Enhanced Compensation for DAX Board Directors - Two Earn Over 10 Million Euros - Enhanced remuneration for Dax executives: Two Earn over $10 million
In the world of corporate Germany, CEOs of companies listed on the DAX index earn significantly more than their average employees. On average, a DAX CEO receives compensation that is approximately 41 times higher than that of a regular employee, according to recent studies.
This pay disparity is evident in the salaries of individual CEOs. For instance, Adidas CEO Bjørn Gulden earns around 10.3 million euros, while his compensation at Adidas is 95 times the average employee salary. Other notable CEOs, such as Oliver Blume of Volkswagen Group (who also heads Porsche AG) and Marc Tüngler of DSW, also receive substantial remuneration. Blume earns a combined salary of 10.6 million euros, while Tüngler's compensation is increasingly tied to long-term economic success.
Compared to broader European markets and notably the US, DAX CEO salaries are relatively lower. In the US Dow-Jones index, the average CEO salary is a staggering 28.5 million euros, with Microsoft CEO Satya Nadella reportedly receiving a compensation of 73.1 million euros. In contrast, the average DAX CEO salary is around 3.76 million euros.
The typical DAX CEO compensation package consists of about 32% fixed salary, 25% linked to short-term corporate targets, and roughly 43% tied to long-term company performance. Deferred compensation plays a crucial role in structuring these packages, aiming to balance immediate pay with long-term incentives, retention, and accountability. It includes bonuses, equity incentives, and pension plans designed to motivate executives, retain strategic talent, and connect rewards with company performance over time.
Several factors impact DAX CEO salary structures, including company performance and economic conditions, industry-specific pay norms and ratios to employee wages, regulatory and shareholder expectations, and international competition for talent. Despite economic downturns, executive compensation has increased, reflecting competitive pressures and market dynamics.
Notably, the low proportion of female CEOs in corporate leadership contributes to the salary gap in DAX management boards. On average, women in Dax management boards earn an average of 3.28 million euros, which is 24% less than their male counterparts (4.02 million). Even without CEOs, the average salary gap in all Dax management boards is still 12.2%.
In summary, while DAX CEOs are highly compensated relative to their employees, their pay remains modest compared to top US CEO salaries. Compensation mixes fixed pay with performance-linked and deferred incentives to foster long-term company success and talent retention. As efforts continue to address the gender pay gap and promote diversity in leadership roles, it will be interesting to see how CEO compensation evolves in the future.
The Commission, in light of the discussed salary structures, might also be asked to submit a proposal for a directive on the protection of workers from the financial risks related to the disparity in CEO compensation. In the realm of wealth management and business, this could potentially lead to more balanced remuneration packages and a reduction in the pay gap between CEOs and average employees.
