Top executives' pay under fire
With the German economy in the doldrums and job cuts mounting, the big salaries paid to company executives are under attack. In the first of a two-part series on the nation's economic woes, Douglas Sutton asks is it corporate greed?
More publicly-listed firms are revealing what they pay their top managemement
But besides Schroeder's criticism, the issue has become increasingly public in Germany as one by one, DAX-listed firms come forth to divulge what their top managers are earning, once again raising questions under the general heading: "corporate greed".
Shareholders groups are coming forward to demand more transparency from German corporations about what their top executives are earning, especially when it becomes apparent that they are giving themselves rewards out of proportion to the firms' profit performance.
In a speech to parliament about the tough process of economic reforms which are demanding more and more belt-tightening from the average citizen, Schroeder took aim at the business executives.
He spoke of a "few hundred top earners" among German companies who were approving millions' worth of rewards for themselves: "This may be legal under the law, but it is not moral or decent," the Berlin leader charged.
His remark touched a nerve in public, where opinion has already been stirred by the trial in Dusseldorf over the huge bonuses paid to various executives in the Vodafone takeover of Mannesmann, at the same time that the German economy has axed tens of thousands of jobs.
*quote1*Slowly - and not without resistance along the way - more publicly-listed firms are revealing what they are paying their top management, although not always in specific detail. Some companies list only the total paid to the top managers, but not the individual salaries.
Under the new voluntary "Corporate Governance Code" in Germany, so far 11 of the 30 companies listed on the Frankfurt Stock Exchange's DAX Index have come forward to report what their top managers were paid in 2003. In 2002, only six DAX companies did so.
Deutsche Bank became the latest on Thursday when it reported that chairman Josef Ackermann's total compensation in 2003 came to EUR 11.1 million - a whopping 60 percent rise over what he was paid the year before.
A few days earlier, Commerzbank said its chief executive, Klaus-Peter Mueller, received EUR 1.42 million in 2003. This was up from EUR 1.26 million the year before, the rise coming despite the fact that Commerzbank lost a record EUR 2.32 billion.
The daily paper Die Welt, taking a look at some of the other salaries and benefits which big-name companies have divulged, noted that in eight of the cases, pay increases exceeded the firms' earnings growth.
*quote2*Among the top earners, managers at DaimlerChrysler saw their pay and benefits boosted by nearly 50 percent last year to around EUR 4.4 million, with executives at energy giant EON receiving an average EUR 4.37 million, a more than 100 percent increase.
But not everyone is getting into the corporate transparency act.
At the machinery and industrial gases concern Linde, for example, chief executive Wolfgang Reitzle, sounding defensive, lashed out against the calls for publishing managers' compensation.
"As long as it's still possible, we won't do it," Reitzle said this week, dismissing the Corporate Governance Code as being a "lust driven by social envy". Reitzle added: "Our shareholders are far less interested in such issues as the journalists."
Whether that is the case with Linde's shareholders or not, it appears not to be the case with others, particularly the lobby group DSW, which champions the cause of small-time shareholders.
Looking ahead to a busy spring season of annual general meetings of such corporate giants as DaimlerChrysler, Volkswagen, EON, HypoVereinsbank, BMW, Deutsche Telekom and SAP, the DSW aims to raise the issue of managers' pay and bonus packages.
The DSW point out that, while the profits of the DAX companies gained an average of 30 percent last year, dividends were only to be boosted by an average of 6 percent.
DSW spokesman Juergen Kurz said that despite the steps towards greater transparency by companies, the issue of managers' salaries and benefits is still a sore one.
"There impression remains that greed continues to rule in the top management levels," he told the daily paper Die Welt.
[Copyright Expatica 2004]
Subject: German News, executives' salaries, corporate greed