• Average total compensation of CEOs is EUR 5.86 million, down just under one percent on 2014
  • Transparency regulations - among the best in the world - successfully established
  • Study: "hkp/// company report evaluation: Executive compensation at DAX companies 2015"

Frankfurt am Main, March 30, 2016. The compensation of CEOs at Germany's biggest listed firms, the DAX companies, was largely constant in 2015 despite a slight decline in average profits. The average total compensation of DAX CEOs was approximately EUR 5.86 million, a decline of just under one percent on the previous year. That puts them even further behind their European counterparts in terms of compensation.

Topping the ranking in 2015 was the CEO of Daimler, with compensation of EUR 14.37 million. He is also the only DAX CEO who makes it into the ranking of top-paid CEOs at Europe's biggest listed companies, to judge by the latest compensation reports published by companies.

These are the findings of the study "hkp/// company report evaluation: Executive compensation at DAX companies" from management consulting firm hkp/// group. The study looks at the quantitative and qualitative data on executive compensation for 29 of the 30 German DAX companies. Volkswagen is excluded from the study for the first time this year due to the automaker's decision to delay publishing its performance and compensation figures until April 28, 2016.

"Following a record year in 2014, average profits at DAX companies have fallen — and taken compensation levels with them," says compensation expert and Managing Partner at hkp/// group Michael H. Kramarsch. The year was a quiet one in terms of compensation. "Some companies saw significant losses with a corresponding impact on compensation levels, for example Deutsche Bank," Kramarsch explains. "At the same time, others enjoyed record profits and saw parallel developments in compensation. The overall picture is more transparent than ever, and also coherent." Of course, things may change when the compensation figures from Volkswagen are published.

Automakers once again head the national compensation rankings

Almost all the DAX companies use the type of table recommended in the German Corporate Governance Code (DCGK) to present their data on CEO compensation. This table includes information on all compensation accrued by the CEO for a specific fiscal year. As in 2014, all the DAX companies follow the DCGK's recommendation in full with the exception of Merck and BMW.

Based on the information in the tables, the top DAX CEO in terms of compensation who was in office for all of 2015 was the CEO of Daimler (EUR 14.37 m), followed by the CEOs of Fresenius (EUR 13.89 m total compensation) and HeidelbergCement (EUR 9.71 m). At the bottom of the list comes the CEO of Commerzbank (EUR 1.12 m). That means that the DAX CEO with the highest total compensation earns around thirteen times as much as the DAX CEO with the lowest total compensation.

DAX executive compensation up in Europe, but USA on a different planet


Looking at 37 annual reports that have been published for the 76 biggest listed European companies (the STOXX® Europe 50 and/or EURO STOXX 50®), we see an increase in the direct compensation of CEOs to EUR 7.26 million on average in 2015, up around 25%. By comparison, average direct compensation of CEOs in firms on the American Dow Jones Industrial Index grew to around EUR 15.79 million, an increase of 13% compared to 2014.


Currently the highest direct compensation at a listed company in Europe is that of the CEO of Anheuser-Busch InBev (approximately EUR 14 m). Worldwide, the top position has been held uninterrupted since 2012 by the CEO of Walt Disney, who earned the equivalent of EUR 38 million in 2015.

"At their current values, the compensation levels of DAX-CEOs are appropriate in the European context — although some Swiss and British firms have compensation levels that are considerably higher," says hkp/// group compensation expert Michael H. Kramarsch. "By contrast, companies in the US are on a different planet in terms of compensation levels and structures."

Variable compensation down, benefits and pensions up

Based on the data contained in the compensation reports, total compensation for DAX CEOs who were in office for the entire year declined by around 1% compared to 2014. This was driven particularly by increases in fringe benefits (+15%) and pensions (+20%, both figures approximate). By contrast, the level of performance-based variable compensation fell, the average annual variable pay (bonus) by around 3% and the comparative figure for the most strongly share-based multi-year variable pay by as much as 7%.

Average basic compensation for DAX-CEOs was up by about 1.7% and thus still lower than general salary developments in the market. However, there were some striking exceptions, such as Fresenius Medical Care (+32%) and Beiersdorf (+25%). Overall, one-third of DAX companies adjusted the basic compensation level of their CEO.

"Hikes of this sort usually have a contractual background — unless they are driven by regulation, as in the case of banks," says Regine Siepmann, Senior Manager and Director of Studies at hkp /// group. "Adjustments to basic compensation levels at board level are not usually made on an annual basis, so when they do happen, after a gap of a few years, they can be comparatively large." Siepmann says the structural developments in variable compensation are more important: "Annual bonuses have been falling clearly since 2006. More and more they are being replaced by multi-year compensation components. That is the right way to reflect sustainable success in executive compensation."

New transparency regulations successful, Commercial Code-type disclosure on the way out
According to the study's authors, the DCGK table for showing compensation levels is increasingly the norm. Transparency is greater than ever: "Transparency over compensation at DAX companies is exemplary – not just compared to other German indices, but worldwide," says hkp/// group compensation expert Regine Siepmann.

Perhaps the only fly in the ointment is the fact that the Commercial Code and DCGK regulations continue to exist side-by-side. This often leads to confusion among the general public, especially on the question of what the "right" compensation levels are.

"In Germany we have the unfortunate situation of incomplete legal provisions on transparency over executive compensation on the one hand coexisting with exemplary voluntary commitments under the German Corporate Governance Code (DCGK) on the other," says hkp /// group Managing Partner Michael H. Kramarsch. "This parallelism prevents the German provisions on compensation transparency, which are among the best in the world, from being entirely successful. This calls for legislation."

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