GERMAN EXECUTIVES NET 23% BIGGER SALARY INCREASE THAN FTSE 100 COUNTERPARTS
Pay for executives of the 100 biggest German companies grew 23% faster than their FTSE 100 counterparts in 2007, reveals research by Incomes Data Services (IDS). DAX 100 executives netted an average 10.5% salary increase last year, compared to just 8.1% for FTSE 100 executives. The average salary for DAX 100 lead executives in 2007 was £505,997 per annum, against £737,537 per annum for the FTSE 100.
The figures, from the first IDS “Executive Compensation Review” survey of executive pay in Germany, also show that total cash remuneration (including bonuses and benefits) for DAX 100 executives grew 19.8% in 2007, in contrast to 16.1% for the FTSE 100. As the market for top boardroom talent becomes increasingly globalised, IDS says pressure has mounted on German companies to close the pay gap between themselves and their foreign competitors.
Adam Elston, of IDS Executive Compensation Review, commented: “German companies are competing for senior talent in a market that is seen as increasingly globalised. European firms now benchmark pay against international peer groups in their own industries, rather than against domestic rivals. This is fuelling a much more rapid pay spiral.
“Executive remuneration is a contentious issue in the UK, where reports of ‘fat cat’ pay can make headlines, but that’s not deterred German companies from increasing pay for top management at a significantly faster rate and closing the pay gap on the UK.
“Germany is currently experiencing its most serious brain drain since the 1940s as executives leave for higher pay and lower taxes in the UK and the US. German companies are starting to respond, but executive pay in Germany is still only 69 per cent of the FTSE 100.”
According to Incomes Data Services, as European businesses expand globally, they are increasingly looking to hire executives who have international experience of managing operations across different cultures.
While about a third of FTSE 100 chief executives are not British, the proportion of DAX 30 companies run by foreigners is around a sixth, compared to none 10 years ago.
Top 3 FTSE 100 and DAX 100 companies for lead executive total cash
| Top 3 FTSE 100 lead executive total cash 2007 | Top 3 Dax 100 lead executive total cash 2007 | ||
| £pa | £pa | ||
| RAB Capital | 14,402,000 | Deutsche Bank | 6,948,854 |
| Man Group | 7,613,000 | Daimler | 5,341,289 |
| ICAP | 6,112,942 | Volkswagen | 3,622,132 |
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