Wednesday, June 27, 2007

Executive pay in Europe

Shareholder rights in respect of executive pay varies across Europe, according to a recent story in the Economist.

British law has required a non-binding vote on company remuneration reports since 2003. In France shareholders have a non-binding vote on attendance fees of members of the supervisory board. The Dutch and the Swedish governments went furthest by introducing binding shareholder votes on remuneration reports. But none of this is enough for Mr Minder. “We want shareholders to vote on three specific sums (pay for members of a firm's management board, supervisory board and advisory board),” he (Minder) says.

The problem of outsized pay for executives is less pervasive in Europe than in the US. In Germany especially, pay is still modest by standards elsewhere.

Mr Minder's pet target is Daniel Vasella, the boss of Novartis, a pharmaceuticals giant. Mr Minder claims that Mr Vasella is the highest-paid boss of a listed company in Europe. At the annual shareholders' meeting of Novartis in early March, Mr Minder pointed out that with an annual pay package of SFr44m ($35.6m), Mr Vasella is today paid 30 times more than when he was appointed in 1996. Novartis says Mr Vasella was paid SFr21m last year—Mr Minder puts a far higher value on share options and restricted shares—so that his salary increase has not been so great. But bosses of other big European firms are paid less. J├╝rgen Strube of BASF, a German chemicals giant, gets a base salary of €150,000; Wolfgang Mayrhuber of Lufthansa, Germany's national airline, receives €700,000 as base salary.

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