McCreevy caps bonuses for ‘fat cat’ bankers and directors (30/4/09)

April 30, 2009 at 6:54 pm Leave a comment

Irish Commissioner Charlie McCreevy has this week outlined new guidelines to limit payments to senior directors. In a series of measures aimed at ending the culture of excessive rewards, the European Commission has issued recommendations to cap bankers’ bonuses, and limit severance payments or ‘golden parachutes’ for outgoing directors to no more than two years of their basic annual salary.
The Commission simultaneously announced a set of recommendations designed to tackle the practice of reckless risk-taking at the heart of the financial crisis. Under these rules, companies would be forced to disclose their remuneration policy, and ensure that shareholders have a stronger role in overseeing these policies.
‘Incentive systems for executive directors have led too often to excessively short-term management actions and “pay for failure”’, said Commissioner McCreevy. ‘Our message is very clear, directors’ remuneration must be clearly linked to performance and not rewards for failure,’ he added.
Irish MEP Liam Aylward welcomed the moves, which he described as a ‘confidence-building measure’ as part of necessary reforms of the European financial sector.