New legislative measures are being introduced in Germany in an attempt to regulate senior executives’ pay and link it more closely to the long-term performance of their organisation.
Under the proposals, full company supervisory boards, which include shareholders as well as staff representatives, will be responsible for setting pay.
They will no longer be able to delegate this responsibility to remuneration panels and could be held personally liable for any damages arising from inappropriate remuneration.
They will also have the power to reduce executives’ pay where a company performs badly.
The draft legislation is being finalised before going to Parliament for approval.