and steelmaker ThyssenKrupp (TKAG.DE)
-- both chaired by corporate governance specialist Gerhard Cromme -- have
set votes on pay at their annual general meetings (AGM) this month, keeping
ahead of a new law that lets investors force a vote.
Cromme and his finance
directors from Siemens and Thyssen met institutional investors on Friday to
discuss, among other things, the remuneration systems of both groups, a
source familiar with the matter told Reuters.
"Certainly the issue on
managers' pay was discussed. This is normal because this is the first time
the AGM would discuss the proposal based on this new law," the source said.
The 'say on pay' law took
effect last August after the German government, which pumped billions of
euros of taxpayer money into bailing out the financial sector, responded to
public outcry over bonuses for bankers.
Companies do not have to put a
vote on the agenda unless shareholders seek it and the vote is not binding,
but experts said it would send a strong signal of investor sentiment.
"If it is a 'Yes' vote, it is
a kind of platonic expression of trust," said Axel Wenzel, a corporate
lawyer at Oppenhoff & Partner.
"If it is a 'No' vote, it has
no legal consequences but may very likely have an impact on the public. It
becomes a public relations disaster. This was exactly the intention of
German legislators who want management to act more responsibly and
sensitively on remuneration issues," Wenzel said.
Annual meetings are often a
day-long affair in Germany, where every shareholder has the right to put
In the case of Siemens, it is
very likely someone will question chief executive Peter Loescher's pay which
is more than 2.5 times that of an ordinary board member, said wage
specialist Christiane Hoelz of private investor protection group DSW. German
executives earned an average 2.27 million euros ($3.3 million) in 2008, down
21 percent from 2007, DSW said, adding Siemens was the top payer. Loescher
got 7.1 million euros in total in 2008-09 year, down from 9.8 million a year
"In Germany ... it is
completely unusual to talk about salary details even within the family.
Therefore, it was hard for managers to understand why they should publish
their salaries in the first place," said Franz-Josef Leven of DAI.
ThyssenKrupp was one of a few
DAX heavyweights to publish individual board member pay in 2002 when Germany
issued a non-binding corporate governance code. A 2005 law forced holdouts
into the open, mostly among middling and small companies.
Shareholder activist group SdK
said it would approve ThyssenKrupp's wage system but reserved final judgment
until complete details were submitted at the AGM on January 21.
ThyssenKrupp ordinary board
members gets a base pay of 585,000 euros which SdK said was a "good" figure.
Chief executive Ekkehard Schulz's basic salary is 966,000 euros.
Its variable component was
still oriented on the share price, and SdL said this should be changed to
The company said total fiscal
2008-09 board pay was cut to 6.5 million euros from 19.8 million the year
before, showing the wage system "breathes together" with its financial
Thyssen lost 2.4 billion euros
in its 2008-09 year.
Employee shareholders of
Siemens were set to oppose the proposal on managers' pay on Jan 26. "The
short-term-oriented annual bonus and the share price-based remuneration ...
are harmful," said the group, which owns 1 percent of the company.
(Reporting by Marilyn Gerlach;
Editing by Dan Lalor)