As German economy struggles, executives earn more than ever

In the face of an economic downturn and major layoffs at large German firms such as SAP, ThyssenKrupp and Bosch, executives at Germany’s major listed companies are earning more than ever before.

The remuneration of board members of companies listed on the DAX, MDAX and SDAX rose by an average of 11% in the 2023 financial year, according to a study by the auditing firm EY that was published on Wednesday.

Including bonuses, they reached a record high of €2.65 million ($2.81 million), the study said. Chief executives’ pay rose particularly sharply, increasing by 16% to an average of €3.7 million.

At the same time, women on the boards of DAX, MDAX and SDAX companies continue to earn more on average than their male counterparts, although the gap is narrowing. According to the study, the incomes of male board members, excluding chief executives, rose by just over 9% to €2.26 million in 2023, while the salary of top female managers stagnated at €2.42 million, a marginal increase of 0.1%.

Women in boards remain a minority, but are in demand. Many firms are seeking women managers, thereby driving salaries upwards.

The analysis examined the total direct remuneration, comprising fixed salary and bonuses, of board members who were in office for the entire financial year.

In Germany’s top tier firms, the DAX-listed companies, pay for male board members surpassed their female counterparts for the first time since 2015, according to EY.

While men’s pay increased by approximately €260,000 on average in 2023, women’s pay decreased by about €150,000. This meant that men had a lead of around €290,000 with a remuneration amounting to approximately €3.3 million on average.

Different factors explain salary rises

“The very positive salary development of many board members last year may be surprising at first glance, since the DAX companies overall recorded rather stagnant revenues and profits,” said EY partner Jens Massmann.

However, he said there is a mixed picture. While some companies faced strong headwinds, others achieved high profits. Additionally, many companies link remuneration to sustainability goals, regardless of their economic situation, and must also remain competitive internationally in the battle for top managers.

Recently, insurers have posted record profits and banks have benefited from rising interest rates. The highest-paid DAX executive in 2023 was from the struggling automotive sector: VW chief Oliver Blume earned around €10.3 million, according to the investor protection association DSW. EY does not name individuals in its study.