The People vs ING: who really torpedoed the bank boss’s pay hike?

An ING bank card
Photo: 24oranges.nl via Flickr

When ING bank announced last week that it was scrapping a proposal to raise the salary of its chief executive Ralph Hamers by 50%, it was immediately declared to be a victory for people power. Thousands of customers had vented their displeasure through ING’s online chat channels, threatened on Twitter to close their accounts or even – according to a spokesman – done so, though exact figures were unavailable. Some of ING’s competitors, especially those such as ASN Bank and Triodos that promote themselves as the ethical alternative to Big Banking, said they had received ten times their usual number of applications. Comparison website De Eerlijke Bankwijzer processed 7,000 enquiries on the day the raise was announced, against an average of 200.

Was this really a case of greedy capitalists getting one in the eye from ordinary, hardworking Dutch men and women? Only up to a point. ING’s chairman, Jeroen van der Veer, said the board had ‘underestimated the public reaction on this clearly sensitive issue’ and apologised for the commotion caused. Yet only a week earlier the same board had been in more bullish mood. Anticipating a public outcry, it pre-emptively retaliated that Hamers’s €2 million a year salary was insufficient to keep ING competitive in the international banking world. ‘Hamers is an Eredivisie player on Jupiler League wages,’ Van der Veer said, suggesting among other things an unfamiliarity with the recent record of Dutch football teams in Europe.

What the board was less prepared for was the forthright response of its institutional investors. Eumedion said it had a ‘lot of questions’ about Hamers’s pay rise that it would be discussing with its members. Errol Keyner, assistant director of shareholders’ group VEB, was plainer still: ‘Smaller investors are troubled by this.’ Condemnation followed from across the political spectrum. Finance minister Wopke Hoekstra called the raise ‘disproportionately high’, before prime minister Mark Rutte used his weekly press conference to remind the banks of their reliance on taxpayers’ money as a fallback option in times of crisis.

Opposition parties, sensing a chance to put themselves in the spotlight in the week before the local elections, pounced on the loose ball. By the weekend GroenLinks leader Jesse Klaver had mustered support from both left and right for a draft law that would give the finance minister a veto on the pay rises of senior executives in companies with a significant social footprint. If Parliament cleared time for the law, it could be in place by the time ING shareholders met on April 23 to vote on Hamers’s pay rise. Socialist party leader Lilian Marijnissen bought four shares in the bank to give herself a ticket to the meeting. Parties across parliament, with the exception of Thierry Baudet’s FvD, backed a motion calling for Van der Veer to be hauled before MPs to explain the bank’s thinking. The wagons were circling.

With most of the opposition lined up behind Klaver’s plan, the burden now shifted to the coalition parties. Neither Rutte’s Liberal party nor the Christian Democrats were likely to support a measure that allowed the state to interfere in the affairs of private companies, but in a government with a one-seat majority they could still be outvoted if a handful of MPs from their partners broke ranks. How in particular would Gert-Jan Segers, leader of the ChristenUnie, convince his five MPs to square such unchecked avarice with their socially responsible Christian values? Even if the law itself foundered, there was a risk that Rutte might have to offer some form of tighter regulation to prevent a time-consuming battle to salvage his government’s majority. Memories of the late-night deals on asylum seekers that were needed to hold the last cabinet together must have weighed on his mind. When Hoekstra announced the following day that he was studying ‘legal and extra-legal’ means to block Hamers’s pay rise, the game was up.

On closer inspection, the bank’s contrition at misjudging the public mood has all the hallmarks of a PR salvage job. Much better to claim you are responding to your customers’ concerns than to admit that you’ve bowed to the combined force of institutional shareholders, the government and opposition parties on the election warpath. Had ING pressed ahead with its plan it would have faced weeks of political turmoil and the prospect of further regulation. The nation’s media would have picked up every twitch and splutter of discontent at the shareholders’ meeting on April 23. And a drawn-out political row could have weakened a generally business-friendly government. On balance, they must have concluded, why risk all that upheaval to pay Champions League wages to Ralph Hamers, a journeyman who for all his talents has spent 27 years playing for the same Eredivisie team?

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