Ex-post test
Before deferred amounts and amounts awarded on a conditional basis are released and are
awarded unconditionally by the bank, we test whether there is a reason to downgrade the
amounts. This test therefore centres on the question: was the award of the variable remuneration
justified, even in the light of what we know today?
1 It is only possible when recruiting
new employees, and only for the first
year of the employment, to award
compensation for the discontinuation
of (deferred) variable remuneration
they received from their previous
employer.The full cycle of risk
management is applied in this process.
Claw back
In special cases, Rabobank can withdraw, or 'claw back', an award with retroactive effect.
Rabobank Group is authorised to reclaim all or a portion of variable remuneration from both
employees and former employees in the following cases:
If payment was made based on inaccurate or misleading information regarding the
achievement of the performance targets or regarding the conditions on which the variable
remuneration was made dependent.
If the employee concerned has been guilty of fraud.
If the employee has participated in, or been responsible for, behaviours that have resulted in
substantial losses and/or damage to the bank's reputation.
If the employee has failed to satisfy the relevant standards for competence and appropriate
conduct.
In addition to these measures above, the prohibitions below apply for all employees:
It is not possible to award guaranteed variable remuneration to employees1.
Personal hedging strategies are not permitted under any circumstances whatsoever.
No discretionary pension benefits are awarded to employees.
A severance payment must reflect the quality of an employee's performance. An employee
will not be rewarded for failure or misconduct.
Identified Staff
Employees who could have a significant impact on Rabobank's risk profile are designated as
'Identified Staff. In 2014, the European Banking Authority issued new criteria for determining
which employees should be designated as Identified Staff. Around four hundred employees are
designated as Identified Staff within Rabobank, distributed across all entities of Rabobank Group.
Only a portion of this group is eligible for variable remuneration. Extra strict rules apply to this
specific group in orderto minimise the risks invoived.The most important of these risk-mitigating
measures are briefly discussed below.
Balanced mix of performance targets
As for all other employees, a proper balance of performance criteria needs to be applied to
Identified Staff. A maximum of financial targets applies specifically for Identified Staff and we
measure performance at various levels: the level of the Group, the level of the business unit
and the individual level.
Deferred variable remuneration and use of financial instrument
A minimum of 50% of the variable remuneration for Identified Staff that is eligible for variable
remuneration is awarded conditionally and paid on a deferred basis.The payment is deferred
for a period of at least three years. Half of the variable remuneration is awarded in the form
of Deferred Remuneration Notes (DRNs), which are linked directly to the price of Rabobank
Certificates. A retention period of one year applies to DRNs awarded unconditionally. This means
that payments are made on DRNs one year after they have vested. The Executive Board can
withdraw or reclaim this variable remuneration in accordance with the applicable legislation
and regulations.
114 Annual Report 2014 Rabobank Group
