On 26 November 2013, the consultation version of the Act on the Remuneration Policy of Financial Undertakings (Wet beloningsbeleid financiële ondernemingen, the "Legislative Proposal") was published. One of the aspects covered by this act, is the introduction of a 20% cap on variable remuneration. The Legislative Proposal will lead to an amendment to the Dutch Financial Supervisory Act (Wet op het financieel toezicht, "DFSA").

http://www.internetconsultatie.nl/wbfo2015 (in Dutch only)

After implementation of the Capital Requirements Directive IV ("CRD IV"), which will likely be in summer 2014, a bonus cap of 100% will apply to banks and investment firms. Only upon approval of the shareholders a higher bonus cap of 200% may apply.

CRD IV however allows Member States to introduce a more restrictive bonus cap. Through the Legislative Proposal, the Dutch legislator uses this possibility and introduces a maximum bonus cap of 20%.

Below, we will outline the most important characteristics of this Legislative Proposal:

Scope of the Legislative Proposal

  • The provisions in the Legislative Proposal are applicable to all financial undertakings that are currently covered by the DFSA with their statutory seat in The Netherlands.
  • The majority of the remuneration rules (including the bonus cap) is applicable to all subsidiaries of those financial undertakings, located both in and outside The Netherlands.
  • If the financial undertaking is part of a group, and the parent company of the group has its seat in The Netherlands, the majority of the remuneration rules (including the bonus cap) also applies to all group companies. Those groups whose 'main activities' do not include activities within the financial sector are exempted.


  • The Legislative Proposal introduces a maximum variable remuneration component for natural persons of up to 20% of the fixed remuneration that person received in that year.
  • The cap is not only applicable toidentified staff (as under the current legislation), but includes all natural persons employed under the responsibility of the financial undertaking (or one of its group companies).
  • In certain situations a bonus cap higher than 20% is allowed. These exemptions are, amongst others, relevant to groups of affiliates located abroad. The most important exemptions are:

    • Natural persons whose main activities take place in The Netherlands and who are not solely remunerated based on a collective labour agreement (collectieve arbeidsovereenkomst), may receive a higher variable remuneration as long as the average bonus cap within the financial undertaking with regard to comparable persons does not exceed 20%.
    • A cap of 100% is applicable to natural persons whose main activities take place in another country than The Netherlands.
    • A cap of 200% is applicable to natural persons whose main activities take place in a third country (i.e. a country that is not a Member State of the European Union), if the shareholders of the financial undertaking have consented.
  • The bonus cap is also applicable to branch offices in The Netherlands of financial undertakings with their seat in another state. However, banks and investment firms (as defined under the Capital Requirements Regulation) do not fall under the scope of this bonus cap. In that situation, remuneration rules (and caps) of their home country are applicable.
  • Exemptions from the bonus cap are available for:

    • managers of investment institutions (i.e. alternative investment funds);
    • managers of UCITS;
    • investment firms trading solely and exclusively for own account with own funds and capital and that do not have external clients.

Several other rules

  • The Legislative Proposal obliges a written remuneration policy. This requirement comes with several disclosure requirements.
  • There will be a ban on guaranteed variable remuneration.
  • The Legislative Proposal contains a maximization of the severance payment for a management board member of 100% of the annual, fixed component of the individual's remuneration.
  • The powers to adjust the bonus amount or reclaim a bonus as mentioned in the Dutch legislative proposal on Clawback (Wetsvoorstel Clawback) will apply to the financial undertakings. This applies (in contrast to the Dutch legislative proposal on Clawback) not only to management board members, but to every natural person employed under the responsibility of that financial undertaking.

Date of entry into force

  • The intended date of entry into force of the Legislative Proposal is 1 January 2015.
  • For employees that still have bonus rights that were awarded to them before 1 January 2015, the bonus cap will apply per 1 January 2016.

Parties have the opportunity to react to the consultation version of the Legislative Proposal until 31 December 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.