Stock Market Slump Makes no Impact on Top Executives' Pay

Chief executive officers of almost half the companies included in Frankfurt's Dax-30 blue-chip index earned more in the crisis year 2001 than in the previous year, an assessment of last year's annual reports found.

Some of Germany's leading corporations approved salary increases for executives of more than 80% last year.

The gulf between the growth in executive pay and in company earnings was at its most marked at Deutsche Telekom, HypoVereinsbank and Commerzbank. These companies raised their managers' pay by between 89% and 30%, even though none of the companies raised their earnings before tax from the previous year.

But executives at other companies clearly tightened their belts, among them the management boards of Degussa, DaimlerChrysler, Infineon, SAP and Deutsche Lufthansa.

On balance, the salaries of managers of all Dax-30 companies in 2001 fell for the first time in years. Executives on average earned 1.58 million euro each, a decline of 10% from the previous year.

Deutsche Bank, by some margin, pays the highest salaries to its executives, while the management of Deutsche Lufthansa receives the most modest remuneration packages of all Dax-30 companies.

Shareholder representatives criticized the latest findings. "You get the impression that executives plunder the companies," said Lars Labryga of Schutzgemeinschaft der Kleinaktionäre, one of the leading groups lobbying on behalf of small shareholders.

The reason behind most of the salary increases are stock options offered to executive as part of their pay.

But Hubert Johannsmann, head of recruitment service Interconsilium, warned against rushed judgement. Performance-related components of salaries often made a delayed impact, he explained. As a result, the profit slump suffered by many companies in 2001 would be reflected in executives' salaries not until next year.