CORPORATE FINANCE No. 09-10 2018

Prof. Dr. Alexander Götz / Moritz Stahl

Prof. Dr. Alexander Götz is Professor for Entrepreneurship/Corporate Finance at the DHBW, Duale Hochschule Baden-Württemberg, Villingen-Schwenningen. Moritz Stahl, B.A., is a law student at the University of Regensburg.
The average per capita compensation of the Executive Board changed only slightly in 2017 in the DAX with a decline of 0.4%. The trend of rising compensation from previous years has therefore not continued. In the MDAX, Management Board members earned 2.8% less in 2017 than in the previous year.

The average per capita compensation of the Executive Board changed only slightly in 2017 in the DAX with a decline of 0.4%. The trend of rising compensation from previous years has therefore not continued. In the MDAX, Executive Board members earned 2.8% less in 2017 than in the previous year. A multi-year comparison shows a positive correlation with the economic development of the companies. In relation to EBIT, it can be seen that the top performers tend to pay below-average compensation in absolute terms, which is why the criticism sometimes voiced about the level of Executive Board salaries cannot be accepted.

I. Introduction
The annual general meetings of DAX and MDAX companies are registering ever higher rejection rates with regard to executive compensation, although the topic has been the subject of intensive debate for many years. Either the companies have not understood the capital market requirements or the shareholders are becoming more critical. However, it may also be due to the increasing influence of voting rights advisors, who have made the topic of management board compensation one of their main focuses. For this reason, the main developments in the remuneration of the Management Board are described below
can be worked out. The study on executive board compensation of DAX and MDAX companies from 20171 for the reporting year 2016 will be extended below with the data for 2017. In the process
the absolute and relative development of the remuneration of the Management Board. In addition, the individual compensation components (fixed, STI and LTI) are evaluated. In addition, ratio indicators are formed, on the one hand in comparison to the EBIT of the company, on the other hand in relation to the average
Personnel expenses of the respective company. These key figures provide a useful benchmark, particularly in the context of the appropriateness requirements of the legislator. The ratio of Management Board remuneration to EBIT is
a simple and good indicator over time of the extent to which the “pay for performance” principle is followed.

II Empirical findings of the analysis 2006 to 2016
In 2015, the remuneration of the members of the Management Board rose by 2.8% in the DAX and by 6.8% in the MDAX3 , and in 2016 the increase was…..

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