• Germany's news in English

Fat cats advise each other to lay off the cream

The Local · 23 Apr 2012, 15:19

Published: 23 Apr 2012 15:19 GMT+02:00

Facebook Twitter Google+ reddit

Klaus-Peter Müller, board chairman of Commerzbank, the second biggest German bank, and chairman of the commission for good corporate governance, and Manfred Gentz, former financial head of auto giant Daimler, wrote a joint letter to the heads of the DAX-listed companies – Germany's 30 biggest firms.

The letter, seen by the Handelsblatt daily, calls for a long-term change in the pay structures in response to growing public anger at excessive bonuses.

"We should always keep in mind, that even, and especially, market economic systems need the understanding and the acceptance of society," Müller and Gentz wrote.

"We are suggesting that integrating limits or caps into the pay structures might be considered, though of course the scale and suitability of these should be decided by the boards."

Such a move would break a business taboo in Germany, where any interference in pay structures has previously been considered an illegitimate violation of market freedoms. Apparently for that reason, Müller and Gentz carefully deny in the letter that they are "instruments of political pressure."

But they warned, "It is to be feared that otherwise, if only out of a populist impulse, politicians will start thinking in terms of legislation." The initiative seems to be designed to head off politicians considering popular legislation ahead of next year's elections.

Germany's top businesses have come under increasing pressure to justify high wages for top management in recent months. The most recent surveys, undertaken by pollsters Forsa, suggest that as many as 71 percent of Germans think CEOs get too much money.

The move by Müller and Gentz is likely to increase that pressure, and history suggests that their fears about government intervention are justified. In 2004, the German parliament passed a transparency law forcing managers to reveal their incomes after many had refused to do so.

Now the two businessmen fear that Germans will no longer tolerate incomes of upwards of €10 million. New figures released in March showed that the CEOs of Germany's top 30 companies earned an average of €6.1 million in 2011, up nine percent from the year before.

Story continues below…

The highest paid German businessman last year was Volkswagen boss Martin Winterkorn, who last year earned €17.5 million in salary and bonuses.

The Local/bk

The Local (news@thelocal.de)

Facebook Twitter Google+ reddit

Your comments about this article

18:56 April 23, 2012 by taiwanluthiers
And the more tax the big execs are being subjected to, the more money they hide in Switzerland...
21:39 April 23, 2012 by wood artist
If history has taught us nothing else...and it's taught us a lot if we're smart enough to learn...it's that when things get far enough out of balance, those on the "wrong" side of the scales will rise up. At some point, and I think the US is nearer that point than Germany might be, CEO's are going to "discover" that they are the targets of legitimate outrage and they're not going to like it.

When a company's stock is in the tank and the profits (or losses) continue, it's harder and harder to maintain the "lie" that the CEO needs that huge bonus...or has even earned one at all. The Occupy movement is about this sort of thing, and I don't think it's going away anytime soon.

What these two men are saying is simple: It's time to wake up and smell the bacon....and it's burning!

Today's headlines
These are Germany's top ten universities
The new library of Freiburg University. Photo: Jörgens.mi / Wikimedia Commons

These are the best universities in all of Germany - at least according to one ranking.

Introducing Swabians - 'the Scots of Germany'
Photo: DPA

These Southern Germans have quite a reputation in the rest of the country.

Woman sues dentist over job rejection for headscarf
Photo: DPA

A dentist in Stuttgart is being taken to court by a woman whom he rejected for a job as his assistant on the basis that she wears a Muslim headscarf.

Isis suspect charged with scouting Berlin attack sites
Photo: DPA

German federal prosecutors said Thursday they had brought charges against a 19-year-old Syrian man accused of having scouted targets in Berlin for a potential attack by the Isis terror group.

Berlin Holocaust memorial could not be built now: creator
The Memorial to the Murdered Jews of Europe, in Berlin. Photo: DPA.

The architect of the Berlin Holocaust memorial has said that, if he tried to build the monument again today, it would not be possible due to rising xenophobia and anti-Semitism in Germany and the United States.

'Liberal' Germany stopping Europe's 'slide into barbarism'
Ian Kershaw. Photo: DPA

Europe is not slipping into the same dark tunnel of hate and nationalism that it did in the 1930s - mainly thanks to Germany - one of the continent's leading historians has said.

Eurowings strike to hit 40,000 passengers
Travelers impacted by the strike on Thursday wait at Cologne Bonn airport. Photo: DPA.

The day-long strike by a Eurowings cabin crew union is expected to impact some 40,000 passengers on Thursday as hundreds of flights have been cancelled.

Deutsche Bank reports surprise quarter billion profit
Photo: DPA

Troubled German lender Deutsche Bank reported Thursday a surprise €256-million profit in the third quarter, compared with a loss of more than six billion in the same period last year.

US 'warned Merkel' against Chinese takeover of tech firm
Aixtron HQ. Photo: DPA

The German government withdrew its approval for a Chinese firm to purchase Aixtron, which makes semiconductor equipment, after the US secret services raised security concerns, a German media report said Wednesday.

Long-vanished German car brand joins electric race
Photo: DPA

Cars bearing the stamp of once-defunct manufacturer Borgward will once again roll off an assembly line in north Germany from 2018, the firm said Wednesday.

10 German clichés that foreigners get very wrong
Sponsored Article
Last chance to vote absentee in the US elections
10 ways German completely messes up your English
Germany's 10 most weird and wonderful landmarks
10 things you never knew about socialist East Germany
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
jobs available
Toytown Germany
Germany's English-speaking crowd