, ROE ING Group, core Tier 1 for ING Bank, debt/
equity ratio ING Insurance, underlying cost/income ratio ING Bank
and administration costs ING Insurance. The quantitative elements
of the targets are considered stock price sensitive and competition
sensitive; accordingly these are not disclosed.
For 2010, at least 40% of total variable compensation will be based
on pre-defined non-financial performance indicators. The
incorporation of non-financial indicators in the overall assessment is
particularly aimed at improving business performances within ING.
These indicators depend on the specific responsibilities of the
individual Executive Board member. For each Executive Board
member a number of performance objectives are formulated
relating to customer satisfaction, improve sustainable business
practices, the diversity of the workforce, employee engagement
and corporate responsibility.
Variable compensation for members of the Executive Board and the
CEO will only be awarded as long as ING Group has a positive net
underlying profit in 2010. The Supervisory Board will review the
remuneration paid over time, in line with the policy.
Remuneration report (continued)
1.3 Our governance
ING Group Annual Report 2009
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