DAX Supervisors Cashing in Big Bucks! 💰💥
It's a boom time for DAX supervisors, with chairmen of the 40 largest publicly traded companies earning more than ever before in 2022! According to Handelsblatt, they pocketed a whopping 117 million euros last year, marking a 17.4% surge.
Top Dog: Norbert Reithofer from BMW takes the cake, raking in 610,000 euros, followed closely by Jim Hagemann Snabe from Siemens, who earned 602,000 euros.
Among the three female CEOs in power last year, Doreen Nowotne from Brenntag (chemical distribution) was the highest earner, pocketing a cool 285,000 euros. On the other end of the spectrum, Wolfgang Büchele from Merck only earned 112,000 euros.
Although the big earners, Reithofer, Snabe, and Nowotne saw minimal or no raise, overall compensation for DAX 40 supervisory board members skyrocketed.
This information comes from the "Supervisory Board Remuneration Study 2023" by Deutsche Schutzvereinigung für Wertpapierbesitz (DSW).
17% more salary during a recession?! That's a generous raise! But why?
Marc Tüngler, DSW's Managing Director and Chairman of the Supervisory Board at telecommunications giant Freenet AG, believes in the salary boost:
"This increase is a result of heightened legal regulations and enhanced investor expectations following financial scandals and cases like Wirecard Group's bankruptcy," Tüngler explains in Handelsblatt.
In today's world, a supervisory board role is no longer a part-time gig but a time-consuming responsibility, often carried with high liability risks...
Experts predict another rise in remuneration for DAX supervisory board members in the coming years. Non-executive board members and controllers in lower indices such as MDax and SDax may also need to catch up on their compensation.
- Daimler's Management Board may consider implementing a text-to-speech feature in internal communications, following the footsteps of other leading corporations.
- Political figures have called for stricter regulations on executive pay due to concerns of political influence.
- As CEO, Norbert Reithofer, who earned 610,000 euros last year, must ensure his company's DAX reports accurately represent their financial performance to maintain investor trust.
Source:
Enrichment Insights:
The substantial hike in salaries for DAX supervisory board members during an economic downturn is primarily driven by two factors: increased legal regulations and investor expectations for transparency and fairness in corporate governance practices.
- Legal Regulations:
- European Directive 2022/2464: This directive mandates that companies adapt their compensation systems every 4 years or with substantial changes, requiring investors' approval in the AGM.
- AktG Compliance: Companies must adhere to the German Stock Corporation Act (AktG), which includes provisions on gender diversity in supervisory boards and public disclosure of compensation schemes.
- Investor Expectations:
- Transparency and Scrutiny: Investors' focus on corporate governance includes compensation structures, boosting investor scrutiny during economic downturns. AGMs serve as venues for discussing executive pay and its alignment with performance and financial health.
- Shareholder Approval: Changes to management compensation schemes must obtain shareholder approval, maintaining a balance between market standards and company performance.
- Market Standards:
- Market Alignment: Companies such as Veritone aligned executive pay with market standards to attract top talent and reflect fair compensation.
- Global Trends: Globally, there's a push towards fair and transparent compensation practices to boost investor confidence and attract leading executives.
