Executive Compensation in Germany – Taxation as a Proposed Way of Regulation

Overview


In the run-up to the last two federal elections the limitation of executive compensation was discussed between the political parties in Germany. The topic is obviously a reliable source for media attention. And every time the proposals lack structural solutions that could have the potential for effective change in favor of more populist terms. This time the Social Democrats (SPD) published a draft bill proposing a tax non-deductibility of management remuneration (including pension schemes) above EUR 500,000. Dr. Nils Wighardt and Dr. Andreas Berger explain in their article that this is not only insufficient, but also a one-sided approach at the expense of shareholders while explaining that a simplification could enable the supervisory board to avoid the risk of unjustified payments and media critic independent of the current regulation.