Board salaries in Germany are at a record high

The board members of the 160 largest German stock exchange groups received an average annual income of 2.65 million euros. Fixed salaries plus bonuses. This is what the auditors from Ernst & Young (EY) have calculated for the 2023 financial year. Plus 11 percent compared to the previous year. And there is little reason to assume that salaries will fall drastically in the current year. How does this reconcile with the ongoing economic downturn in this country?

Simple answer: The vast majority of corporations did and do very profitable businesses. Often around the world. In addition to the board of directors, the company owners also benefited from this: the 160 companies paid out a total of more than 62 billion euros to their shareholders in 2024, calculates the German Association for the Protection of Securities Ownership. An increase of 1.6 percent compared to the previous year, the third annual record in a row. And the workforce?

Adjusted for inflation, wages and salaries in Germany have been rising again for around a year and a half, according to the Federal Statistical Office. In the first half of 2024, an average of more than three percent, without taking into account the price increase of around six percent. The most recent collective agreement in the metal and electrical industries also reaches this level. However, over a period of a good two years. And that is exactly what shows what has changed in the past few weeks: economic expectations, and therefore the mood.

Consumer sentiment has fallen and Germans are saving more again. New car, new washing machine? No thanks, not at the moment. Companies from Volkswagen, Ford to Miele know this. This consumer behavior is completely understandable, because the occasionally galloping inflation has enormously increased the everyday cost of living.

The price shock is deep. A shrug can quickly turn into resentment. To that very small group of employees who earn millions in salaries: corporate board members. You don’t have to worry about high everyday prices. Free, it’s never been different. But the fact that their incomes have increased almost twice as much as those of their workforce increases the income gap. As has been the case for many years. And that reduces acceptance. Increasingly.

It is obvious how this unpleasant development could be mitigated: by doing without. There are actually top managers who reduce their income in corporate crises. And while it doesn’t typically cause them excessive pain, it’s more than just a gesture. It demonstrates responsibility, attitude and decency. And that creates social added value in a social market economy.