Despite the sluggish economy, most CEOs of large corporations will not be forced to accept any significant pay cuts for the 2024 financial year. According to the remuneration reports of the Dax companies, many top managers achieved their targets in 2024 and will be able to collect higher annual bonuses in many cases.

Large changes – either upwards and downwards – are mainly due to the generally share-based long-term incentives (LTI), where managers can benefit from positive developments on the stock markets after a typical waiting period of four years.

One example of a decline in the annual bonus is the energy supplier RWE, where the remuneration paid to CEO Markus Krebber in 2024 fell to 5.65 million euros, after 6.40 million euros in the previous year. Although the manager is also certified as having fully met his targets in 2024, Krebber significantly exceeded the targets for 2023. This is reflected in the bonus with a decrease of 1 million euros to 1.6 million euros.

In some cases, reductions are also due to the utilisation of state aid. This was the case in 2024 for the Executive Board of Siemens Energy, which had to forgo bonus payments due to the utilisation of a state guarantee. The year before, the Fresenius management team's bonus was cancelled after the healthcare company received state energy aid.

The comparison of remuneration reports is no longer fully possible, after the standardised tables for the presentation of salaries were removed from the German Corporate Governance Code, and legislators caused confusion with new specifications for „remuneration granted and remuneration owed“. However, most companies still use the old „accrual tables“ and show the amounts „earned“ in the year for the respective cycle, even if the annual bonus only lands in the account in the following year – often after the Annual General Meeting.

Investors are also calling for transparency. As a rule, they are not offended by the absolute level of remuneration, but want to know what performance is being rewarded. As a result, many remuneration reports now provide detailed information on individual incentivisation and target achievement, so that shareholders can understand significant changes in salary.

This year more CEOs have exceeded the threshold of 10 million euros, which is still often regarded as the „magic threshold“ in Germany, than in the previous year. New to the group are SAP CEO Christian Klein with 19 million euros, Deutsche Telekom CEO Tim Höttges with 11 million euros, and VW CEO Oliver Blume with 10 million euros, whereby Blume is paid half each for his management role at VW and Porsche.

The shooting star in 2024 is Beiersdorf CEO Vincent Warnery, for whom the consumer goods group is reporting remuneration of 13.2 million euros after 2.5 million in the previous year. The manager benefits from the long-term variable bonus granted. This is not granted on a share-based basis, but is measured by the achievement of strategic targets over four years from 2021 to 2024, and has now earned Warnery almost 11 million euros in cash. In the previous year, only the one-year bonus was paid out. Incidentally, Beiersdorf is one of the few companies in the Dax that no longer grants pension commitments to its Executive Board members – still a significant salary component for managers in many companies.

The fact that share price-based LTIs can also go in the other direction can be seen at DHL Group.
The remuneration of the head of the logistics group, Tobias Meyer, fell by 1.4 million to 3.1 million euros in 2024. Unlike in the previous year, the manager did not exercise any stock appreciation rights.

The remuneration report shows that the vesting period for the LTI plan tranche expired at the end of August 2024. The tranche was allocated four years ago at an issue price of 37.83 euros. The absolute performance of Deutsche Post shares compared to the initial share price was 2.34%, while the relative value compared to the Stoxx Europe 600 was minus 36.97%. „This means that all performance targets were missed,“ the report concludes. „The 2020 tranche lapsed without replacement or compensation.“ In his first year as CEO in 2023, Swiss Post CEO Meyer earned 1.95 million euros from the tranche granted in 2019.

Managers can continue to benefit from share-based LTI programmes long after they have left the company. At Siemens, for example, Joe Kaeser, CEO of the technology group until February 2021, received further remuneration from stock awards in 2024, totalling 6.2 million euros. Since the end of his term of office, a total of 12.7 million euros has been disclosed, in addition to pension payments.

The salaries of top managers are not only linked to stock market performance via share-based LTIs; many companies now require board members to own shares. The stock ownership guidelines of Mercedes-Benz, for example, stipulate that members of top management must acquire shares and hold them permanently, for up to two years after the end of their employment contract. Depending on the function, the number of shares is between 20,000 and 75,000. Until the specified number of shares is reached, up to 25% of the gross remuneration from the performance phantom share plans must be used to acquire real shares in the company; however, shares can also be acquired in other ways, according to the car company's remuneration report.

When managers move from other companies, it is customary to compensate for lost pension or remuneration entitlements at the start. Munich Re granted Clarisse Kopff, who has been responsible for Europe and Latin America on the Board of Management since 1 December 2022, compensation for forfeited variable remuneration from her previous employer (Euler Hermes), which will be paid out between 2024 and 2026. According to the Group, the basis is a gross settlement amount of 3.69 million euros, divided into three installments of 1.23 million euros each. The individual payment amounts depend on the performance of Munich Re shares in the relevant period. Things went well for the manager here, with the first instalment of 1.56 million euros above the agreed amount.