Managers Under Fire

"This kind of sermon to bosses serves no purpose, like sermons by politicians in general," Ludwig Georg Braun, of the German chamber of commerce and industry, told the daily Frankfurter Rundschau.

On Monday, Dec. 3, Chancellor Merkel had said during talks about executive salaries that she did not see a problem with top managers being "well paid" as long as they "did a lot for their companies and their partners."

However, Merkel stressed her belief that: "When directors' failures are rewarded with fantastic bonuses, it damages trust in the social balance within our country," as cited by AFP news agency.

German President Horst Köhler had said something similar last week.

Braun said Tuesday that "it is up to the supervisory boards of companies to decide on the salaries they are willing to pay to recruit the best managers."

Porsche paid over 100 million euros to mangers

The issue arose last week when news of generous pay packages enjoyed by directors of the luxury sports car company Porsche was reported.

Porsche said it had paid its six top board members a total of 112.7 million euros ($165 million) in bonuses for their performance in 2006. In the previous year, it had paid 45.2 million.

The Wall Street Journal reported that chief executive Wendelin Wiedeking alone was paid 68 million euros in compensation last year.

The news broke around the same time that German postal workers won a hard-fought battle for a minimum wage of between eight and 9.80 euros an hour. The announcement underscored an increasing disparity of wealth in Europe's biggest economy.

Poverty among those who work

A study by the Hans Böckler Foundation confirmed this week what many Germans had already been feeling: that their buying power is steadily declining in the midst of a robust economic recovery.

"The distortion in the distribution of wealth and the rise of poverty among workers are a real problem for the economy and society as a whole," Claus Schaefer, author of the study, told AFP.

At a press conference on Tuesday, Ekkehard Schulz, head of the steel group ThyssenKrupp, said: "I share the view of Mrs. Merkel and Mr. Köhler," referring to bonuses paid to mangers.

"Excesses, especially when it is a question of severance pay, are not timely, and never were…," he added.

Schulz himself earned around four million euros in the company's last fiscal year. He said he was was "satisfied" with his pay: "I am within the average of Dax bosses," he told AFP, in reference to the German index of 30 blue chip groups.

Porsche, which is not listed on the Dax index, earned more money trading derivatives than from selling cars in its fiscal year that ended July 31. Stock-option transactions contributed a pretax of 3.59 billion euros to the group's results.

Total net profit came to 4.242 billion euros, more than three times the result of 1.393 billion one year earlier, as cited by AFP.