Black swans and golden mountains

BNR Beleggerspanel
Erasmus School of Economics

In the investor panel of BNR Nieuwsradio, Mary Pieterse-Bloem, Professor of Financial Markets at Erasmus School of Economics, discusses the consequences of the war in Ukraine and the reward policy of Flow Traders.

The war in Ukraine is seen as a black swan: an event that was not foreseen in advance and that has a major impact. This also applies to the financial markets. Pieterse-Bloem mentions the three criteria that generally have to be met: the event must be rare, unexpected and have a great impact. Although the war was foreseeable for political scientists, this was not the case for economists and financial economists, according to the professor, and can therefore be labelled as a black swan.

Commotion at Flow Traders

2021 was a good year for many companies: executive pay was high, as it is often linked to the organisation's performance. Sometimes very high, as was the case with Amsterdam-based company Flow Traders. However, adjustments have been made to the remuneration policy: the total payout is a maximum of 35% of the profit instead of 40% and the maximum reward is 20 times the average reward. According to Pieterse-Bloem, this first step towards a better remuneration policy is still insufficient: two investor interest groups have expressed their lack of confidence in the current policy. When it comes to remuneration policy, there are mainly two conflicting interests. On the one hand, a company wants to keep its top executives, but on the other hand, an investor also wants the profits to be invested in the company.

Professor
More information

You can listen to the broadcast of BNR Nieuwsradio, 22 March, here.

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