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The management board members earned an average of 3.558 million euros. (Image: istockphoto.com / filmfoto)
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DAX managers: more performance bonuses, but base salaries also higherExecutive salaries showing stronger increases

In 2017, salaries of management board members of DAX-listed companies rose by 4.5 percent – stronger than in the three years before. Bonuses are thus moving in line with the even bigger increases in corporate profits and DAX share prices. However, the base salaries of board members, not linked to performance, were also higher. This was revealed in the annual study, presented today in Frankfurt, by the Technical University of Munich (TUM) and DSW, an advocacy group for private investors.

Management board members with companies listed on the DAX exchange earned an average of 3.558 million euros in 2017, or 4.5 percent more than in 2016. This represents a significantly larger increase than in the previous three years. However, average annual growth in earnings for occupants of corner offices over the past 10 years is still below 2 percent.

Gross wages in Germany increased by 2.5 percent in 2017. As a result, top executives earned an average of 52 times as much as the employees working under them, as compared to a factor of 50 a year earlier.

"This development didn't surprise us. Not only have we seen a massive rise in corporate profits, by around 25 percent. The DAX is also up by 11 percent," said Prof. Gunther Friedl of the Chair of Management Accounting at TUM, who headed the study. As a result, there was an increase in both the bonuses, which depend largely on companies' annual results (variable cash bonuses, which were up by 2.9 percent) and the compensation components linked to the share price (+5.6 percent).

two thirds of compensation linked to performance

The fact that more than two thirds of executive pay is linked to these two performance criteria is also reflected in the annual differences for individual companies. Management board members with Deutsche Börse, Munich Re and Bayer earned more than 10 percent less in 2017 than a year earlier, while those at Lufthansa were paid 42.5 percent more.

"From the shareholders' standpoint, the main consideration is whether the compensation of board members is tied to individual performance – in other words, whether the 'pay for performance' principle applies," says DSW managing director Marc Tüngler.

However, the companies also increased board members' base salaries, not linked to performance, by an average of 5.7 percent. "We can't see any plausible reason for this. Companies shouldn't be weakening the link between executive compensation and performance. They should be doing the opposite if they do not want to lose public acceptance," says Friedl. "The bottom line, however, is that the trend in compensation in recent years has tracked the success of the DAX companies."

Female board members earn less than men

For the first time, the study also looked at differences in pay in terms of gender and nationality. Female board members, with average earnings of 3 million euros, earned significantly less than their male counterparts, who were paid an average of 3.7 million euros. Even if the pay of CEOs is excluded – as there are still no women in the top jobs – men still came out ahead, with average compensation of 3.3 million euros. The study also identified a difference between German executives (3.4 million euros) and non-Germans (4 million euros).

SAP bosses earn the most

As in the previous year, the top earners in 2017 were the management board members with SAP, who were paid an average of 5.654 million euros, followed by Volkswagen (5.591 million) and Merck (5.339 million).

SAP also topped the rankings for CEOs for the second time: Bill McDermott received 12.874 million euros in compensation. The salary of Matthias Müller, the CEO of VW, also exceeded the 10 million euro mark (10.141 million). Harald Krüger of BMW was third, at 8.383 million euros. The average pay of a CEO in 2017 was 5.787 million euros.


Prof. Dr. Gunther Friedl
Technical University of Munich (TUM)
Chair of Management Accounting
Tel: +49 89 289 25801

DSW (Deutsche Schutzvereinigung für Wertpapierbesitz e.V.)
Jürgen Kurz – Press spokesman
Tel.: +49 211 6697 61

Corporate Communications Center

Technical University of Munich

Article at tum.de

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