Pursuant to the Regulation on Sound Remuneration Policies (Regeling Beheerst Beloningsbeleid -Rbb), distributed non-cash instruments must be subjected to an appropriate retention policy, the key element of which is the retention period. The duration of this period depends in part on the number of years in respect of which the delivered performance is measured but is twelve months in principle. However, the retention period may be shortened if the performance period is longer.
The retention period that (after deferral) follows a twelve-month performance period is, in principle, twelve months as well. But if performance is measured over several years (two or three) prior to the assessment date, the retention period may be reduced accordingly. Depending on the risk profile, the minimum deferral period is three years.
Example: An identified staff member has a target performance date three years from now. If the employee meets the target after three years and a proportion of the non-cash instruments is distributed, a shorter retention period may be applied than if the employee had been subject to a performance period of just twelve months. This is because the risk has already been adjusted and managed in part in the period preceding the date on which the ultimate performance is measured and the amount of the variable remuneration is determined.