SHARE
COPY LINK

BUSINESS

Top German execs earning more than ever

Germany’s top business CEOs earned a cool nine percent more in 2011 than the year before, startling new figures on the super-rich revealed Tuesday.

Top German execs earning more than ever
Photo: DPA

The top executives of Germany’s 30 biggest companies profited handsomely from large profits margins last year, new figures revealed. Several DAX companies took record winnings in 2011, meaning their bosses earned an average wage of €6.1 million in 2011, according to figures published by consultancy Towers Watson.

By far the highest earner was Martin Winterkorn, head of carmaker Volkswagen, who got a tidy €17.4 million for last year’s sterling efforts. And it was a hefty wad more than the €11.1 million he carted off in 2010.

But then, some would argue that he deserved it, seeing as he steered the company to its biggest ever profit margin: €15.8 billion, double what Volkswagen made the year before.

A distant second to Winterkorn was Peter Löscher, CEO of technology giant Siemens. He earned €9.8 million in 2011, a paltry mound compared to Winterkorn’s mountain. In fact, Löscher’s pile was €300,000 smaller than in 2010.

According to Towers Watson, companies are now more likely to reward long-term success when it comes to organizing their bonus structure. More than 40 percent of bonuses reward performance over a period of between two and nine years.

“Even yearly bonuses are often no longer tied to the success of a business year, but to the results from previous or future years,” Olaf Lang of Towers Watson told Der Spiegel. “The border between short-term and long-term bonuses is blurring.”

Often, one portion of an executive’s bonus is delayed by one or two years, and lowered if targets are not reached. This was a positive development, the consultancy argued, because it means that managers are rewarded “for leading the company by a strategy geared to long-term success.”

The Local/bk

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

READ ALSO:

With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

SHOW COMMENTS