- The compensation of the supervisory board chairmen of Austria's top stock-exchange listed companies has grown by around 6 percent to an average level of EUR 63,500
- Compensation levels still far from adequate
- hkp/// group study "Evaluation of annual report data on the compensation of supervisory boards at ATX companies 2015"
Frankfurt am Main, June 3, 2016. According to the new study by management consultants hkp/// group "Evaluation of annual report data on the compensation of supervisory boards at ATX companies 2015", the compensation of the supervisory board chairmen of Austria's leading stock-exchange listed companies (ATX firms) rose by 5.6 percent in 2015 compared to the previous year. The average total compensation of supervisory board chairmen is approximately EUR 63,500. That puts it well below average international levels, as in previous years. For example, the supervisory board chairmen of medium-sized German firms on the MDAX earn around EUR 176,500, while those of firms on the Swiss SMIM index earn around EUR 1.27 million.
As in previous years, heading the compensation rankings for ATX supervisory board chairmen who remained in office throughout 2015 is Erste Group at EUR 146,000, followed by Wienerberger (EUR 84,400) and Voestalpine (EUR 81,500). At the bottom of the ranking comes Schoeller-Bleckmann at EUR 22,500.
Highest compensation | Total compensation in EUR
- Erste Group | 146,000
- Wienerberger | 84,400
- Voestalpine | 81,500
Lowest compensation | Total compensation in EUR
- Österreichische Post | 25,900
- Flughafen Wien | 24,900
- Schoeller-Bleckmann | 22,500
Fig. 1: Highest and lowest total compensation levels of chairmen of supervisory boards remaining in office for the whole year at ATX firms, 2015
Unlike the moderate growth observed in the compensation of supervisory board chairmen, the management board chairmen of ATX firms saw their pay increase by 36% in 2015, to around EUR 2.18 million. That means that management board chairmen now earn 34 times what supervisory board chairmen earn on average.
"The salaries of those responsible for governance at ATX firms – even in companies at the top of the rankings – remain firmly at a level that is inadequate given the wide variety of the tasks and the responsibility of the position. Professional governance and strategy support calls for adequate and professional compensation," says Michael H. Kramarsch, compensation expert and Managing Partner at hkp/// group. According to Kramarsch, compensation levels of supervisory board chairmen have been catching up with those of management board chairmen in recent years internationally as the role of governance receives increasing recognition. "We do not see this development in Austria, however" Kramarsch says.
Another clear difference between Austrian practice and international practice is in the structure of the compensation. Supervisory board chairmen at ATX firms are paid almost entirely in the form of fixed compensation and attendance fees. However, the authors of the study believe that the fixed compensation covers the governance activities of the supervisory board chairmen, not their role as a strategic sparring partner to the management board.
"No major project, no strategic decision of any weight is taken without the close involvement of the supervisory board chairman these days," says Jennifer S. Schulz, Senior Manager at hkp/// group and co-author of the study. "This aspect of the job should be compensated with performance-related pay, ideally in the form of shares with appropriate share ownership guidelines. This binds the supervisory board chairman, as a representative of the firm's owners, to the long-term success of the company," she adds.