German Executives Pocket Hefty Raises, Study Shows | Business| Economy and finance news from a German perspective | DW | 18.02.2008
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German Executives Pocket Hefty Raises, Study Shows

Salaries of top German business leaders rose by some 17.5 percent last year, a new study shows. Board members in listed companies received anything from 40,000 to over seven million euros ($58,000 to over $10 million).

A man in a suit pocketing money

Germany is debating whether top executives are pocketing too much

The release of the survey comes at a particularly sensitive time in Germany. A huge tax evasion scandal involving senior executives is currently unfolding, and concerns are growing about the gulf between the haves and the have-nots.

The Kienbaum management consultancy firm said it had arrived at its results after questioning 4,300 executives at 1,300 companies.

Top managers in DAX-listed companies came out best in the survey with an average increase in earnings of 23.3 percent, while executive pay in privately owned firms climbed by 12.6 percent.

Performance-related pay shot up

Scales with nothing on one side and a stack of banknotes on the other

Some Germans feel the gulf between the poor and the wealthy is getting too wide

Most of the increase was accounted for in the form of bonuses, according to the study.

"This clear rise is due above all to the increase in the variable parts of their saleries indexed on their company results, while base salaries generally remained constant," said Kienbaum's managing director Alexander von Preen.

Among those surveyed, some 350 companies gave their board members more than 500,000 euros ($732,635), 128 of them rewarded them with over a million and 44 paid more than two million euros. According to Kienbaum, the number of staff and the state of a firm's finances were the main factors determining pay levels.

On average, board chairmans received 50 percent more than other board members, but the difference in practice ranged from 10 to 300 percent.

Adding fuel to the flames?

Klaus Zumwinkel, former CEO of Deutsche Post

The probe against the former Post CEO and other executives is raising questions

The figures are set to further stoke the debate in Germany about the integrity of the executive class sparked by a tax probe into allegations that wealthy executives hid assets in Liechtenstein to dodge paying taxes.

At the same time, there is also growing resentment over benefit cuts and stagnating wages in the light of the renewed economic growth of recent years and rising energy and food prices.

After months of wild cat strikes, the German rail company agreed at the end of January to give German train drivers an eight-per cent pay rise from March. Now, hundreds of thousands of public sector workers are involved in similar action.

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