Initiated legislation to limit the remuneration of directors
In one of the first reactions to the worldwide financial crisis, the government
initiated legislation to limit the remuneration of directors of, particularly, public
companies to levels justified by the performance of the company and by the
market generally.
Company performance must be seen in the light of the long-
term interests of the business, rather than in that of short-term fluctuations.
The legislation recognises that the question is, to a large degree, subjective and
is therefore in part unspecific. However, remuneration packages for senior
management are now more clearly the responsibility of the supervisory board,
which now has the power to reduce salaries, should company performance fall
short of expectations. Long-term thinking is encouraged by the ban on stock
option exercise within four years of grant, and supervisory board independence
is enhanced with a compulsory waiting period of two years before a former
director may take a seat on the board.
There is also an element of personal
liability for board members, should the salaries of senior management prove to
have been excessive.
EU Forecast
euf:ba18e:32/nws-01