Com­pen­sa­ti­on of the Manage­ment Board in the DAX and MDAX 2017

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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