Executive Compensation

Executive compensation refers to the total financial and non-financial remuneration that members of the executive board of a stock corporation receive for their activities. Key components of compensation include the fixed base salary, short-term variable compensation such as bonuses, long-term incentive systems (e.g., stock option programs), as well as fringe benefits and retirement provisions. A modern compensation system aligns with corporate governance principles, sets clear performance indicators, considers environmental, social, and governance (ESG) criteria, and promotes sustainable corporate performance. According to the Stock Corporation Act and the German Corporate Governance Code, the supervisory board must establish, regularly review, and transparently disclose the compensation policy in the compensation report; shareholders vote on the so-called Say-on-Pay. The aim is to avoid conflicts of interest, enhance management motivation, and ensure long-term value creation for shareholders, employees, and society. A market-appropriate, transparent, and performance-based executive compensation strengthens the trust of investors, analysts, and the public in the company. Given the growing regulatory requirements and societal expectations, the careful design of executive compensation assumes a strategic key role in every German publicly listed company.