Status: 07/13/2021 6:49 p.m.
Germany’s top managers earn less than last year. But no reason to complain: DAX board members still get on average more money than their colleagues in the rest of Europe.
The most impressive is the number written out: 1,100,000,000 euros. That’s 1.1 billion. That’s how much Alex Karp earns a year. The head of the US software company Palantir is the highest-paid CEO in the world. In contrast, the salaries of board members in German companies look downright modest. Nevertheless, with an average earnings of 3.4 million euros per year, none of the 192 board members of German DAX companies have to gnaw on starvation. Overall, the bosses of the large stock corporations had to accept a drop in salaries of 3.3 percent last year. This is mainly due to the corona crisis and its economic effects.
Reverse gender pay gap
For 21 years now, the German Association for the Protection of Securities Holdings (DSW) has been examining the remuneration of the executive board of the largest German stock corporations every year. This time there was a big surprise: women earn better for the first time. On average, they receive 3.4 million euros a year, compared to 2.9 million for their male colleagues. This reverse Gender Pay Gap This only arises, however, if you leave out the remuneration of the CEOs.
According to the DSW study, the top earner in the German leading index DAX is Linde boss Stephen Angel with an annual income of 14 million euros. The head of the aircraft engine manufacturer MTU, Reiner Winkler, earned the “worst” with 951,000 euros.
Recurring “envy debate”
Again and again, the high salaries of the board members give rise to discussions or envy. Especially when they are put in relation to the earnings of the average company employees. For example, the board members of the DAX newcomer Delivery Hero earn 121 times what their employees take home. But this number should be treated with caution, says Professor Gunther Friedl from the Technical University of Munich, the author of the DSW study. Because companies like Delivery Hero or Deutsche Post mainly employ low-paid employees as deliverers. “Of course this factor is higher than at Deutsche Bank, for example, where the employees have higher salaries overall,” says Friedl.
It is also gratifying that the gap between “simple” employees and the executive floor in Germany does not widen further, said the DSW remuneration expert Christiane Hölz. In Germany, for example, board members have earned an average of around 50 times as much as their employees. This value has even fallen slightly in recent years. That also distinguishes Germany from the USA. “There this value lies beyond good and bad,” says Hölzl.
Potential for improvement
The authors of the DSW study found a nuisance after all: some companies would have made their board members’ salaries more attractive by paying special bonuses. “Anyone who on the one hand exercises media-effective waiver and ‘voluntarily’ waives remuneration in Corona times cannot later negotiate compensation via special bonuses,” complained DSW managing director Marc Tüngler.
In the future, executive board salaries should be more based on factors that were previously considered “soft”, he demanded. The ecological orientation of the company, for example, social behavior or a greater contribution to climate neutrality. The consequences of climate change in particular could very quickly develop into “hard” factors for companies if, for example, higher prices for CO2 certificates or damage from storms ruined the balance sheet.
Tüngler also called on companies to be more transparent. It is true that a real turning point has occurred this year, because a new legal regulation means that stock corporations must show the salaries of their board members much more transparently than before. Nevertheless, there is still a lot of catching up to do here. However, since in the end the owners of the company – i.e. the shareholders at the general meeting – would have to decide on the amount of the remuneration, openness is an absolutely necessary condition. Not all companies have implemented this sufficiently yet.