Deutsche Bank chief’s bonus takes hit from missed governance targets

Deutsche Bank chief executive Christian Sewing’s annual bonus took a hit after the supervisory board of Germany’s largest bank issued a rare rebuke over missed milestones and delays in improving internal controls

The supervisory board decided to axe €1mn from total executive pay for 2022, Deutsche Bank disclosed in its annual report on Friday, a move that hit 10 of the lender’s most senior staff.

Deutsche is embroiled in a deepening tussle with Germany’s financial watchdog BaFin over fixing poor anti-money-laundering controls. The bank has spent more than €2bn attempting to fix these issues over the past five years, repeatedly changing key managers and overhauling its internal organisation.

BaFin, which has imposed a special monitor to oversee the lender’s improvements since 2018, signalled last November that it was still not satisfied with the progress and threatened to fine the lender if it missed crucial deadlines.

Deutsche’s supervisory board, which is led by new chair Alexander Wynaendts, said in the annual report that “the overall extended timeline on which the remediation has taken place and the re-planning and/or missed milestones in certain areas need to be recognised in the Management Board’s compensation”.

The shortcomings are reflected in the bank’s failure to meet some of its own governance targets, with the annual report showing that the lender met 27 per cent of targets related to control environments and 50 per cent of its anti-money laundering and know-your-client remediation activities. As a result, the bank met just 64 per cent of its wider environment, social and governance targets.

The supervisory board imposed a 5 per cent reduction to one of the bonus components, docking €1mn in total, including a €145,000 cut for Sewing, according to Financial Times calculations. Overall, the current and former executives together received €67.7mn in pay last year, up from €64.5mn in 2021. Sewing’s overall pay edged up 1.4 per cent to €8.9mn.

In total, Deutsche paid out €2.13bn in bonuses to its 85,000 employees, a 1.3 per cent increase from 2021. The number of employees making at least €1mn a year shot up by 10 per cent to 572.

The disclosure of the pay among Deutsche’s top ranks came as DWS, the asset manager majority owned by the German lender, revealed that its former chief executive, Asoka Wöhrmann, received a payout of €13.7mn following his resignation last June.

While Wöhrmann resigned “with effect from the end of June 9, 2022”, he continued to be on the group’s payroll until the end of January and received €5.6mn in pay for 2022, including a bonus of €3.2mn, DWS said in its annual report on Friday.

He will also receive €8.15mn in severance pay, of which 60 per cent will be paid out over the coming five years. DWS highlighted that the severance package was subject to the “possibility of clawback”.

DWS is under investigation by criminal prosecutors and multiple regulators over alleged greenwashing under Wöhrmann’s watch after its former head of ESG, Desiree Fixler, accused the firm of overstating its green credentials. Wöhrmann resigned a day after the firm’s headquarters were raided by police as part of their investigation last year.

Stefan Hoops, who succeeded Wöhrmann, noted in the annual report that “clarifying the allegations and resolving external investigations remain top priorities”, adding that it was too early to comment on “potential outcomes or timeframes of the external investigations”.

DWS’s own internal reviews are “nearly completed”, according to Hoops. “We continue to stand by our financial disclosures as well as the prospectuses of our funds.”

This post was originally published on Financial Times

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