The Dutch Central Bank (De Nederlandsche Bank, DNB) has launched a public consultation on a Q&A regarding retention bonuses (retentievergoedingen) within the meaning of Article 1:122 of the Act on the Financial Supervision (Wet op het financieel toezicht, the AFS). In this Q&A DNB provides guidance on when DNB’s prior consent is required for a retention bonus.

Article 1:122 of the AFS stipulates that a financial institution may award a retention bonus which exceeds the statutory 20% bonus cap, provided that the:

  1. retention bonus is necessary in connection with a sustainable organisational change of the institution;
  2. retention bonus only serves to retain the employee for the institution;
  3. retention bonus does not result in a situation where the sum of all variable remuneration for the employee exceeds the percentages referred to in Article 94(1)(g)(i), first sentence and (ii) of the Capital Requirements Directive IV ; and
  4. DNB has provided its written approval.

In the Q&A, DNB clarifies that if:

  • awarding a retention bonus results in a situation where the sum of the retention bonus and other variable remuneration exceeds the statutory 20% bonus cap, DNB’s prior approval is required; and
  • if instead of the 20% bonus cap, the 200% bonus cap, or no cap at all, applies to the employee concerned, DNB’s prior approval is not required.

The consultation period ends on 26 September 2022.