ING Direct 2008 Annual Report Download - page 75

ING Group Annual Report 2008
73
Remuneration report
This section sets out the remuneration for the Executive
Board and the Supervisory Board. The remuneration policy
was adopted by the annual General Meeting on 27 April
2004. In 2006, the Executive Board pension scheme was
revised in alignment with the approved amendment to the
remuneration policy. The revised Executive Board pension
scheme is further described on page 79. There were no
changes to this policy in 2008 and therefore, the approval
of the 2006 annual General Meeting still applies for 2008.
This section starts with the general policy for senior
management remuneration, followed by the Executive
Board compensation for 2008 and the compensation
structure for 2009. In addition, information is included on
loans and advances to the Executive Board and Supervisory
Board members as well as ING depositary receipts for shares
held by members of both Boards.
GENERAL POLICY SENIOR MANAGEMENT REMUNERATION
Background
The prime objective of the remuneration policy is to enable the
company to recruit and retain qualified and expert leaders. The
remuneration package supports a performance-driven culture that
aligns ING’s objectives with those of its stakeholders. ING rewards
performance on the basis of previously determined, challenging,
measurable and influenceable short-term and long-term targets.
ING’s remuneration policy is based on five key principles that apply
throughout ING. These principles are:
Total compensation levels are benchmarked against relevant •
markets in which ING competes for talent.
ING aims for total compensation at the median level in the •
relevant market, allowing only for above-median compensation
in the event of outstanding performance.
The remuneration package includes variable-pay components •
(short-term and long-term incentives) to ensure that executive
remuneration is linked to ING’s short-term and long-term
business performance.
To enhance the effectiveness of the short-term incentive plan, •
clear, measurable and challenging targets are set at the
beginning of each year.
Long-term incentives ensure a focus on longer-term strategic •
targets and create alignment of management with the interests
of shareholders. A broad selection of ING’s senior leaders
participates in the plan to ensure a common focus on ING’s
overall performance.
Remuneration structure
Total compensation throughout ING consists of three basic
components:
Fixed or base salary which represents the total guaranteed •
annual income.
Short-term incentive (STI) in cash, which compensates for past •
performance measured over one year.
Long-term incentive (LTI) in stock options and performance •
shares, which compensates for performance measured over
multiple years and is forward-looking.
In addition to the base salary and incentive plan participation,
senior management and Executive Board members enjoy benefits
similar to most other comparable employees of ING Group. These
include benefits such as the use of company cars, contributions to
company savings plans and, if applicable, expatriate allowances.
Base salary
The base salaries of the Executive Board should be sufficient to
attract and retain high-calibre management needed to achieve
our business objectives. The Supervisory Board assesses the
experience, background, responsibilities, performance and
leadership competencies of the CEO and the members of the
Executive Board when making decisions on base-salary levels.
To ensure that base-salary levels are in line with the relevant
market for talent, the Supervisory Board reviews the base-salary
levels of the Executive Board on an annual basis.
Short-term incentive plan
The short-term incentive plan (STIP) is a key component of ING’s
performance-driven culture. The short-term incentive is paid in