Higher compensation for DAX board members

Research

7/23/2024
Reading time 2 min.

The executive board members of DAX companies earned around six percent more in 2023 than in the previous year. These are the findings of the annual study by the Technical University of Munich (TUM) and DSW, an advocacy group for private investors. Despite many crises, the DAX had developed positively in the long term, which also had an impact on managers' income.

Sculpture Bull and Bear by Reinhard Dachlauer in front of the Frankfurt stock exchange.

The executive board members of the 40 companies represented in the German share index (DAX) earned an average of 3.6 million euros in 2023, 5.8% more than in the previous year. In 2022, the managers had recorded a significant drop of 8.4 percent.

On average, board members earned 40 times as much as their employees. The pay gap within the companies thus widened a little more.

The compensation of managers is made up of several components: Around 32% were fixed payments. Around 43% was linked to targets that are set for at least three years, such as the development of the share price. Bonuses linked to short-term targets accounted for around 25%.

"For German companies, the year was characterized by ongoing geopolitical tensions and macroeconomic challenges due to high inflation, restrictive monetary policy and the energy crisis," said Prof. Gunther Friedl, Chair of Controlling at TUM. "Despite these challenges, the DAX managed to perform positively."

As the index curve also points upwards when viewed over several years, the long-term compensation of the executive board members also rose (plus 5.7%). However, short-term payments (plus 6.2%) and fixed compensation (plus 5.8%) also increased.

CEOs earn more in other countries

The CEOs earned an average of 5.7 million euros compared to 5.1 million euros in the previous year. However, their salaries are still low in an international comparison. The CEOs of non-German companies listed in the EuroStoxx 50 share index received an average of 6.9 million euros, while CEOs in the US Dow Jones index received 24.2 million euros.

The study also examines how transparently companies disclose payments to their board members. Marc Tüngler, managing director of DSW, explains: "Transparency in the compensation of top managers is important. It has a lot to do with credibility and communicated comprehensibility. The transparency of executive board compensation in the DAX companies is nominally at a good level. All companies disclose the compensation at individual level. Most companies also report extensively on the assessment basis. However, there is a lack of comparable presentation across all companies. This is mainly due to the abolition of the codex tables and legal changes that give companies a great deal of freedom in their presentation. What is missing is a standardization of the reports to make a comparison possible without great effort."

Technical University of Munich

Corporate Communications Center