Record CEO Compensation in Germany Fuels Inequality Concerns
In a full-fledged economic uncertainty, executive pay in Germany continues to climb to outrageous levels. In 2024, the chief executives of Germany’s highest value publicly listed companies (especially DAX listed companies) earned record levels of pay packages, on average €3.76 million, up 3% from the year before.
The data comes from a joint research project by the German Association for the Protection of Securities Ownership (DSW) and the Technical University of Munich. While the 3% year-on-year increase may seem small, the yearly data presents a wider narrative that highlights changing norms of compensation, the widening wage gap, and shifting public sentiment about executive compensation.
At the top of the pay scale is Volkswagen CEO Oliver Blume, who earned a staggering €10.6 million in 2024. This figure breaks what many experts regard as a “psychological threshold” for CEO compensation in Germany. Blume’s package is particularly noteworthy, with nearly 75% comprising performance-based incentives, stock options, and bonuses — reflecting a broader trend among DAX executives, whose variable pay now accounts for approximately 70% of their total remuneration.
Following closely were Adidas CEO Björn Gulden with €10.3 million and Deutsche Bank’s Christian Sewing with €9.87 million. These figures, once considered exceptional, are increasingly becoming normalized — a development that is causing concern among governance experts, unions, and sections of the public.
Marc Tüngler, Managing Director of DSW, remarked that the €10 million mark isn’t just symbolic; it has profound societal implications. “This number carries weight far beyond financial significance,” Tüngler said. “It reflects broader societal sentiment and trust in the corporate ecosystem. Crossing this threshold quietly and frequently risks eroding that trust.”
The current legal framework also seems to be accommodating this upward trend. Under the German Stock Corporation Act (AktG), the average formal cap on CEO pay now hovers around €10.4 million. Though intended as a safeguard, this benchmark itself is indicative of the shifting boundaries of what is considered acceptable executive compensation.
Interestingly, shareholder sentiment appears to be uncomplicatedly supportive – at least for now. Major companies (e.g. RWE, Deutsche Telekom, Deutsche Post etc.) have recently convened to approve pay increases for the chiefs – a lot of approval. From a corporate performance perspective, of course, many investors contend that competitive pay is necessary to attract and retain top-tier global leadership talent.
That said, the optics change; corporate pay increases, even for bosses, can be politically unpalatable at the best of times, especially in times like these where economic pressures are mounting, inflation is rising, and wage growth for the broad worker class remains stagnant. Germany, like a lot of Europe, is grappling with reduced GDP growth, declines in industrial production, and increasing living costs. In such an environment, unless sufficiently rationalized by performance, escalating CEO pay will be equally eschewed by labor leaders, political leaders, and for that matter, the general public.
The widening gap between executive and worker pay also adds fuel to the broader debate about income inequality and corporate governance. Data shows that while executive salaries are climbing, average real wages have either stagnated or grown marginally in the past year. This divergence has the potential to trigger greater social discontent, particularly in sectors where employees feel under-compensated or underappreciated.
Companies will have to find the right balance between rewarding performance and social cohesion. As Tüngler said, “The issue of executive pay is not only a corporate governance issue; it is a social issue.” Boards have to now consider not only shareholder interests, but also how they are perceived in the public arena with regard to their compensation choices.
In the future, regulatory bodies, institutional investors and advocacy groups will undoubtedly call for more transparent and equitable compensation practices. Whether companies will use restraint in compensation practices, or just continue on their trajectory of increasing CEO pay will impact not only the tenor in the boardroom, but public confidence in German corporate governance, and its top leaders in the future.
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