ING Direct 2009 Annual Report Download - page 78

Remuneration report
PROPOSED NEW REMUNERATION
In the public debate on the causes of the financial crisis, a lot of
attention is given to remuneration practices in the financial sector.
Regulators and financial authorities worldwide responded by
issuing a significant number of guidelines on remuneration. In
the Netherlands, the banking sector itself, including ING, played
a proactive role in this respect by developing the new Dutch
Banking Code. The Dutch Banking Code contains, amongst
other things, principles on remuneration.
It is of utmost importance that the remuneration policy of ING
strikes a balance between interests of its customers, employees,
shareholders and society at large, and supports the long-term
objectives of the company. This is all the more true in the present-
day environment, as the financial crisis has shifted the focus on
these interests, drawing even more focus to the public utility
function of financial institutions and their responsibilities towards
their stakeholders. ING is well aware of the pivotal role that banks
and insurance companies play in society.
The globally changing views on remuneration policies have
amplified the call upon financial institutions to develop more
moderate remuneration policies with an increased emphasis on
long-term value creation and performance measurement based
on non-financial indicators. Against this backdrop, we considered
it our responsibility to evaluate our remuneration policy. Based on
this evaluation and taking into account the principles of the Dutch
Banking Code, we have developed a new remuneration policy for
the Executive Board and senior management. Along this process,
both national and international standards with respect to
remuneration were taken into account and various relevant
stakeholders, including the Central Works Council, Dutch trade
unions and the Dutch government, were consulted.
The new remuneration policy for the Executive Board will be put
forward for adoption at the 2010 annual General Meeting. If
adopted, it will become effective as of compensation year 2010.
The general principles underlying the adjustments to the
remuneration policy for the Executive Board will also be applied
in the remuneration of members of the Management Boards and
other senior managers throughout the organisation.
A comparison of the (application of the) current Executive Board
remuneration policy versus the (application of the) proposed new
Executive Board remuneration policy is further described on
page 79.
General principles of new remuneration structure
Even though ING traditionally has had a conservative approach with
regard to the remuneration of its management and employees, as
evidenced by the fact that it has always aimed for compensation
levels at the median level in the relevant markets, the new
remuneration structure provides for a number amendments.
The general principles which underlie the proposed amendments
are as follows:
Create a more balanced compensation mix; •
Reduce emphasis on variable compensation;•
Further enhance long-term value creation; •
Further improve the alignment of risk and reward; •
Place a more significant weighting on non-financial, •
sustainable performance indicators; and
Include claw-back arrangements.•
This section sets out the remuneration for the Executive Board and
the Supervisory Board. In 2009, the Remuneration Committee of
the Supervisory Board undertook a comprehensive review of the
remuneration policy for the Executive Board. The Remuneration
Committee proposed a new remuneration policy, which was
adopted by the full Supervisory Board. The first part of this
Remuneration report explains the proposed new remuneration
policy to be effective from 1 January 2010, which will be submitted
for shareholder approval at the annual General Meeting on 27 April
2010. The Remuneration report also provides an outline of how the
Remuneration Committee is applying the new policy in 2010. The
final part of the Remuneration report provides information on the
remuneration paid 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.
1.3 Our governance
ING Group Annual Report 2009
76