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.