More Money for Managers

The uproar over Siemens decision to increase top managers pay by 30 percent has yet to die down. As the next round of collective bargaining between union representatives and management looms, the plans could cause a boomerang effect, said Wolfgang Gerke, a professor of banking at the University of Erlangen/Nuremberg.

"The employees at Siemens in collective negotiations will now point to management helping itself to 30 percent more and that one should also like to be taken into account," Gerke told DW-TV on Friday.

"One can't let 5,400 employees go on the one hand, make no extraordinary profits and at the same time give top management 30 percent higher salaries," he added. Pay raises should be used to increase motivation or as rewards, Gerke said.

Siemens supervisory board chairman Heinrich von Pierer had told Der Spiegel magazine last weekend that he had decided to increase the managing board members' pay because he determined it was low in comparison to Germany's other leading companies. The firm's executives haven't enjoyed a pay hike in three years.

"Different yardstick for managers"

Leading German politicians expressed outrage over the move. Social Democratic Party (SPD) parliamentary group head Peter Struck said on Wednesday it showed a lack of instinct, particularly at a time when many people are trying to ensure their survival by fighting for a minimum wage. SPD Secretary General Hubertus Heil said the executives filled their own pockets with no regard for employees.

Saarland Premier Peter Müller, a member of Chancellor Merkel's Christian Democratic Union (CDU), said it was incomprehensible why companies continued to expect sacrifices from employees while adding to managers pay packages to such an extent.

"Employees can only interpret (the pay increase) in the sense that executives are measured using a different yardstick," said Bavarian Premier Edmund Stoiber, the head of the CDU's sister party.

Bavarian IG Metall trade union boss, Werner Neugebauer said Siemens could expect tough negotiations over cuts to the company's IT branch SBS as well as Fujitsu Siemens Computers. He said the pay raises were excessive and unconscionable.

"The Siemens managing board apparently has a strange understanding of globalization: manager salaries like in the USA, corporate taxes like in Cyprus and, for the employees, salaries like in China," he said.

28 million euros, 12 men, one year

Criticism also came from the stock markets due to Siemens' weak developments there.

"What is the shareholder supposed to think? At the end of the 2002/03 business year, the Siemens share was listed at around 60 euros and since then has climbed by 12.3 percent," market analyst Heino Ruland of brokerage Steubing told Reuters Monday. But over the same period, the DAX went up by 82.3 percent.

A Siemens spokesman on Wednesday said that it was normal practice to raise executives' pay packages at regular intervals.

The company's 12 executives were remunerated with around 28 million euros ($35 million) in cash and securities over the previous business year. CEO Klaus Kleinfeld was paid nearly 3.3 million euros alone.