Danish politicians call for limits on banker bonuses

danish-kronerA move by the Danish People’s Party aims to ensure that favourable share options and giant bonuses for bank executives are done away with – even if they are from banks that did not figure in the government-sponsored bank crisis packages.

The proposals will be presented by the party during a status meeting among the parliamentary majority that had itself earlier adopted the rescue packages, reports Politiken.

“Developments in the past few years have shown that the banks are so entangled in the country’s economy that it is a matter for all of society when the banks get into trouble,” says Kristian Thulesen Dahl of the DDP. This is the main reason that advocates feel that limiting senior bank executives’ options for bonuses and share options as part of their salaries is deemed to be reasonable. “This possibility contributes to making management take too short-sighted risks,” said Thulesen Dahl.

In addition, the DPP has also said that it wants to impose restrictions on share options and bonus schemes on a range of other sectors with the wind industry included.

“Some companies basically live from specific decisions that the politicians make and which can increase their earnings,” Thulesen Dahl stated. He singled out the wind energy industry and with specific reference to Vestas CEO Ditlev Engel, said: “If Ditlev Engel’s salary is based on a quick increase in the stock price, then I understand much better why a company like Vestas is so actively trying to make the politicians take certain political decisions.”

The Danish Bankers Association has urged politicians to adhere to international recommendations which argue that long-term decision ramifications should determine bonus programmes; for example by calculating amounts paid over a period of several years.

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