Bonus and salary caps for top managers

3rd March 2009, Comments 0 comments

Trade Union chief Henk van der Kolk calls for labour agreements to curb top manager's earnings.

THE HAGUE—Top managers will only be allowed to earn 20 times the salary of their lowest paid worker. That is, if Trade Union Federation FNV has a say in the matter. In many companies that would mean a salary cap of half million euros a year, including bonuses. Union Chief Henk van der Kolk outlined his proposal in an interview with de Volkskrant.

The Trade Union Federation would like to make labour agreements to this effect. Van der Kolk thinks that the time has come for such a measure. “Many governments would like to curb the salaries of managers from rescued banks. Some top managers have handed in salary voluntarily.” The largest trade union in the Netherlands would like to make agreements on top salaries now so that when the economy recovers it doesn’t become “the sky’s the limit” once again.

Van der Kolk admits that top managers usually don’t fall under labour agreements. There are however, ways to insist that they do: "By making agreements on what’s reasonable and unreasonable in a labour agreement, you create a norm.”

He also wants to drastically limit the bonuses of top managers. As far as he’s concerned, a bonus should be capped at 50 percent of the yearly salary. Accordingly, integral to the labour agreement should be criteria against which not only fiscal success will be judged, but also social leadership and sustainability. Hence, judgement criteria would become integral to a labour agreement made with top managers.

“It isn’t exactly simplistic,” counters Van der Kolk. Some top managers now earn millions of euros a year. But he hopes that someone will set an example. “Curbing the amount of bonuses is the first step, but we’d also like to talk about a salary cap.”

ANP/Lila Lundquist/Expatica

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