Merkel government to clamp down on executive benefits
Berlin - The two parties in Chancellor Angela Merkel's government have agreed to restrict benefits enjoyed by corporative executives which have been widely blamed for a "culture of greed" in high finance, party sources in Berlin said Thursday.
While there would be no cap on executive pay, which has been proposed in many nations, executives would in future be barred from cashing in their stock options during their period of employment.
Germany would also set senior executives' personal liability for breaches of duty at up to one year's salary in every instance.
Currently most German executives obtain personal-liability insurance at their employer's expense, meaning that even if they are sued, the full sum of damages must be paid by the insurer.
The party officials said the law changes were agreed in talks between Merkel's centre-right Christian Democratic Union (CDU) and the centre-left Social Democratic Party (SPD), meaning legislation would be drafted and passed this year.
As in other nations, Germans have expressed outrage at executives escaping penalty for past misdeeds and obtaining huge remuneration, even when their companies are in deep financial trouble and sacking staff.
Senior executive pay scales in Germany have risen much more rapidly in the past decade than regular white-collar salaries.
However the CDU refused in the talks to cap executive pay or apply harsher taxation to high pay.
The new rules would apply to members of management and supervisory boards.
The liability rule would mean that if a court imposed a 5-million- euro damages award on an executive who is paid 2 million euros per annum, the insurer would pay 3 million and the executive would pay 2 million.
Joachim Poss, a senior Social Democrat, said the parties also agreed to ban any one person from sitting on more than five supervisory boards. (dpa)