In a letter to the editor in leading Dutch newspaper De Volkskrant, CEO Jan Hommen has announced that ING Group’s Executive Board has decided to not accept the variable remuneration awarded to them, as well as the previously announced 2% increase of the 2011 base salary. At the same time, the Executive Board will not be awarded variable remuneration until the remaining five billion euros capital support has been fully repaid.

Jan Hommen’s letter of 22 March 2011:

“Last week, ING Group published its Annual Report for 2010, which contained, amongst other things, the remuneration of its Executive Board. The variable pay, in particular, triggered many responses from our customers, and from the broader society and politicians. As CEO of ING, I want to make clear that we take our responsibilities to our customers and the community extremely seriously. That certainly applies to me personally. After all, my decision in 2009, after a long career outside the financial sector, to lead the restructuring at ING, was based precisely upon my conviction that I could hereby make a real contribution to the stability and future of the Dutch financial sector, a sector which is of the utmost importance to the future of the Dutch economy.

We are very keen that our remuneration should not be a subject of constant public debate. Which is why last year ING was the first major international financial institution in the world to substantially reform its remuneration policy and thereby set the example. The new policy that ING has introduced reflects the changed social perceptions regarding responsible financial rewards. It is more moderate and based more than before on long-term and non-financial criteria.

To my regret, I have to acknowledge that the variable pay awarded to the Executive Board for 2010 is threatening to damage the recovering confidence of our customers and society, which our staff has been rebuilding day-by-day and step-by-step. After discussion with the Supervisory Board, we have concluded that we misinterpreted the signal this would send to Dutch society. This, despite the fact that the variable remuneration awarded by the Supervisory Board is consistent with what was agreed with both our shareholders and the Dutch Ministry of Finance (including the Dutch Banking Code).

The Executive Board of ING has therefore decided to not accept the variable remuneration awarded to them, nor the previously announced 2% increase of the 2011 base salary. Furthermore, the Executive Board will not receive variable remuneration until the remaining five billion euros capital support (out of the ten billion euros ING Group had received from the Dutch state in 2008) has been fully repaid. I hope this demonstrates that we take the criticism of ING seriously and are prepared to act accordingly.

ING is a multinational company with more than 100,000 employees and active in over 40 countries. We are currently implementing an unprecedented change process, which demands the full attention of all our staff. Foremost in this process is precisely our intention to restore confidence in ING.

Since 2009, ING has achieved good results. First, we have improved the financial health of our company. In addition, as part of our “Back to Basics” transformation programme and in line with the Dutch Banking Code, we closer aligned our services and business operations with the interests of our customers. For instance, by screening our product portfolio against stricter criteria for customer-friendliness regarding issues such as simplicity, transparency and risk profile. We have also intensified the dialogue with our clients, the communities in which we operate and other stakeholders.

In addition, we are working on the implementation of a far-reaching restructuring plan which includes the separation of our banking and insurance activities.
Furthermore, we paid back to the Dutch state the first half of the capital injection by the end of 2009, including a substantial premium.
And in the meantime we have, following the sharp improvement of our business results, announced our intention to pay back the remaining five billion euros in two tranches: the first tranche in May 2011 and the second in May 2012 at the latest, provided that the market conditions remain favourable.

At the same time, we are focusing our attention and energy in further developing our position as an international preferred bank for individuals and companies, and are doing everything possible to ensure a promising future for our insurance operations.
Now that the operational separation of our bank and insurance activities is complete, we can now concentrate on the realisation of the independence of our insurance companies. This is a complex operation, especially since both on the banking side (Basel III) and the insurance side (Solvency II) we are faced with significantly more stringent regulations regarding capital and liquidity. These stricter regulations will make the financial system safer, but will undoubtedly also have consequences for the economy. That is a discussion we should have as well.

In short, despite the good results ING has delivered, it is evident that we still have major challenges ahead of us. Nevertheless, looking back on what we have achieved in the past two years, you will appreciate that I am proud of what our people and management have achieved in such a short time. In the best interest of our customers I want to continue this momentum. This is what we all need to focus on, not the remuneration of the Executive Board. “