Boardroom Ethics
December 9, 2007
Social Democratic Party (SPD) head Kurt Beck said Saturday, Dec. 8, that his party was considering legislative ways to limit severance packages, often worth millions of euros, paid to business leaders.
"I can understand people's anger when managers get sent home with millions in compensation -- even after a company is bankrupted," Beck told Saturday's Bild Zeitung, adding that while the business brass deserve fair pay the situation in some companies had gotten out of hand.
Beck's comments come on the heels of Chancellor Angela Merkel's criticism of business directors who after failing their companies are rewarded with "fantastic bonuses." The head of the Christian Democratic Union (CDU), Merkel added that managers should be well paid as long as they "did a lot for their companies and their partners."
Morals in the boardroom
The European Commission supported Beck's view. Vladimir Spidla, the EU's commissioner for employment and social affairs, told Germany's Bild am Sonntag newspaper that ethical business limits were "certainly exceeded" when top managers earn 100 times more than regular employees.
In the interest of fairness to all, the head of Germany's Protestant Church, Bishop Wolfgang Huber, called for a federal law limiting managers' salaries.
"It goes against every notion of fairness when one person's salary could finance more than 100 jobs and a company has to cut jobs to save on costs," he told the Bild am Sonntag.
A survey published in the paper said about two-thirds of Germans would be in favor of a salary cap.
Tact, transparency needed
But federal Economics Minister Michael Glos, a CDU member, said private companies -- not politicians -- should determine what constitutes a fair severance package.
"I am fundamentally against the state handing down rules from on high," he told the Bild. "Instead I hope for tact and a sense of responsibility."
Interior Minister Wolfgang Schäuble, also of the CDU, said he was against legislating managers' pay and on Sunday called on companies to stop writing "unacceptably high" paychecks.
He also said publically listed companies should disclose how much they pay their directors and that laws forcing companies unwilling to do so was
In an interview with the Welt am Sonntag, he said, "transparency rules making it mandatory for public companies to disclose the actual payments made to managers" would be "worth considering."