Press Release No. 14/2017 IG Metall and employee representatives on supervisory boards call for effective limits on ...

Frankfurt am Main – IG Metall and employee representatives on the supervisory boards of DAX-listed companies in the metal and electrical industries are calling for effective limits on executive compensation. “In recent years, executive compensation has moved in only one direction: upward. This is rightly sparking a socially necessary debate about the disproportionate nature of these salaries. They contradict the standards of merit-based justice and fairness. The balance between executive compensation and employee income has been thrown off course,” said Jörg Hofmann, President of IG Metall, on Wednesday in Frankfurt.

A statement released today by employee representatives of IG Metall reads: “That is why the compensation levels of German executive board members must be capped and, at the same time, linked to the company’s sustainable success. To support supervisory boards in this regard, effective and practical legal regulations are absolutely essential.” It should be noted that at the very least, supplementary European solutions are needed. Supervisory boards must be required to set binding and company-specific caps on the total compensation of executive board members. In the future, the ratio of executive board compensation to the average employee salary should be the decisive factor in this regard.

This also applies to their pension benefits. In the long term, executive board members should finance their own retirement plans. “You cannot convince any employee in Germany that policymakers require them to make private pension provisions, while executive board members receive generous supplementary pensions at the company’s expense on top of their enormous salaries. If anyone in this country can afford to make private pension provisions, it is the executive board members of large companies,” said Hofmann.

Experience shows that effective limits can only be achieved with a strong employee voice on supervisory boards. Sustainability and integrity cannot be achieved through a unilateral decision by management. The statement by the employee representatives underscores their willingness to assume this responsibility on supervisory boards.