The dividends from German corporations have risen by an average of almost 10 percent this year, with shareholders benefiting from the rapidly increasing profits from the past financial year.
The 30 largest publicly listed corporations on the leading German DAX stock market index distributed almost €30 billion, or $33 billion, to their stockholders this spring, more than ever before.
But those who think the companies are amply rewarding their shareholders and possibly neglecting their most important assets, the workers, would be mistaken. They are also profiting, and often even more so than the shareholders, according to calculations made by Handelsblatt.
But the lavish bonuses are limited mainly to the automotive, chemical and pharmaceutical industries, and only when there is something to distribute.
The lavish bonuses are limited mainly to the automotive, chemical and pharmaceutical industries.
Uwe Hück, the head of the works council at Porsche, proudly announced on Wednesday that the luxury carmaker would be handing out €126 million to employees. Each of the 14,600 permanent employees will receive a special bonus of €8,600, of which €700 will go to the company pension plan.
“Our employees have accomplished a tremendous amount,” he said. “Therefore there is now a record special bonus.” Last year, the bonuses were €8,200.
In 2014, Porsche was more profitable for its parent VW Group than the VW brand itself. Mr. Hück said the bonuses were “not a gift from the employer, but the team had worked hard for it.” That apparently does not really apply to the few remaining independent shareholders. They will have to be satisfied with an unchanged dividend of €2.01 per preferred share.
The situation is similar at Merck, the German pharma giant. Its employees across the world will benefit from €300 million from the business’s success. Merck is giving its employees €40 million more than last year, which is an increase of 15 percent.
The Merck bonuses, being distributed in April, are equivalent to half an additional salary for staff. Of the 10,000 employees in Germany, all of the salaried workers will receive a higher bonus than last year.
Merck shareholders will receive a dividend of €1 per share after the annual shareholders’ meeting on April 17. That is up from 95 cents last year, giving an increase of a meager 5 percent.
Dividend rises at other big German companies are also poor compared to the growth in bonuses. Investors made chemicals company Bayer the most valuable German company, due to their eagerness to buy and reluctance to sell. The company is worth €117 billion on the stock exchange, which is up 50 percent from last year.
As a result, the firm is giving its shareholders dividends that are 7 percent higher. But Bayer provided its employees with €430 million in bonuses, up €90 million from last year, which is an increase of 37 percent.
Daimler is increasing its dividends by 9 percent. Its 135,000 employees are receiving €4,350 this year, up from €2,541 last year, which is an increase of 72 percent.
VW and Continental, the tire maker, are showing this year that investors can profit more than employees.
BASF is increasing its distribution to investors by 4 percent. But Europe’s largest chemical company is giving its employees a total of €445 million, which is almost one-third more than last year. The company’s 25,600 salaried employees will be receiving a total of €345 million, and the rest of the bonuses will go to the 7,800 non-salaried workers. There is an additional €100 million in bonuses for the occasion of the company’s 150-year anniversary.
The shareholders, however, will not notice a perk from the company’s birthday, though it is usually customary for shareholders to be rewarded in such an anniversary year. Software firm SAP, for example, raised its dividend payments from 60 cents to €1.10 in 2011, to celebrate the company’s 40th anniversary.
VW and Continental, the tire maker, are however showing this year that investors can profit more than employees.
For years, shareholder associations have complained that Continental has paid too few dividends. The company once distributed at most 20 percent of its net profit, landing it at the bottom end of the DAX companies. Common distribution rates internationally are between 40 and 50 percent.
But this year Conti drastically increased its distribution rate to 30 percent. Each employee of Conti, which produced record profits, will receive €1,006. That is €56 more than last year, or an increase of 6 percent.
At VW, bonuses for each of the roughly 115,000 salaried employees will drop slightly from €6,200 to €5,900 compared to last year, while at the same time the dividends will increase by a fifth. Bonuses have been dwindling over the past few years following a record €7,500 award in 2011.
But the total bonus pot of almost €700 million will not change, because in just one year VW hired 5,500 new employees in Germany alone. This probably explains why the works council head Bernd Osterloh has not complained about the lower bonuses.
Ulf Sommer is a Handelsblatt editor who covers companies and financial markets. To contact the author: email@example.com