Management Board compensation levels and structure: appropriateness and competitiveness

In accordance with Section 87 of the German Stock Corporation Act (AktG), when determining the total compensation of individual members of the Management Board, the Supervisory Board must ensure that the compensation is appropriate in relation to the Board members’ individual tasks and performance, as well as the economic situation of the company and does not exceed the usual compensation without particular reasons. In addition, competitive compensation is essential in order to recruit and retain the right candidates.

Against this background, the appropriateness and market conformity of the compensation levels and structures should be regularly reviewed. Investors and proxy advisors now expect disclosure of the peer group used in market comparisons and, in the case of significant increases in compensation, a detailed justification. Compensation in line with the market is also important to be perceived as an attractive employer for future Management Board members - both internally and externally. Therefore, compensation should also be considered in the context of succession and appointment processes in order for the Supervisory Board to have a clear picture of its scope for action.

The Mercer | hkp///group Corporate Governance Advisors rely on excellent domain expertise and many years of project experience as well as comprehensive, up-to-date market data at national and international level. They are available to advise you as independent consultants on all compensation-related issues.