Executive floors are often far removed financially from the simple reality of work. 52 times as much as their employees were paid by the executive boards of dax companies last year – on average.
As a result, the salary gap in germany’s premier borsenliga was just as steep as in 2017. This was calculated by the german association for the protection of investors (DSW) together with the technical university of munich.
According to the study presented in frankfurt on tuesday, the gap is widest at volkswagen. According to the most recent figures, management salaries at the automaker are 97 times higher than the average salary per employee in the company. According to the report, the lowest salary gap is at the german stock exchange, which pays its executives an average of 25 times that amount.
The supervisory board is called upon to ensure that the gap in a company does not widen too much, DSW managing director marc tungler warned. Experts are skeptical about capping values across all industries. "This would indicate business decisions that have nothing to do with business reality," warned munich scientist gunther friedl. Companies could, for example, be forced to relocate employees to low-wage countries.
On average, a member of the management board in the german share index – including group ceos – received total compensation of 3.51 million euros in 2018. After years of growth, the total decreases again for the first time. The decline compared to the previous year, when both stock markets performed better and profits were stronger, was 3.5 percent. The figures relate to 29 of the 30 dax companies.
Shareholder representatives note with approval that the part of the pay that is based on the share price tends to become coarser. According to the calculations, it was just over 30 percent in 2018. Fixed salary accounts for around 33 percent. Variable bonuses still account for the lion’s share of total compensation, at almost 37 percent.
"Good performance should be well rewarded," said tungler. "But if it goes badly, the board must also trace this in the wallet. And this is what we often do not see."
In terms of average executive pay, VW was the top performer in the dax in 2018: at the automaker, the average remuneration of a member of the board of management totaled 6.0 million euros. At the pharmaceutical company merck, ranked number 2, it was around 5.2 million euros.
The authors of the study were surprised that deutsche bank board members ranked third with an average of just under 5.1 million euros – after all, the institute was "obviously not on a successful course. At 55.2 percent, the remuneration of the management board of germany’s largest financial services provider also rose more sharply than that of any other group in the german share index. A year earlier, the deutsche bank board of management had waived bonuses.
While an ordinary member of the executive board of a dax company received an average of just under 3.1 million euros in compensation, the study found that the company’s ceos received an average of 5.4 million euros. The top earner was once again sap chief bill mcdermott, who exceeded the ten million mark for the third time with total compensation of 10.8 million euros. The platzen is followed by VW’s herbert diess (around 7.9 million euros) and bernd scheifele of heidelberg cement (around 7.3 million euros).
There are numerous studies on executive board compensation. Due to different calculation methods, the results differ significantly in some cases.
In an international comparison, the sums now published by DSW appear modest: in europe, carlos brito, CEO of the belgian beverage giant AB inbev, stands out with 31.8 million euros. In the u.S., disney boss robert iger even achieved total compensation of just under 55.6 million euros. The gross component is linked to the company’s share price in each case.
And even in germany, top dax earner mcdermott is surpassed according to calculations: at mdax-listed fashion mail order company zalando, the salaries of the three co-chiefs robert gentz, david schneider and rubin ritter each added up to just under 19.4 million euros. The low percentage of these are stock options that are spread over a period of several years.