Politics

Cabinet approves strengthening of owners' rights

For the remuneration of managers, in the face of criticisms more stringent requirements are to apply in future. Shareholders of listed companies are in future to get more control rights on the remuneration of the Executive Board. So says a reform of company law adopted by the cabinet in Berlin on 8 May. The shareholders instead of the Supervisory Board are annually to decide mandatorily and bindingly on the remuneration system of top management. Maximum limits a top executive can reach should also be known. There should not, however, be a legal limit. So far, shareholders can only vote on executive pay if the board allows it. “Reason and measure” should not be lost in the payment of managers, said Max Stadler (FDP). The new regulation is an effective and appropriate response to excessive compensation of individual managers and should avoid “self-service” in large corporations, the Parliamentary State Secretary of Justice went on. Now the Bundestag too must approve the plans of the government coalition. The change can then be added to the current company-law amendment already before the Bundestag and come into force in this legislative term. In early March, the debate on the appropriateness of executive pay in listed companies heightened after citizens in Switzerland approved the “popular initiative against the rip-off”.