The shareholder advisor Glass Lewis is bothered by the high fixed salary of the CEO of Deutsche Bank.
(Photo: REUTERS)
Frankfurt The American voting rights advisor Glass Lewis sharply criticizes the compensation system for the board members of Deutsche Bank. Glass Lewis advised shareholders to vote against the compensation system at the AGM on May 19. This emerges from the voting rights recommendation that is available to the Handelsblatt.
The basic salary for CEO Christian Sewing is “excessive”, is one of the reasons given. A comparison with the average fixed salaries of CEOs in the DAX and at other European banks has shown that the CEO of Deutsche Bank receives a “significantly higher basic salary” than the comparison group.
Sewing had received a fixed salary of 3.6 million euros last year. Together with his bonus he even earned 8.8 million euros. According to calculations by Glass Lewis, the average fixed salary of Dax bosses in 2020 was 1.4 million euros. According to this, the CEOs of European banks have received an average basic salary of 1.6 million euros.
The voting rights adviser criticized the fact that the non-variable basic salaries of the other Deutsche Bank board members were above the average fixed salary of DAX CEOs. According to the report, Glass Lewis is skeptical about high fixed salaries because such remuneration is not directly linked to performance.
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The proxy advisor also complained that the bank increased Sewing’s base salary by 6 percent, CFO James von Moltke and risk director Stuart Lewis by 7.7 percent.
While the recent pay increases are “moderate,” given the “excessive baseline” to which they relate, “we believe that shareholders should reasonably have expected a compelling rationale to justify this amount of fixed pay,” Glass said Lewis. “We didn’t find her.”
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Another point of criticism from Glass Lewis is that, from the proxy advisor’s point of view, the bank does not disclose the bonus criteria and performance targets transparently and specifically enough. This may be due to the fact that the bank has set up a remuneration system that focuses on a large number of different individual criteria.
Criticism of non-transparent bonus criteria
“However, we do not believe that such a level of disclosure or such a complex set of criteria is suitable for guaranteeing shareholders an adequate level of transparency,” the analysts complained. They also doubt that such a complex system is understood “efficiently” internally by the affected executives themselves.
Deutsche Bank was initially unavailable on Sunday for comment on Glass Lewis’s criticism.
Germany’s largest bank is not the only public company whose remuneration system Glass Lewis has criticized: Voting rights advisors recently recommended rejecting Commerzbank’s payment system at the general meeting. Although their remuneration system has improved in some points, the criteria for variable remuneration are too backward-looking, the analysts complained.
Since 2021, German stock corporations have been obliged to let the shareholders vote on the remuneration system for executive board members at least every four years. In addition, shareholders are allowed to vote after any material change in compensation practices.
The result of this vote is not binding. However, in the event of rejection, companies are obliged under the Stock Corporation Act to present a reviewed remuneration system for a vote at the latest at the following ordinary general meeting.
More: Proxy advisor rejects Commerzbank’s remuneration system