German Minister Appeals to Bahn′s Sense of Fairness | Germany| News and in-depth reporting from Berlin and beyond | DW | 01.11.2008
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German Minister Appeals to Bahn's Sense of Fairness

Amid calls for his resignation, German Transport Minister Wolfgang Tiefensee asked Deutsche Bahn executives to refuse millions in bonus payments planned to be paid upon the rail company's IPO.

German Transport Minister Wolfgang Tiefensee

Tiefensee is under growing pressure to give up his post

"I call on the directors of the Bahn to decline the bonus," he told the mass-market daily Bild on Saturday, Nov. 1. "Understanding is always the best answer."

The minister also added that German equity law prevents him from dictating how the company chooses to compensate its executives.

Tiefensee has come under increasing criticism this week when it was made public that Deutsche Bahn managers would receive hundreds of thousands of euros in bonus payments even if the company's much-disputed stock launch didn't earn as much as expected. The IPO has been postponed due to market turmoil.

Touchy subject

Toy figures dressed in suits on euro notes

Debate has arisen in Germany over how much managers should earn

Public outcry over the issue led Tiefensee's deputy, Matthias von Randow, to lose his job this week. Von Randow knew how much the Bahn planned to spend in bonus payments but didn't inform Tiefensee.

Deutsche Bahn CEO Hartmut Mehdorn stood to gain up to 1.4 million euros ($1.8 million) for the market listing, and other board members could also reap millions, depending on its success, according to a report in the daily Sueddeutsche Zeitung.

Excessive executive pay has become a sensitive subject during the global financial crisis and many European leaders, including Chancellor Angela Merkel, have called for restraint.

Merkel's chief spokesman, Ulrich Wilhelm, backed Tiefensee saying he enjoyed the chancellor's full confidence. Opposition politicians, meanwhile, called for Tiefensee's resignation.

"Tiefensee must resign," Fritz Kuhn, the Greens party parliamentary leader, said in a statement. He added that the minister had either known about the bonus plan longer than he had admitted, or had failed to take proper charge of the listing that had been planned for Oct. 27.

Minister: Would have fought bonuses

A red traffic light in front of a Deutsche Bahn sign

Some opposition parties want a stop put to the Bahn's IPO

Tiefensee said he didn't know about the bonus payments until mid-September, long after he could do anything to change the scheme von Randow had approved.

"The personnel committee decided in June, and if I had found out about it earlier I would have opposed the bonuses," he told the Bild.

The listing of Europe's biggest rail firm, which market analysts initially thought might raise up to 8 billion euros, was put on hold earlier this month due to market volatility. Experts recently estimated that a stock launch under current conditions would bring the Bahn between 3 billion euros and 5 billion euros.

Earlier on Friday, the company reported that revenues and profits rose by around 10 percent over the first nine months. Deutsche Bahn also said by the end of September, it had cut its debt by 1 billion euros to 15.5 billion euros.

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