Dilemmas facing the Supervisory Board
Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
Finding a balance between the interests of stakeholders
In recent years, as a consequence of changes to legislation
and increasing regulation, the Supervisory Board has had
to devote more time to monitoring activities. The statutory
duty 'to supervise the policies pursued by the Executive
Board and the general course of business at Rabobank
Nederland and its affiliates' now demands more attention
from the Supervisory Board than in the past. As a result,
this jeopardises the balance of the Supervisory Board's
activities as they shift increasingly towards fulfilling the
demands and expectations of the external regulators such
as DNB, AFM and ECB. In addition to this specific supervisory
role, the Supervisory Board also fulfils the role of advisor
and employer, both of which are of great importance to
the continuity of the business. The Board is continually
seeking the right balance between these different roles
and the attention that is given to them on behalf of all the
stakeholders in Rabobank.
Staying true to the Dutch two-tier governance model
In the Netherlands the two-tier governance model is the
norm. Both the Executive Board and the Supervisory Board
are fully aware of their statutory roles and responsibilities.
This model is relatively unknown outside the Netherlands.
As a consequence, in some cases it can prove difficult to fulfil
the supervisory role appropriately, staying true to the two-
tier model while at the same time acting in a manner that
external regulators can understand and accept when their
expectations tend to be more in line with a one-tier model.
Can Rabobank function effectively without variable pay?
Remuneration in the financial sector has been the subject of
public debate for a few years, both in the Netherlands and
abroad. There is fierce criticism of the 'bonus culture'within
the financial sector.
Rabobank takes the message seriously. The majority
of Rabobank employees do not receive variable
remuneration. In 2013, variable income was scrapped from
the CLA. In a parallel move in the same year, the variable
remuneration of the Executive Board was also scrapped
without any form of compensation. In 2014, variable pay
for senior managers (the layers immediately below the
Executive Board) was likewise eliminated.
Having said that, outside the Netherlands and for
certain specialist positions in the Netherlands, variable
remuneration is often a standard part of the remuneration
package. In light of its competitive position on the labour
market, Rabobank must pay in conformity with the market
in order to attract the right employees and to be able to
guarantee the quality of its services. Rabobank is selective
as to which functions are eligible for variable remuneration.
If variable remuneration is a significant element of the
remuneration package in certain markets, it is chosen to
continue paying variable remuneration on the grounds
of professional customer service. In this way the bank can
continue to attract, hire and keep the right employees
so that the quality of its service is guaranteed in those
activities. This applies primarily to Wholesale, Rural Retail
outside the Netherlands, and to DLL and Rabo Real Estate
Group. The debate on variable remuneration also influences
the strategic choices we make as a group as to which sectors
we operate in. For instance, Rabobank substantially reduced
its activities in investment management some years ago.
164 Rabobank Annual Report 2015
