Michael H. Kramarsch

Michael H. Kramarsch is founder, Delegate of the Board and Managing Partner of the hkp /// group.

In his more than 20 years consulting business he has established himself as one of the most highly regarded experts in the field of value-oriented management, corporate governance, performance management and top-executive compensation - in industrial companies as well as banks. His consulting expertise to Boards (Aufsichts- und Verwaltungsräte), Executive Boards and HR managers spans Germany, Switzerland and Austria – as well as additional European countries and the U.S.

Prior to founding hkp/// group on January 1st 2011, Mr. Kramarsch worked 13 years for an international HR management consulting firm. There he held various management and executive positions, e.g. as Managing Partner for the German-speaking regions.

Jointly with Prof. Fred G. Becker, Michael H. Kramarsch published one of the first studies in German-speaking countries on value-oriented corporate management and incentives in 1997. His book on equity-based management compensation (“Aktienbasierte Management-Vergütung”, Schaeffer Poeschl), available as second edition, is still considered a standard reference of executive compensation in Germany. Together with Dirk Filbert he analyzed the regulatory framework conditions of an altered remuneration landscape in "Performance-based remuneration in the banking business", a chapter of the "Handbook Corporate Governance in Banks" (Ed. Hopt, K. and Wohlmannstetter, G., Vahlen / CHBeck, June 2011).

Michael H. Kramarsch was a named specialty expert for German regulatory bodies as Governmental Commission on Corporate Governance (Deutsche Regierungskommission Corporate Governance), managed by Chairman Prof. Dr. T. Baums (2001), and The Government Commission German Corporate Governance Code (Regierungskommission DCGK) managed by the Chairmen Klaus Peter Müller und Dr. Manfred Gentz (2012 to 2014). He is founding member and CEO of the German Association of Independent Compensation Consultants (VUVB) as well as member of the advisory board of HHL Center for Corporate Governance, Leipzig.

Mr. Kramarsch is regularly cited in articles, lectures and publishes on current developments in corporate governance, top executive compensation and performance management.

Michael H. Kramarsch, Managing Partner
Phone +49 69 175 363 363
michael.kramarsch@hkp.com

Michael H. Kramarsch

Michael H. Kramarsch, Managing Partner
Phone +49 69 175 363 363
michael.kramarsch@hkp.com

Regine Siepmann

Regine Siepmann, Senior Partner, is a member of the founding team of the hkp/// group. As an experienced consultant, she has been supporting Supervisory Boards and Corporate Offices in questions of sustainable Corporate Governance and compensation at the interface of HR, strategy and finance for about 15 years.

As head of the consulting practice Board Services at hkp/// group, her consulting focus includes the design and amount of executive compensation as well as the composition and evaluation of the working methods of Supervisory Boards and the investor-friendly communication of issues relevant to Supervisory Boards. Furthermore, she deals with the disclosure of the remuneration of board members according to national and international accounting standards and she is a member of the working group on executive compensation of the German Accounting Standards Committee (in German: Deutsches Rechnungslegungs Standards Committee e.V. - DRSC).

Regine Siepmann is involved in continuous education for Supervisory Boards and is active alongside Supervisory Board chairmen, investor representatives and academics in the working group Guidelines for Sustainable Management Board Remuneration. The Corporate governance expert is a member of the Association of Independent Compensation Consultants (VUVB) as well as a sought-after speaker and author of numerous specialist articles and publications.

Regine Siepmann, Senior Partner
Phone +49 69 175 363 327
regine.siepmann@hkp.com

Regine Siepmann

Regine Siepmann, Senior Partner
Phone +49 69 175 363 327
regine.siepmann@hkp.com

Nina Grochowitzki

Nina Grochowitzki has worked for the hkp/// group since its founding in 2011. Her consultancy work focuses on corporate governance and management board and supervisory board compensation.

The business mathematics graduate also has expertise in evaluating and structuring long-term incentives and company pension schemes. In addition to her consultancy mandates, Nina Grochowitzki supports a wide range of projects and activities aimed at establishing and maintaining good corporate governance and she has been involved in compiling identification standards in remuneration reporting and the guidelines for sustainable Management Board Compensation.

Nina Grochowitzki has authored numerous studies and editorial articles for specialist publications.

Nina Grochowitzki, Partner
Phone +49 69 175 363 355
nina.grochowitzki@hkp.com

Nina Grochowitzki

Nina Grochowitzki has worked for the hkp/// group since its founding in 2011. Her consultancy work focuses on corporate governance and management board and supervisory board compensation.

Nina Grochowitzki has authored numerous studies and editorial articles for specialist publications.

Nina Grochowitzki, Partner
Phone +49 69 175 363 355
nina.grochowitzki@hkp.com

Continuity and transparency in executive compensation at DAX companies 2015

Results of the hkp///group study "Executive compensation DAX companies 2015"

30. March 2016

From Michael H. Kramarsch, Regine Siepmann, Nina Grochowitzki

Average total compensation of CEOs is EUR 5.86 million, down just under one percent on 2014
Transparency regulations - among the best in the world - successfully established
Study: "hkp/// company report evaluation: Executive compensation at DAX companies 2015"

Frankfurt am Main, March 30, 2016. The compensation of CEOs at Germany's biggest listed firms, the DAX companies, was largely constant in 2015 despite a slight decline in average profits. The average total compensation of DAX CEOs was approximately EUR 5.86 million, a decline of just under one percent on the previous year. That puts them even further behind their European counterparts in terms of compensation.

Topping the ranking in 2015 was the CEO of Daimler, with compensation of EUR 14.37 million. He is also the only DAX CEO who makes it into the ranking of top-paid CEOs at Europe's biggest listed companies, to judge by the latest compensation reports published by companies.

These are the findings of the study "hkp/// company report evaluation: Executive compensation at DAX companies" from management consulting firm hkp/// group. The study looks at the quantitative and qualitative data on executive compensation for 29 of the 30 German DAX companies. Volkswagen is excluded from the study for the first time this year due to the automaker's decision to delay publishing its performance and compensation figures until April 28, 2016.

"Following a record year in 2014, average profits at DAX companies have fallen — and taken compensation levels with them," says compensation expert and Managing Partner at hkp/// group Michael H. Kramarsch. The year was a quiet one in terms of compensation. "Some companies saw significant losses with a corresponding impact on compensation levels, for example Deutsche Bank," Kramarsch explains. "At the same time, others enjoyed record profits and saw parallel developments in compensation. The overall picture is more transparent than ever, and also coherent." Of course, things may change when the compensation figures from Volkswagen are published.

Automakers once again head the national compensation rankings

Almost all the DAX companies use the type of table recommended in the German Corporate Governance Code (DCGK) to present their data on CEO compensation. This table includes information on all compensation accrued by the CEO for a specific fiscal year. As in 2014, all the DAX companies follow the DCGK's recommendation in full with the exception of Merck and BMW.

Based on the information in the tables, the top DAX CEO in terms of compensation who was in office for all of 2015 was the CEO of Daimler (EUR 14.37 m), followed by the CEOs of Fresenius (EUR 13.89 m total compensation) and HeidelbergCement (EUR 9.71 m). At the bottom of the list comes the CEO of Commerzbank (EUR 1.12 m). That means that the DAX CEO with the highest total compensation earns around thirteen times as much as the DAX CEO with the lowest total compensation.

DAX executive compensation up in Europe, but USA on a different planet

Looking at 37 annual reports that have been published for the 76 biggest listed European companies (the STOXX® Europe 50 and/or EURO STOXX 50®), we see an increase in the direct compensation of CEOs to EUR 7.26 million on average in 2015, up around 25%. By comparison, average direct compensation of CEOs in firms on the American Dow Jones Industrial Index grew to around EUR 15.79 million, an increase of 13% compared to 2014.

Currently the highest direct compensation at a listed company in Europe is that of the CEO of Anheuser-Busch InBev (approximately EUR 14 m). Worldwide, the top position has been held uninterrupted since 2012 by the CEO of Walt Disney, who earned the equivalent of EUR 38 million in 2015.

"At their current values, the compensation levels of DAX-CEOs are appropriate in the European context — although some Swiss and British firms have compensation levels that are considerably higher," says hkp/// group compensation expert Michael H. Kramarsch. "By contrast, companies in the US are on a different planet in terms of compensation levels and structures."

Variable compensation down, benefits and pensions up

Based on the data contained in the compensation reports, total compensation for DAX CEOs who were in office for the entire year declined by around 1% compared to 2014. This was driven particularly by increases in fringe benefits (+15%) and pensions (+20%, both figures approximate). By contrast, the level of performance-based variable compensation fell, the average annual variable pay (bonus) by around 3% and the comparative figure for the most strongly share-based multi-year variable pay by as much as 7%.

Average basic compensation for DAX-CEOs was up by about 1.7% and thus still lower than general salary developments in the market. However, there were some striking exceptions, such as Fresenius Medical Care (+32%) and Beiersdorf (+25%). Overall, one-third of DAX companies adjusted the basic compensation level of their CEO.

"Hikes of this sort usually have a contractual background — unless they are driven by regulation, as in the case of banks," says Regine Siepmann, Senior Manager and Director of Studies at hkp /// group. "Adjustments to basic compensation levels at board level are not usually made on an annual basis, so when they do happen, after a gap of a few years, they can be comparatively large." Siepmann says the structural developments in variable compensation are more important: "Annual bonuses have been falling clearly since 2006. More and more they are being replaced by multi-year compensation components. That is the right way to reflect sustainable success in executive compensation."

New transparency regulations successful, Commercial Code-type disclosure on the way out
According to the study's authors, the DCGK table for showing compensation levels is increasingly the norm. Transparency is greater than ever: "Transparency over compensation at DAX companies is exemplary – not just compared to other German indices, but worldwide," says hkp/// group compensation expert Regine Siepmann.

Perhaps the only fly in the ointment is the fact that the Commercial Code and DCGK regulations continue to exist side-by-side. This often leads to confusion among the general public, especially on the question of what the "right" compensation levels are.

"In Germany we have the unfortunate situation of incomplete legal provisions on transparency over executive compensation on the one hand coexisting with exemplary voluntary commitments under the German Corporate Governance Code (DCGK) on the other," says hkp /// group Managing Partner Michael H. Kramarsch. "This parallelism prevents the German provisions on compensation transparency, which are among the best in the world, from being entirely successful. This calls for legislation."

You would like to know more about this topic?

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Press contact

Thomas Müller Partner, Head of Marketing & Communication
Phone: +49 69 175 363 323
E-Mail: thomas.mueller@hkp.com

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