How transparent is executive compensation?

The latest annual reports of the DAX companies offer a very good insight into the level of salaries paid to members of the executive board. Despite the increased transparency, many questions remain unanswered regarding the determining of salaries.

On average, the salary of a DAX executive board member was EUR 3.3 million in fiscal year 2014. 70% of this amount consisted of a performance-based component of which two thirds was linked to long-term goals. Historically, the development of executive salaries is more closely related to accounting performance than to shareholder value.

The short-term financial incentives in the 2014 financial year were based on an average of 2.6 criteria, of which 1.7 were based on book values. Long-term success was determined using an average of three criteria, of which 1.3 are each based on market values and 1.3 on book values. The number of criteria applied has increased slightly since 2006.

This study is co-authored by Henrik Paganetty.

Please note: This study is available in German only.

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