FRANKFURT, Feb 5 (Reuters) - Germany’s corporate governance commission has called for stock market listed companies to put a cap on executive pay, but stopped short of setting an absolute limit.
“The system of remuneration should not be open-ended,” said Manfred Gentz, a former supervisory board chairman of Deutsche Boerse, who led a review of corporate pay for the panel.
Rather than suggesting an upper limit on pay, the commission said on Tuesday the absolute level should be set by a company’s supervisory board. In Germany, large listed companies have a two-tier board system - a board of independent directors oversees the management board.
Potential upper limits on pay should be made clear in annual reports, and companies should ensure board level pay does not swell disproportionately in comparison with rewards for other employees, Gentz said.
Furthermore, companies should standardise the way they disclose pay, so shareholders find it easier to make a peer comparison, the commission said. In Germany, only the salaries of management board members need to be disclosed.
The biggest pay check among board members was awarded to Volkswagen chief executive Martin Winterkorn who got 17.5 million euros ($23.7 million) in salary, bonuses and profit for 2011 for helping deliver record profit.
For 2011, Deutsche Bank co-chief executive Anshu Jain was paid almost 10 million euros.
In April, two members of the commission said blue-chip companies should consider a voluntary cap on executive earnings as momentum builds for a European Union-wide clamp down on pay.
The German panel makes recommendations for inclusion in Germany’s corporate governance code. Companies which have signed up to the code will be obliged to follow its recommendations. ($1 = 0.7392 euro) (Reporting By Alexander Huebner and Edward Taylor; Editing by Dan Lalor)