02 May 2008 17:06 [Source: ICIS news]
Correction: In the ICIS news story headlined “INSIGHT: Manager rankings - Hambrecht on top” dated 2 May, 2008, please read in the seventh paragraph …Cologne-based monthly financial magazine… instead of …Dubai-based monthly financial magazine…
And please read in the ninth paragraph …judged under a system established by… instead of ...judged by… A corrected story follows.
By Dede Williams
In the halcyon days of ?xml:namespace>
But years of corporate downsizing, restructuring and general belt-tightening have changed this perception dramatically.
Many “ordinary” employees are now convinced that their jobs - and their pay - are being sacrificed on the altar of shareholder value, while the top brass is allowing itself ever heftier bonuses and stock options.
Stock market-listed companies are now required to publish individual board member remuneration in their annual reports, but the jury is still out on whether the current discontent reflects the “envy” predicted by executives, including BASF’s CEO Jürgen Hambrecht, two years ago.
Some whose pay is in public view take it with a grain of salt. “Just so you won’t have to search for it - my salary is on page 28 of the financial report,” Linde CEO Wolfgang Reitzle said at the start of this year’s annual results press conference.
Arousing perhaps greater concern than actual pay numbers, and adding another dimension to the discussion over whether managers deserve what they take home, is a wave of corporate corruption scandals, none affecting chemical companies.
Against this background, Cologne-based monthly financial magazine Capital sought to gather fresh evidence of how well the country’s managers actually perform, or at least are seen to perform by sector professionals.
The magazine asked 90 hand-picked German and international analysts and consultants to rate the CEOs of the DAX stock market index of 30 blue-chip companies on the scale of 1 (excellent) to 6 (failure) used in the German school system.
The managers were judged under a system developed by Kienbaum Management Consultants on the basis of competence, personality and communication skills. The “bottom line” was that not one was worth an “A” (1 to 1.5), but the “best” CEO, the survey found, was head of a chemical company, in fact, the chemical company
BASF’s Jürgen Hambrecht topped the list with a rating of 1.88 (roughly, a B+). The average was 2.54, and three CEOs of the four chemical-related companies in the DAX 30 index topped that notch.
Number four, at 2.13, was Wolfgang Reitzle, number 11 Bayer chairman Werner Wenning at 2.25. Number 22, Karl-Ludwig Kley, head of Merck for only a year, weighed in 2.65. This, Capital said, reflected the company’s weaker earnings performance.
Hambrecht’s ranking contrasts with a 2003 Capital study comparing performance and pay. In that one, which took a different approach, had a different mix of players and didn’t award school marks, he ranked 13th.
Some analysts quoted by the magazine said Hambrecht’s drive to make BASF more independent of chemical cycles through the acquisitions of Engelhard and Degussa’s construction chemical business had lifted his status. Reitzle and Wenning also scored with acquisitions.
Hambrecht won best marks on several important points, notably BASF’s financial performance and his long-term perspective. The overriding factor, the magazine said, was his positive demeanour.
It quotes one survey participant as saying that the chemical executive “is always convincing” at analyst conferences. Stressing the importance of a company’s investor relations department in attracting and keeping investors, the analyst added that BASF has one of the largest and most active staffs.
Hambrecht also achieved the top ranking in supporting and promoting future managerial talent.
Survey participants were invited to express their thoughts on whether executives really earn their keep. The general view was that most do.
More than 97% thought Deutsche Bank CEO Josef Ackermann, who in the past has routinely placed at the top of such surveys but is publicly perceived as overpaid, deserved his annual €14m packet.
The Swiss native pulls in nearly twice Hambrecht’s €7.5m, which more than 90% of the respondents felt he deserved, and almost four times Werner Wenning’s €3.6m annual remuneration at Bayer.
With €8.2m, Linde’s Reitzle earns more than any chemical executive, a situation thought to reflect his international experience and previous positions in the automotive sector. Majority privately owned Merck does not publish individual salaries.
Up to now, the question of whether German managers earn too much has been mainly a national one, but another recent survey that found German supervisory board members to earn considerably less than
In view of the German system of separate managing and supervisory boards, a true comparison is not possible. However, a table of executive board earnings for the new Linde Group for 2007 - the first after full-year consolidation of BOC - may provide some hints.
It shows proportionately higher remuneration for board members coming from BOC compared with board members from pre-merger Linde. The report explains that the figure “includes emoluments provided by BOC companies”.
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