Pay for Performance, Continental Style

If you think that shoveling cash into the pockets of executives who've driven their companies off a cliff is a uniquely American trait, think again.

Belgium is all aflutter today over the news (in Dutch) that Fortis paid its former CEO, Jean Votron, 6.3 million euros ($8.3 million) when he fled the wreckage of the giant financial-services firm last July.

Votron was in charge when Fortis joined with Royal Bank of Scotland and Banco Santander of Spain, in a ruinous bidding war against another team led by Barclays Bank to acquire the global Dutch bank ABN Amro.

The RBS/Fortis/Santander team won the bidding -- if "won" is the right term -- with a $101 billion offer in October 2007.

Five months later, Bear Stearns collapsed, the global financial system started to unwind, and the ABN Amro deal became a noose around the necks of the winning bidders.

Both RBS and Fortis have had to be rescued by their governments, hobbled as they were by crushing debts from the deal and losses on mortgage securities. The governments of Belgium, the Netherlands, and Luxembourg jointly pumped $16 billion into Fortis last September, and wound up dividing the remains among themselves to try to recoup some value for taxpayers.

The debacle caused the rump end of Fortis still operating in Brussels to lose a remarkable $37 billion in 2008, the company said today.

Small wonder, then, that Votron's golden handshake -- which included a $2.5 million bonus for completing the ABN Amro takeover and a $1.9 million bonus for creating shareholder value -- has raised such a fuss even among normally peaceable Belgians.

by Mark Stein