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Mounting speculation Royal Dutch Shell may move its HQ out of The Hague

The Independent

Bosses threaten Dutch plan to cap ‘fat cat’ pay

 

By Vanessa Mock in Brussels

Monday, 19 May 2008

The Dutch government has provoked uproar among the country’s business leaders by proposing laws to curb large bonuses and golden handshakes for company bosses.

 

The Finance minister Wouter Bos launched the “fat cat” crackdown following a series of recent scandals involving “unjustifiable” payouts to prominent business figures. However despite government support, Mr Bos’s proposals are under attack from Dutch blue-chips such as Philips, Shell and Unilever, whose chairmen argue they will damage Holland’s international competitiveness and drive away corporate talent. “It’s something everyone in Europe is concerned about, especially now the economic downturn is starting to bite,” said Mr Bos. “You can’t expect employees to tighten their belts while those at the top are being paid ever-bigger bonuses, which are often not even linked to their performance. Public support for entrepreneurs will plummet if this continues.”

Mr Bos, who leads the Dutch Labour Party (PvdA), has put forward new laws that would slap taxes on companies for over-rewarding bosses. Under the proposed legislation, which is currently making its way through parliament, companies would have to pay a 30 percent tax on severance packages, or “golden parachutes”, of more than €500,000 (£398,000), paid to executives when they leave a company. In addition, an extra tax would be levied in cases when company pensions are paid out to executives earning more than €500,000.

There is mounting speculation that Royal Dutch Shell may decide to move its headquarters out of The Hague. Shell’s chief executive Jeroen van der Veer said in a newspaper interview: “Either you have a headquarters and accept as part of the bargain that large numbers of people earn high salaries, or you don’t. I’ve noticed there is very little understanding for the needs of a large company. I find this disturbing.”

Several top executives, including Michel Tilmant, of the ING banking group, have threatened to leave the Netherlands if the government continues to intervene on earnings.

“We must watch out that we don’t go too far,” said Hans Wijers, chief executive of Akzo Nobel, one of the largest Dutch companies. “There are many senior managers who are working themselves to the bone and they’re not doing it to get super-rich.” Ad Scheepbouwer, chief executive of the telecommunications giant KPN, told the Volkskrant newspaper: “It feels like we are being discriminated against. All the fuss about salaries will make companies want to move their headquarters away from the Netherlands and talented people will start to leave.”

The planned laws are being brought in after a national outcry last year when Rijkman Groenink netted an estimated €22m after selling off the bank ABN Amro to a consortium of leading European banks. Later that year, another executive, Jan Bennink, scooped up €80m-worth of shares, stock options and bonuses after selling the baby food producer Numico to the French food giant Danone.

Mr Bos was applauded by European finance ministers in Brussels last week for his measures. “Bloated payouts are a social scourge,” said Jean-Claude Juncker, Luxembourg’s Prime Minister and chairman of the Eurogroup. Several countries, including Germany and France, are also considering legislation.

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