21.03.2019 - Studies

DAX executives: Hardy skin in the game

by Philipp Immenkötter

The remuneration systems of DAX companies do not lead to executive board members acting like long-term owners. For example, board members hardly ever come into contact with shares of their own company.

A manager has "skin in the game" if his financial situation is linked to the long-term success of the company. This commitment is intended to ensure that a manager acts farsightedly, taking into account the interests of the owners and other stakeholders. In our study "The Key to Skin the Game," we formulated a catalogue of requirements for executive compensation systems. 

Our four central requirements are as follows: Share ownership, a deferral of short-term compensation components, long holding periods for share-based programs and clawback policies.

Checking the DAX companies for these four requreiments leads to a sobering result. None of the DAX companies' compensation systems fully meets our requirements.

This study in only available in German.


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