A job not even worth it to a dog

Blog

19 November 2018

Determining the correct remuneration for supervisors is no sinecure. Meanwhile everybody knows that nowadays supervisory directors and other supervisors have a job that is not even worth it to a dog rather than an honorary job. But how much should a ‘dog’ earn? There are dogs of all sorts and dimensions. There are guard dogs and lap dogs, large dogs and small dogs. Some have dangerous incisors, others have no teeth left at all. This also applies to supervisory directors.

In short, you need to differentiate when it comes to remuneration. In this respect you should formulate general guiding principles or even develop an actual remuneration philosophy. On Curacao you can define a maximum of four relevant supervision domains for the development of a remuneration philosophy. First of all, the financial sector: these are the banks, the insurance corporations, the pension funds, the trust funds, etc. Secondly, the public-service legal persons: these include, for instance, Aqualectra and Curoil but also the Social Insurance Bank (SVB) and the FKP. Thirdly there is the remaining private business community: Kooijman, Centrum Supermarket and so on. And finally, the art, culture and welfare sector. The remunerations for supervisory directors and supervisors differ strongly in these four sectors.

“Hence, the correct remuneration is customization work in the course of which this need for self-realization is taken into account”

In terms of the financial sector there is not much public insight on Curacao into the remunerations paid, neither for directors nor for supervisory directors. This is different in Europe (where, like us, they mostly follow a two-tier board structure). Almost all salaries are public there. Usually a member of the supervisory board receives 10% of what the members of the board of directors earn. The chairman receives 15% of the said remuneration. It is probably not much different for us. In case of public-service legal persons the remunerations are reasonably public on Curacao. Standard amounts are paid to supervisory directors. On average it is approximately ANG 1,500 net per month. In the remaining business community there (often) are no supervisory directors or supervisors yet, let alone that public data would be available about their remuneration. Finally, the art, culture and welfare sector has many foundations and associations, small and large. Here, the supervisors generally work for free. They do occasionally receive a (usually modest) expenses allowance.

This is a remarkably diverse palette, certainly considering the increased responsibilities of a supervisor. Namely, these responsibilities are basically no different for a chairman of the supervisory board of a large insurance corporation than for a chairman of the supervisory board of, for instance, the foundation Monumentenfonds. If the business goes bankrupt then the same liability rules apply. The external supervision by the Central Bank in case of financial institutions is basically just as rigid for a small institution as for a large institution. If you do not observe the required compliance rules then considerable fines will follow. Then how should you determine what an appropriate remuneration for all the supervisory directors in these totally different institutions is? A potential key to the solution may be found in the following.

Remuneration is not just about money. Everybody wants to feel appreciated. Above all, they want to give shape to an inner need, to development and what psychologists refer to as self-realization. Hence, the correct remuneration is customization work in the course of which this need for self-realization is taken into account. Within a foundation that has no resources or does not want to release resources to remunerate its supervisors, a budget could, for instance, be created for training. Then you can kill two birds with one stone. The costs are limited, money is not spent on private individuals, the supervisors improve their knowledge and skills and therefore work better and more efficiently in the interest of the legal person. And last but not least: it will make the individuals better people. It is the same with your dog. Of course it needs to be fed. And without attention or training you will get nowhere with it. Supervisory directors and supervisors should also receive this attention and training. Then this job may be worth it after all!

This blogpost is also available in Papiamentu. Download the PDF version.

Do you have a question about corporate governance? Please email it to governance@ekvandoorne.com and perhaps your question will be discussed in the next blogpost.