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DAX executives earning less


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DAX executives earning less

Executive compensation linked more closely to stock performance, less to profits

Earnings of management board members of companies listed on the DAX exchange were 2 percent lower on average in 2018 than in the previous year. The companies have also linked executive compensation more closely to stock price performance. This was revealed in an annual study presented today by the Technical University of Munich (TUM) and DSW, an advocacy group for private investors, at a news conference in Frankfurt.

Management board members with the 30 companies listed on the DAX exchange earned an average of 3.564 million euros in 2018, or 2 percent less than in 2017. The study compares the 2018 figures of DAX-listed companies with the previous year including companies that were not yet listed on Germany's top exchange in 2017. There were two changes in the DAX in 2018.

The decrease runs counter to the prevailing trend over the past decade, in which executive compensation increased every year except in 2012 and 2015. Although gross wages in Germany were up by 3.1 percent in 2018, top executives still earned an average of over 52 times as much as their employees.

"Share prices are the best indication of the long-term trend"

As compared with recent years, the DAX corporations increased the portion of executive compensation linked to the longer-term performance of their stock prices. This component now represents 30.4 percent of overall compensation as compared to 26.8 percent a year earlier.

"We approve of this trend because the stock price is the most accurate reflection of a company's long-term performance," says Prof. Gunther Friedl of the Chair of Management Accounting at TUM, who headed the study. "In 2018 the German economic engine showed signs of slowing down. Share prices dropped significantly in some cases and the business outlook turned gloomy. The changes we have observed in executive compensation largely reflect these developments."

"The figures show that the system of 'breathing' salaries for board members basically works. But it's also clear that the assumption that it's all about what a company has to pay in executive compensation, and not the total that a top manager can receive from the system, does not go far enough. Public discourse will always revolve around how much money ultimately ends up in executives' wallets. Shareholders will be more interested in how much the company spends on their pay. A supervisory board should bear both aspects in mind and keep to a happy medium," says DSW managing director Marc Tüngler.

Female executives earn less than their male counterparts

Base salaries unrelated to performance still represent approximately one third of total compensation. However, companies reduced the average share of bonuses primarily dependent on corporate profits ("variable cash bonuses") from 41.8 percent to 36.7 percent. As a result, these payouts were 14.2 percent lower despite an overall increase in corporate profits.

Female board members, with average earnings of 3.1 million euros, again lagged behind their male counterparts, who received an average of 3.6 million euros. As before, not a single DAX company has a female CEO. Board members from other countries earned more than those from Germany in 2018 (3.7 million euros vs. 3.5 million euros).

Volkswagen executives back at number one

After SAP's executives headed the salary rankings in 2016 and 2017, Volkswagen returned to its accustomed number one spot in 2018. The automaker's top managers were paid an average of 6 million euros, followed by their colleagues at Merck (5.2 million). Number three was Deutsche Bank (5.1 million), where executive compensation was 55.2 percent higher than in 2018 - the largest increase among the DAX companies. In 2017 the bank's top managers had waived their variable compensation. The steepest drop in executive pay, at 38.9 percent, was at BMW.

The average compensation of CEOs of DAX companies was 5.4 million euros. Bill McDermott, the CEO of SAP, remained at number one, earning 10.8 million euros as the head of the highest-valued DAX company. In second place was Herbert Diess of Volkswagen, with 7.9 million euros, ahead of Bernd Scheifele, the CEO of Heidelberg Cement, with 7.3 million euros.

More information:

All figures on executive pay and the speeches at the press conference are available at: (German website)


Prof. Dr. Gunther Friedl

Technical University of Munich (TUM)

Chair of Management Accounting

Tel.: +49 89 289 25801 / +49 162 2916314

DSW (Deutsche Schutzvereinigung für Wertpapierbesitz e.V.)

Jürgen Kurz, Press spokesman

Tel.: +49 211 6697 61

The Technical University of Munich (TUM) is one of Europe's leading research
universities, with around 550 professors, 41,000 students, and 10,000 academic
and non-academic staff. Its focus areas are the engineering sciences, natural
sciences, life sciences and medicine, combined with economic and social
sciences. TUM acts as an entrepreneurial university that promotes talents and
creates value for society. In that it profits from having strong partners in
science and industry. It is represented worldwide with the TUM Asia campus in
Singapore as well as offices in Beijing, Brussels, Cairo, Mumbai, San Francisco,
and São Paulo. Nobel Prize winners and inventors such as Rudolf Diesel, Carl von
Linde, and Rudolf Mößbauer have done research at TUM. In 2006 and 2012 it won
recognition as a German "Excellence University." In international rankings, TUM
regularly places among the best universities in Germany.
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