We have to talk about manager salaries again. Because the news of the last two weeks has impressively illustrated how much is still in a mess. Thus, despite billions in losses, the board members of Dieter Zetsche are entitled to millions in bonuses – and are desperately trying to spare the supervisory board around Paul Achleitner from criticism. However, their voluntary partial waiver is “not a laudable insight, but an admission that the remuneration system does not work”, Dieter Fockenbrock of the Handelsblatt commented aptly. And once a system is working, Fockenbrock continues, it will be abolished. For example at Tui, where CEO Friedrich Joussen has to make do with 1.1 million euros after a weak year.
Ludwig Erhard would have identified market failure
Promptly, Supervisory Board Chairman Dieter Zetsche rushed to his aid and announced that the criteria for variable compensation would be relaxed. Bonuses only for success? This seems unthinkable in Germany’s executive suites; the much-vaunted “entrepreneurial pay” is pure theory: top managers are paid “very securely” in this country, the Manager Magazin states in its current cover story. This is not only due to lax bonus criteria, but also to generous fixed salaries and pension provisions.
And let’s not get into market economy mechanisms now: for decades, supervisory boards of listed companies that did not take their jobs seriously have generously distributed foreign money – and thus created a far exaggerated attitude of entitlement. Ludwig Erhard would probably have rebuked market failure in the form of supervisory board and owner failure: “After all, no one assumes genuine entrepreneurial responsibility when shares in free float and controllers are cronies. The new, more professional generation of supervisory boards would now have to turn the wheel back decisively – especially against the background of the digital transformation. But this will be difficult as long as old hands like Zetsche, who have been socialised in the world of mega-salaries, are at the top. If we want to increase the acceptance of the social market economy, there is no way around it.