19.07.2017 - Studies

With cards covered: Executive compensation for DAX companies

The DAX companies do not let anyone look into their cards when it comes to setting executive salaries. It is not possible to comprehend even one single salary. Although performance criteria are specified, stakeholders are usually left in the dark about targets, weights and pay-for-performance. In our transparency rating, Fresenius Medical Care has the most transparent compensation, while Adidas, Deutsche Bank and ProSiebenSat1 report most opaque.

Not "how much" but "why" must be asked when analysing the compensation of top managers in Germany. Transparency in the calculation of salaries is essential if a discussion is to be held on the appropriateness of executive compensation. "Why" is determined by the company's compensation system, about which the compensation report as part of the annual report must provide information. Unfortunately, the guidelines do not go very far and can already be fulfilled with rudimentary information. Therefore, the question arises as how far large German corporations grant insight into their remuneration structures.

In this study, we assess the transparency of the compensation reports of the DAX companies for 2016 and award a transparency score for each compensation report. We analyze information on the following four dimensions: Observability of the performance criteria, disclosure of the agreed targets, weighting of the criteria and implementation pay-for-performance. Only if sufficient information is provided in all four dimensions stakeholders are be able to understand the reasons for the salaries of the executive board.

Please note: This study is available in German only.

Legal notice

The information contained and opinions expressed in this document reflect the views of the author at the time of publication and are subject to change without prior notice. Forward-looking statements reflect the judgement and future expectations of the author. The opinions and expectations found in this document may differ from estimations found in other documents of Flossbach von Storch AG. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. This document does not constitute an offer to sell, purchase or subscribe to securities or other assets. The information and estimates contained herein do not constitute investment advice or any other form of recommendation. All information has been compiled with care. However, no guarantee is given as to the accuracy and completeness of information and no liability is accepted. Past performance is not a reliable indicator of future performance. All authorial rights and other rights, titles and claims (including copyrights, brands, patents, intellectual property rights and other rights) to, for and from all the information in this publication are subject, without restriction, to the applicable provisions and property rights of the registered owners. You do not acquire any rights to the contents. Copyright for contents created and published by Flossbach von Storch AG remains solely with Flossbach von Storch AG. Such content may not be reproduced or used in full or in part without the written approval of Flossbach von Storch AG.

Reprinting or making the content publicly available – in particular by including it in third-party websites – together with reproduction on data storage devices of any kind requires the prior written consent of Flossbach von Storch AG.

© 2020 Flossbach von Storch. All rights reserved.