Executives of leading German companies have dismissed a government initiative to force publicly traded companies to disclose top managers' salaries.
Greater transparency to help prevent abuse
Representatives from automobile manufacturers BMW and DaimlerChrysler called the initiative "unnecessary" and said that company boards already monitored compensation. Luxury car maker Porsche pledged to fight such a law in German and European courts.
Porsche's chief, Wendelin Wiedeking, who is thought to earn more than €15 million ($20 million), said the measure will lead to to "socialism" in the boardroom, by forcing salaries to match in order to prevent envy and resentment.
The government initiative, proposed last week, would require disclosure of individual executive salaries, bonuses and other benefits such as stock options.
Voluntary reporting unsatisfactory
German Justice Minister Brigitte Zypries introduced the legislation after a failed effort by the government to entice the majority of companies to voluntarily report salaries. Currently, about one-third of Germany's top corporations disclose their salaries.
"I regret that companies didn't meet their voluntary commitment," she said, calling the initiative important for shareholders.
But industry leaders said they would only comply if forced to.
"We think the proposal doesn't make sense," a spokesman for BMW chief told the Frankfurter Allgemeine Sonntagszeitung daily Sunday.
Chemicals maker BASF's supervisory board chair Jürgen Hambrecht agreed and said that such oversight was the responsibility of the board.
Standard practice elsewhere
Deutsche Bank chief executive Josef Ackermann signals victory before his trial on charges of improperly approving large executive payments during a high-stakes takeover deal. The trial focused the nation's attention on boardroom behavior and transparency issues
Officials responded to criticism by pointing out that such disclosures are part of standard business practices in the United States, Canada, and other European countries such as the United Kingdom, France, Italy, the Netherlands and Sweden.
And only in Germany would such a law include an option for companies not to disclose if shareholders in a 75 percent majority voted not to require it.
It is unclear when the initiative will be introduced in parliament. To become law, it must be approved by the cabinet and the lower house of parliament.
Public pressure for more transparency was spurred by criminal trials over payments to executives at mobile phone company Mannesmann during a merger with Britain's Vodafone Group last year. Six executives and board members were acquitted in July.