Company bonus policies create bad blood

Nearly 80 percent of Philips shareholders voted Tuesday against the high salary of CEO Frans van Houten. More and more shareholders are rebelling against ‘corporate greed’ when it comes to compensation.

Frans van Houten, CEO of Philips, gets his bonus at a time when the Dutch technology company is in a serious crisis due to problems with its medical sleeping machines. U.S. research has shown that sleep and ventilators pose a health risk to people with apnea. First, the Food and Drug Administration (FDA) sounded the alarm, and in late April, it turned out that U.S. courts are also investigating the case. For Philips, that study put a damper on the results. It set aside 900 million euros and the share price was halved in one year.

The essence

  • Despite strong shareholder opposition, Philips CEO Frans van Houten received his remuneration package.
  • In the Netherlands, shareholders can only advise on bonuses, which companies can ignore.
  • This Dutch exception also led to a revolt in France over the bonus from Stellantis CEO Carlos Tavares
  • The Norwegian state fund launches a global campaign against the ‘corporate habit’, which rewards poor results with large bonuses.

Nevertheless, Philips wanted to give Van Houten a bonus of 1.9 million euros. It was significantly less than in previous years. The total remuneration for Van Houten fell from 6.4 million euros in 2020 to 3.1 million euros in 2021. However, due to the poor performance of the stock and because the CEO remained well below the intended target, there were a number of (large) investors who received the remuneration. was too high.

That protest was very widespread. Not only did Dutch groups representing investor interests complain, but two international advisory groups representing US investors also spoke out against the remuneration.

That opposition was known even before the general meeting. The Belgian Paul Stoffels, vice chairman of the board (in our case the board) of Philips and responsible for the group’s compensation policy, tried to defend the payment. According to him, a lower compensation to Van Houten would have led to a lower compensation to other board members and it would have a ‘deterrent’ effect.


Van Houten had previously rejected the riot as ‘typically Dutch’. At the meeting he said: ‘I am deeply involved with Philips, I have worked here all my life. I am also a shareholder, and I feel the pain, and I will continue to do so. “

Shareholders were not impressed and massively rejected the compensation plan. With almost 80 percent, the shareholders’ meeting set a Dutch record. In Dutch listed companies, more and more shareholders are revolting when it comes to remuneration. Previously, a majority of the shareholders in Besi, AkzoNobel and Accell were also against the remuneration report.

Shareholders do not quickly forget when you have turned their backs on them.

Anonymous Dutch driver

The fact that Philips ignores such a massive rejection sends a shock wave through the stock market landscape. In the Dutch business newspaper Het Financieele Dagblad, other directors were – anonymously – concerned: ‘Shareholders do not quickly forget when they have been turned their backs. That echo sounds when you appeal to their loyalty. Then you pay a price ‘.

The special thing about the Dutch system is that the shareholders can only cast an ‘advisory’ vote on the remuneration report and that the companies can simply ignore it. Rients Abma, the director of the large investor club Eumedion, is looking for ways to prevent listed companies from disregarding shareholders’ wishes. He believes that a majority can be found in the Dutch parliament for a law that allows shareholders to vote on the bonuses awarded at any time.


The special Dutch situation leads to trouble far beyond the border. In the full French election campaign, the compensation to Carlos Tavares, Stellantis’ CEO, provoked indignant reactions. The car group Stellantis was created by a merger of the French car manufacturer PSA and the Italian-American Fiat group. Tavares received 19.1 million euros in compensation for 2021. Over the next five years, his salary could increase to 66 million euros. Stellantis is officially listed on the Dutch stock exchange and therefore follows Dutch rules. More than 52 percent of shareholders voted against Tavares’ remuneration, but the company also ignored the vote there.

Extra pity because the news became known on April 14, a few days after the first round of the French presidential election. In a campaign dominated by purchasing power, Stellanti’s CEO’s salary was an easy target for far-right Marine Le Pen, who was fiercely targeting Tavares. But President Emmanuel Macron, who was to face Le Pen in the second round, had no choice but to attack.

The fight against the abuse of high wages must be fought at European level, otherwise society will explode

Emmanuel Macron

French president

“Shocking and exaggerated,” the French president said. ‘People struggle with their purchasing power and then see such sums.’ The choice to take the Netherlands as a place of business is politically very sensitive in France, where wages can be voted out. According to Macron, there must be European legislation. “The fight against the abuse of high wages must be fought at European level, otherwise society will explode,” the president warned.

Belgium has fewer activist shareholders. Ontex increased the compensation to the chairman of the board, Hans Van Bylen, even though the diaper manufacturer has been in a difficult situation for some time and lost about two-thirds of its market capitalization in one year. But the chairman’s remuneration was adjusted to his “status and profile” and was approved at the general meeting last week. Albeit by a minority of shareholders and exploiting the inertia of still many small and large investors. 57.9 percent of the shares were present and 76.5 percent of them voted in favor. In total, 44.3 per cent. of the shares.

Norwegian funds

But investor activism is on the rise. The Norwegian state fund, which is backed by the yield of oil, systematically attacks “corporate greed”, where excessive compensation is paid for “moderate performance”. The Government Fund’s CEO Nicolai Tangen is very clear in the British business newspaper Financial Times. “We are in an inflation period where many companies are doing very poorly with very large compensation packages. Greed is reaching a level we have not seen before. ‘

Greed is reaching a level we have not seen before. ‘

Nicolai Tangen

CEO of Norwegian state funds

Norwegians have already voted against the compensation packages at Intel, Apple, IBM and GE this year. The focus is initially on the United States, where very high fees are approved. But the focus will also be on European companies. “It’s clear that shareholders have not always done their job well,” Tangen said. “But the biggest problem is clearly with the CEO and the boards.” And also in the legislation if investors are legally ignored, such as at Philips.

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