Compensation and Benefits Survey 2008: Executive Compensation in Germany

Considerable Salary Increases for Germany’s Top Managers
Gummersbach, 19 December 2008 The salary packages of German managing directors and leading executives have witnessed considerable increases in 2008: managing directors are taking home an average of four percent extra, compared to 4.9 percent growth in 2007. Leading executive staff are benefiting from an increase of 3.6 percent over last year’s figures. The absolute amount of the annual salary package varies according to the level in the corporate hierarchies: the average managing director is currently receiving 280,000 EUR per annum. Among these, managing partners are taking home 271,000 EUR, while the average appointed director receives 283,000 EUR. Salary levels are lower on the lower rungs of the corporate hierarchy: first-tier executives can expect 131,000 EUR a year, compared to an average of 100,000 EUR for second-tier staff. These are the findings of the salary survey “Compensation and Benefits Survey 2008: Executive Compensation in Germany” published by the management consultancy Kienbaum. The survey includes data for 858 directors at 495 companies.
 
Bigger Bonuses for Leading Executives
Variable remuneration makes up 35 percent of the overall compensation package for managing directors. As a result of the very successful business year achieved by many German companies in 2007, their directors are receiving substantial bonus payments. On average, these amount to 97,000 EUR for the last year. For other leading executives, the share of variable remuneration has continued to stagnate over the last few years: 90 percent of first-tier managers are benefiting from such bonus payments, contrasting to only 82 percent of occupants of second-tier positions. The level of such bonuses is also heavily dependent on the corporate hierarchy: while leading top-tier executives are receiving an average of 5,000 EUR more than they did in 2006, the average second-tier manager is only receiving an additional 1,000 EUR when compared to two years ago. “Basic salaries are only seeing minor increases or are even being rolled back. In their place, performance-related bonuses are becoming ever more significant. And that pays off for both parties: the company can offer compensation flexibly, depending on its own health and on individual performance, and executives have the opportunity for a considerable boost to their pay package by putting in above-average commitment”, the Kienbaum compensation expert Christian Näser explains.

Substantial Differences in Remuneration on the same Level of Hierarchy
The spread of salary levels for positions on the same rank of the corporate hierarchy is considerable: managing directors are awarded compensation packages ranging from less than 60,000 EUR to over 2.7 million EUR. Among other leading executives, the average 157,000 EUR paid to general commercial managers puts them in the top bracket. Salaries can range from 50,000 EUR to considerably more than half a million EUR. A majority of executives on the first and second tier of the managerial hierarchy is, however, receiving similar amounts: 43 percent are offered 50,000 to 100,000 EUR, 37 percent between 100,000 and 150,000 EUR per annum.

Responsibility Pays
The decisive variable influencing the amount of the compensation package is the size of the business: at companies with less than 50 employees, directors are receiving an average of 148,000 EUR. By contrast, companies with a workforce of over 5,000 employees are paying their directors 274,000 EUR. Businesses with a turnover of up to 7.5 million EUR set the average salary of their directors at 148,000 EUR, while companies with turnover volumes of more than half a billion EUR are paying their managing directors 448,000 EUR per year.

The survey “Compensation and Benefits Survey 2008: Executive Compensation in Germany” is available at a price of 1,750 EUR (+VAT) in the online shop of Kienbaum at www.kienbaum.de or directly at the Kienbaum Vergütungsberatung, P.O. Box 10 05 52, 51605 Gummersbach (Fax +49 2261 703-201). If you have any further questions, please contact Mr Christian Näser. Phone: +49 2261 703-608, Email: christian.naeser@kienbaum.de.

Kienbaum is the market leader for Executive Search and HR Management services in Germany as well as one of the leading management consultancy providers. With its unique integrated approach to consulting, Kienbaum supports clients from all leading sectors of the economy in every stage of their change processes, from conceptual design to eventual implementation. Kienbaum combines its proven HR competence with comprehensive expertise in matters of strategy and organization.

Further Information:
Erik Bethkenhagen
Phone: +49 2261 703-579
Email: Erik.Bethkenhagen@kienbaum.de