Top managers resist forced disclosure of salaries

Top managers resist forced disclosure of salaries Government plans to tighten corporate governance after companies ignore voluntary code

Justice Minister Brigitte Zypries' initiative to force managers to disclose their salaries has met with fierce resistance from some of the biggest names of corporate Germany. The heads of Daimler Chrysler, BASF, BMW, Munich Re and Porsche said they had no intention of publishing more than a combined figure for management board remuneration. The government announced last Friday that it planned to force management board members of listed companies to disclose their individual salaries from 2006, a direct response to the fact that many companies refuse to follow Germany's voluntary corporate governance code on this issue. Nine out of the top 30 companies that are included in the Dax index disclose only a lump sum for all board members.

Zypries said her aim was to strengthen shareholder rights. She pointed out that disclosure of management salaries is common practice in most industrial countries. The law would apply to all of Germany's roughly 1,000 listed companies. To avoid disclosure, managers would have to rally a majority of three-quarters of their company's shareholders backing their defiant attitude.

While shareholder lobbyists welcomed the planned law, Germany's main industry federation, the BDI, expressed strong criticism. BMW boss Helmut Panke warned the planned law would be counterproductive and prompt a useless ”envy debate.” BASF head Jürgen Hambrecht said shareholders would not profit from the publication of individual salaries. ”The cumulative publication of board remuneration reflects the joint responsibility of the board,” he said.

The ever-defiant Porsche boss, Wendelin Wiedeking, who already made headlines as a stubborn opponent of the publication of quarterly results, pointed out that the market sets the price of a service. ”Somebody who can offer something that is in high demand but difficult to get will obtain a high price for it. That applies not only to famous actors, pop stars, top athletes and jet-set hairdressers, but also to management board members,” he told the Frankfurter Allgemeine Zeitung. Whether a manager's salary was justified depended on whether he had succeeded in adding value for his company's shareholders, Wiedeking said, adding that the Porsche share price had risen by a factor of nearly 25 during his time in office.

Wiedeking, who is rumored to be one of Germany's best paid executives, may have nothing to worry about, though. All voting shares at Porsche are in the hands of the Porsche and Piech families, who may vote against disclosure.

Munich Re chairman Nikolaus von Bomhard, meanwhile, warned that the release of individual executive salaries might encourage kidnappers to try their luck, causing huge additional security outlays for companies wishing to protect their managers.

Zypries' move comes at a time of widespread indignation over the coincidence of massive layoffs and record corporate earnings. Zypries also previously ventured plans to cap executive salaries by law, a plan which she rapidly dismissed, however, amid ensuing outrage from the business community.

Some experts have raised the question whether individual disclosure of management salaries could actually be counterproductive. Such disclosure, they say, would make public German managers' relatively low salaries in international comparison and could thus encourage an upward adjustment - at the cost of the company's owners, the same shareholders whose interest the planned law aims to protect.

Something like this could trigger unintended consequences.

Imagine if executives see what the others are making and then go argue for more themselves!

Imagine if executives see what the others are making and then go argue for more themselves!<<<

True...but imagine if the shareholders realize what they're paying someone that has mismanaged THEIR Company and gets paid handsomely to do it while they, the actual owners of the company, lose money.....If executives pay was tied to the long term stock price the same as the owners, the cream would rise to the top!...I amazes me to watch the executives that have mismanaged a Corp. get paid millions of dollars in golden parachutes!.....Too bad the real world jobs dont work that way....Can you imagine a common worker getting fired from say Wal-Mart and getting a huge settlement check for being fired????

Something like this could trigger unintended consequences.<< Yeah!....over time..Good managers would get paid more then poor ones

In another light...if you were the owner of a small or large company (stockholder) ...would u expect to know how much u paid your help? (executives)

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