The work of supervisory board members in Germany is increasingly attracting higher pay. Many DAX-listed companies have significantly increased compensation for their supervisory board Chairs, in order to reflect the growing demands and expanded profiles required, as well as to remain internationally competitive in recruitment. While CEO salaries in Germany have been on the rise for some time now, compensation for corporate oversight has lagged behind. In the 2022 cycle, a supervisory board Chair earned an average of 393,000 euros. Ten years earlier, it was 350,000 euros, so there was little movement. But now the sum has edged up above 400,000 euros.

The top earner in the 2023 ranking is Deutsche Bank's supervisory board chairman Alexander Wynaendts, with compensation of 929,167 euros. The chairman was paid under the old compensation system for three months. For the current fiscal year, the amount will increase to 950,000 euros, which under a new system will be the fixed salary for the chairman of the supervisory board. Wynaendts' predecessor, Paul Achleitner, received 870,833 euros for the last full year in 2021, and in previous years, his pay reached 900,000 euros.

Deutsche Bank has fundamentally redesigned its compensation model. The annual fixed compensation for ordinary supervisory board members has tripled from 100,000 to 300,000 euros. For Chairs and Deputy Chairs, the fixed salary has increased from 200,000 to 950,000 euros, and from 150,000 to 475,000 euros, respectively.

The compensation for chairmanship and membership in individual committees, however, has been reduced. The supervisory board chairman no longer receives additional compensation for committee work. Before the adjustment, compensation for work in the committees often made up the lion's share of the annual salary. Wynaendts chairs three committees and sits on four others.

Allianz also significantly upgraded the work of the chairman of the supervisory board with adjustments in 2023. The insurer increased the fixed salary for the chairman of the supervisory board from 250,000 to 450,000 euros. For ordinary board members, compensation increased more moderately from 125,000 to 150,000 euros. The compensation for the supervisory board chairman, Michael Diekmann, thus increased from 537,000 to 759,000 euros, placing him second in the 2023 ranking. Unlike the top earner Wynaendts, whose compensation is purely fixed, 40% of Diekmann's compensation is still derived from committee work.

The audit committee at Allianz is also receiving higher compensation. The salary for the chairmanship increased by 50,000 to 150,000 euros, and for membership, by 25,000 to 75,000 euros. The compensation for other committees remains unchanged and relatively moderate, at 25,000 euros for membership and 50,000 euros for chairmanship. Chairman Diekmann sits on all committees of the supervisory board and chairs four of the subcommittees.

Committee work also benefited Norbert Winkeljohann in 2023 as the deputy chairman of the Deutsche Bank supervisory board, who earned 564,583 euros under the old compensation system, including 225,000 euros for committee work. His compensation from Deutsche Bank exceeded that of his role as the Bayer supervisory board chairman, for which he received 480,000 euros.

In the current season, other companies have implemented higher compensations for their top corporate overseers. SAP has significantly increased pay as well. The outgoing chairman of the supervisory board, Hasso Plattner, received 430,000 euros. The software company will increase the basic compensation from 275,000 to 600,000 euros starting in 2024, eliminating additional compensation for committee work.

„At the top end, the compensation of supervisory board members in Germany is on par with international standards – but not in breadth", says Regine Siepmann, Senior Partner at the consulting firm HKP Group. However, she acknowledges that the comparison on an international scale is not always possible, due to the different governance structures, with single-tier and two-tier board systems. Nevertheless, international candidates expect "an internationally attractive level of compensation, which they mainly find in Germany among the large publicly listed companies.“

Traditionally, the chairmen of the supervisory boards of automotive companies also rank among the top ten. Volkswagen moved to the forefront in 2023 with an increase in compensation for Hans Dieter Pötsch from 420,000 to 676,000 euros. VW increased the fixed salary for the chairmanship of the board from 300,000 to 510,000 euros. In the distant past, former VW supervisory board chairman Ferdinand Piëch surpassed the 1 million euro mark.

A similar effect is shown at Mercedes-Benz, due to a new set of rules. The fixed salary for the chairman of the supervisory board was increased from 432,000 to 600,000 euros, with no additional compensation for committee work. In his last year, the compensation for Bernd Pischetsrieder increased from 532,000 to 600,000 euros. He passed the baton to his successor, Martin Brudermüller, at the Annual General Meeting.

A novelty at Mercedes is the upgrading of the audit committee chairmanship with a fixed compensation of 450,000 euros, which resulted in a salary increase of nearly one-fifth for incumbent Olaf Koch.

BMW also ranks high in the ranking, with the compensation for the chairman of the supervisory board remaining unchanged at 610,000 euros compared to 2022. The same applies to Siemens, with 602,000 euros.

Regine Siepmann, the compensation expert at HKP, sees the question of whether a higher fixed salary should be accompanied by no longer compensating committee work separately „as a purely technical issue". Supervisory board Chairs are usually active in many committees, and often chair them. „Whether a company grants fixed compensation plus committee fees or a higher fixed compensation that includes everything is less significant,“ says Siepmann. Having one larger compensation component is easier to arrange.

Payment with a purely fixed salary has been a feature of German supervisory boards for a long time. There is ongoing discussion about whether stock-based compensation could also make sense for the supervisory boards. Supporters argue that this could better align the interests of the supervisory board and shareholders. Opponents fear conflicts of interest when board members base their decisions on the stock price.

Some DAX corporations now require their oversight board members to invest a portion of their earnings in the company's stock. For example, at BASF, where supervisory board chairman Kurt Bock continued to earn 550,000 euros, each board member must invest one-quarter of their fixed compensation in BASF shares and hold them for the duration of their term. Brenntag requires an investment of one-fifth of the fixed salary into its stocks in accordance with the Share Ownership Guidelines, with an obligation to hold the investment for one term. The chemical distributor also adjusted its compensation in 2023, raising the fixed sum for the chairmanship from 210,000 to 325,000 euros.

„Company stocks are a very useful tool for supervisory board members – especially in their dual role as overseers and strategic partners to the management board," notes Siepmann. Board members are involved in decisions that require approval and have a significant impact on the company's success and stock price. "Having a skin in the game with your own shares encourages responsible decisions“, she adds.