The coronavirus pandemic has not only cut profits for companies listed on the leading ATX index by a good half, but has also left deep marks on top managers’ paychecks.
The direct pay of CEOs, ie the sum of base pay and variable pay, fell by 16.2 per cent in 2020 to an average of €1.742 million. This is what European management consultant hkp has calculated to arrange his annual bonuses.
For the 14 CEOs who held their positions throughout the year in 2019, average compensation declined 10.9%. “The drop in wages is partly due to the fact that you have a different demographic — the number of presidents has fallen from 19, who held their positions throughout the year in 2019, to 15,” explained Michael Kramarsh, partner at management consultancy hkp-Group. , in an interview with the APA. But you can also see that “variable pay, an omen, also goes down in bad years, and that’s the whole point of the exercise.”
Kramarch said that for the first time, you have the opportunity to show the one-year variable pay and the multi-year variable pay separately, because companies will now report it constantly, Kramarch said.
This time around, Mayr-Melnhof Karton heads the list of ATX CEOs, with Wilhelm Hörmanseder (€11.789m) handing management over to Peter Oswald (€4.975m) in the spring. Voestalpine President Wolfgang Eder took third place (4.480 million euros). “These are the values that stand out in Austria,” Kramarsch said. However, this includes a special bonus in the context of joining or leaving the company. “This is a point in time when old CEOs who have done so much for the company can finally do something good and they finally want to do something good, and sometimes it may be justified. It is good that the supervisory board now has to justify this to shareholders and the public.
However, termination payments must be agreed upon in advance and not paid as a gift without consideration. “It was not unusual in Austria for the Supervisory Board to distribute severance payments and bonuses loosely. This is exactly what shareholders and investors do not want. These illegal, non-performance bonuses are under heavy criticism from investors, the Austrian Supervisory Board should get used to it” . The payment of bonuses not yet agreed upon in Austria has not yet been finalized, “but I see infidelity approaching dangerously there.”
Rainer Selye, president of OMV in the past years, has made much less profit in 2020, this time coming in fourth place with 3.949 million euros. His base salary has decreased compared to the previous year due to the termination of his employment relationship. Since mid-2019, after the retirement of Manfred Leitner, Seele has also taken an interest in marketing and downstream trading, which has been paid additionally. His adjusted direct wage without job allowance decreased by 28.9 per cent.
For years, hkp has criticized the low level of transparency in the company’s individual bonus data: “In the past, Austrian wage reports were more than a tool to avoid transparency,” Kramarsch said. This has changed due to the new legal framework, and there are now more tables, graphs and explanations on the basis of assessment or short- and long-term variable remuneration. “ATX companies have taken a giant step towards natural transparency. They haven’t become transparency seekers in a year, but they are in the middle of the international field.”
The first pay-for-performance considerations are now possible, and the reward has been shown to almost constantly “breathe” with company performance.
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