Germany and the UK: Two different approaches to executive remuneration

The subject of executive remuneration continues to be a hot topic across Europe, with the differing nations adopting diferent policies on how to address the challenge.

While the salaries of UK FTSE-100 chief executives are rising twice as fast as salaries for shopfloor workers, in Germany, BMW has become the first major company to link the bonuses of its top managers to those of its assembly line workers.

“We don’t just want to build sustainable cars. We also want to have sustainable personnel politics. We think this is good for the company culture,” said a spokesman for BMW.

Meanwhile in the UK, despite the country being in the depths of recession, the chief executives of Britain’s top companies earned the same amount in the past year as they did during the booming economic times in 2006.

According to pay specialists Income Data Services, the total cash remuneration for the bosses of companies in the FTSE 100 fell by an average of just 1.5% in 2009 compared with 2008, with a 29% drop in bonuses partially offset by a 7.4% rise in salary.

Though the reduction in bonuses may be the largest fall in the past decade, it still means that the typical chief executive took home an extra £500,000 on top of their basic salary. The IDS research also shows that the average bonus payment fell from £707,000 to £502,000 over the past 12 months.

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BMW links executive pay to that of its line workers

Targets made easier to hit for UK chief executives