Executive Board remuneration structure 2008
The Supervisory Board has taken notice of the recommendations by the Frijns corporate governance monitoring committee and will evaluate these recommendations in 2008.
Policy for 2008
With regard to the remuneration policy for 2008, the Supervisory Board continues to build upon the remuneration policy initiated in 2003, which supports the performance-oriented culture. Over the past six years, the Executive Board’s total remuneration package has gradually converged to the benchmark through increases in the short-term and long-term incentive target levels (as a percentage of base salary). The results of the market-competitive analysis indicate overall increases in the market that may put pressure on compensation levels.
Executive Board base salary 2008
A market-competitive analysis is conducted on an annual basis to ensure market competitiveness. For 2008 the Supervisory Board has concluded to increase the base-salary levels by 5% for all Executive Board members with the exception of Tom McInerney (who is employed on a US-based compensation structure).
Executive Board short-term incentive plan 2008
The 2008 short-term incentive target at 100% of base salary will remain the same as 2007. The actual payout may vary between 0% and 200% of the target level (e.g. between 0% and 200% of base salary).
The mix for the 2008 short-term incentive award will remain the same as in 2007: 70% will be determined by pre-defined ING Group financial performance measures and 30% will be based on individual performance objectives set for each Executive Board member and agreed by the Supervisory Board.
For 2008 the Supervisory Board has determined that the Executive Board’s short-term incentive award for the Group performance should be measured using three financial criteria: underlying net profit per share, underlying operating expenses and economic profit/embedded value profit (excluding financial variances).
Executive Board long-term incentive plan 2008
The Supervisory Board will keep the LTI target value at 100% of base salary (same target percentage as the STI). The range may vary between 50% and 150% of the target level (e.g. between 50% and 150% of base salary). The structure for the 2008 long-term incentive award will remain the same as the 2004 structure (the total award value will be split between stock options and performance shares).
As was the case in 2007, the total LTI value in stock options and provisional performance shares to be granted to the Executive Board members will be determined by the Supervisory Board at the end of 2008, based on the extent to which each of the three pre-defined financial objectives set out in the 2008 short-term incentive plan have been achieved.