The five members of the Managing Board all have thorough knowledge of the financial sector in general and the banking sector in particular. Four board members have long-term experience in the banking sector and one worked at the Dutch Ministries of Finance and Economic Affairs, where he most recently held the position of Treasurer General.
The Managing Board focuses on balancing the interests of all NIBC stakeholders. The main forum for this is the weekly board meeting, where all current issues are discussed. Stakeholders' interests are also discussed by the Engagement and Compliance Committee (ECC), which comprises members of the Managing Board, the general counsel and head of Compliance. Meeting weekly, its main purpose is to ensure a meticulous, documented decision-making process in which commercial deals are viewed in relation to legal, regulatory and other compliance requirements. There is a strict policy on conflicts of interest that is overseen by the ECC, and active monitoring of Chinese walls and Procedures on Personal Investment Transactions (PPIT). At Supervisory Board level, there is also a Related Parties Transaction Committee.
In addition to these committees, the division of tasks within the Managing Board creates a balanced consideration of interests as two Managing Board members (the heads of the strategic pillars Merchant Banking and Specialised Finance) represent the commercial interests, while the CFO and CRO have a supervisory role, all under the leadership of the CEO. These roles are reflected in the remuneration policy and enshrined in the charters of the Managing Board and the Supervisory Board.
The moral and ethical declaration signed by each Managing Board member is being further implemented in the organisation, including embedding it in our Code of Conduct. It will also be referred to in new employment contracts. The underlying standards reflected in the declaration have for years been part of the business principles of NIBC.
The composition of the Supervisory Board offers sufficient assurance of independence, expertise and diversity.
The Supervisory Board has four members with expertise in banking and three who are financial experts. Other members have expertise in the fields of compliance, corporate governance, internal governance and CSR, backgrounds in industry or as all-round managers.
The Supervisory Board consists of nine members of diverse nationalities: five are Dutch and the others are Australian, German, Belgian and American. There is one female member.
For the concept of independence of the Supervisory Board members, we adhere to the independence criteria laid down in the updated Dutch Corporate Governance Code (Governance Code).
A programme of lifelong learning has been drawn up for members of the Managing Board and the Supervisory Board, to keep them up to date on matters such as relevant developments in the banking and financial sector, corporate governance, duty of care towards customers/'Client First', integrity, risk management and financial reporting. The lifelong learning programme activities of individual Supervisory Board members have been registered and their learning needs have been taken into account.
Two days have been reserved in 2011 for collective lifelong learning of the Supervisory Board. NIBC also offers individual training programmes.
For the Managing Board, five days in 2010 were reserved for lifelong learning, which partly followed some elements of the Supervisory Board programme, as well as teamwork on aspects such as corporate strategy, cooperation and clients. Additionally, each Managing Board member followed individual educational programmes in line with his personal development needs, such as programmes delivered through the Duisenberg School of Management.
Internal Audit and role of the external auditor
Internal Audit reports directly to the CEO and, at the request of the Managing Board, pays increasing attention to new initiatives, products and related projects within the bank. Following the Banking Code, the Managing Board aims for closer cooperation and coordination between the control functions such as internal audit, compliance and (operational) risk management. There is increasing focus on themes such as integrity, conflicts of interest, information security and fraud control.
The head of the internal audit function also has a direct reporting line to the chairman of the ACC of the Supervisory Board. The internal audit function assesses the quality and effectiveness of the system of governance, risk management and the bank's control procedures and reports its findings to both the Managing Board and to the ACC.
Consultations between the internal audit function and the external auditor have intensified. Internal Audit and the external auditors regularly review audit results, risk analysis and planning. The information exchange with the ACC of the Supervisory Board has remained unchanged. At its own initiative, Internal Audit has periodic discussions with the DNB and the external auditor, where the risk analysis, planning and audit results are shared and discussed.
Remuneration (as of 1 January 2012)
Taking into account all relevant regulations and guidelines, most notably the Banking Code and European and DNB regulations, the Supervisory Board has determined NIBC's remuneration policy in such a way, that this policy is sustainable, balanced and in line with the chosen strategy and risk appetite. It recognises the following key principles: (i) alignment with business strategy; (ii) differentiated and determined by performance results; (iii) externally competitive and internally fair and (iv) managed in an integrated, total compensation manner.
To generate an objective comparison measure for remuneration purposes there is a peer group, consisting of all listed companies in the AEX and AMX indices. Total compensation of Chairman and Members of the Managing Board is targeted just below the median of their peers in the aforementioned group, and based on benchmark data provided by external compensation consultants.
Any variable remuneration of the Managing Board is capped, well below the maximum levels agreed upon in the reigning Banking Code. In response to public opinion and further changes in regulation, the remuneration policy for the Managing Board as from 2012 no longer includes short term variable compensation.
Each Managing Board member annually agrees to 4 - 6 financial and non-financial targets for the year as well as for three years ahead. The long-term incentive for the Managing Board is subject to a three-year performance period and the achievement of the financial and non-financial targets, followed by a pro-rated 3-year deferral period before pay-out.
However, it is foreseen that the Supervisory Board will not be able to grant any variable payment to MB members as long as NIBC is in receipt of government support.
In addition, any unvested amounts of variable compensation are subject to Malus (in exceptional cases where as a result of the financial situation of NIBC it would be impropriate or unreasonable to allow the deferred compensation to vest in full) and/or Claw Back (recovering of variable pay awarded on the basis of incorrect (financial) data), not withstanding the discretionary right of the Supervisory Board to adjust any or all variable pay downwards if it considers that this would lead to unfair or unintended effects.
All in all, the combination of restraint and moderation on the one hand, and strict governance around the remuneration process on the other, makes for a sustainable remuneration policy.