Financial institutions that are successful on an enduring basis form an essential part of the economic and social fabric of stable societies. They perform centralized service functions for citizens, the economy and the state. At the same time, they make a significant contribution to maintaining confidence in the system and they promote growth and prosperity. Their decision makers carry a large burden of responsibility. The ethical principles on which management remuneration systems are based therefore are becoming an indispensable factor for long-term success in the banking sector.
In a joint position paper, five leading financial institutions have committed themselves to ethical principles in the remuneration of management. Here, the core aim is to make remuneration systems open and transparent and to eliminate false incentives. Commerzbank AG, Deutsche Bank AG, DZ BANK AG, HSBC Trinkaus & Burkhardt AG and HypoVereinsbank are signatories to the paper. The process was facilitated by the Wittenberg Center for Global Ethics.
The signatories to this position paper have committed themselves to leadership that is oriented towards success and based on values. This requires that the remuneration and performance assessment of management also need to be built on ethical principles as well as empirical quantities and financial indicators. This demands the following.
The comments of the chief executives of the participating institutes are shown below.
Martin Blessing, Chairman of the Board of Managing Directors, Commerzbank AG:
“We wish to demonstrate clearly that value orientation plays an integral part in our perception of our work and that it shapes our actions. This must also be reflected in our incentive systems”.
Jürgen Fitschen, Co-Chief Executive Officer, Deutsche Bank AG:
“A consistent leadership culture is necessary in which corporate values, business strategy and formal incentives support each other”.
Wolfgang Kirsch, Chief Executive Officer, DZ BANK AG:
“The close link between entrepreneurship and social responsibility is a cornerstone of the social market economy and an integral element of the cooperative idea. Traditionally, this has also been reflected in the remuneration of our management staff. For us as the central institution of the German cooperative banks, it is only consistent that we have publicly committed ourselves to fundamental ethical principles in our remuneration practices”.
Andreas Schmitz, Chairman of the Management Board, HSBC Trinkaus & Burkhardt AG:
“Banks can only justify their existence by going about their business responsibly. First and foremost, this must emanate from the attitude of the banks themselves and their employees, and must be firmly anchored in the corporate culture. Our incentive systems are an important starting point for promoting sustainable business”.
Dr. Theodor Weimer, Spokesman of the Management Board, HypoVereinsbank:
“The principles that have now been drawn up show that we are taking our responsibility seriously and that the financial institutions are making their own contribution to bringing about change”.
The position paper can be downloaded on the internet from the web sites of the participating institutes and from the web site of the Wittenberg Center for Global Ethics (http://www.wzge.de/). Please get in touch with the press contacts at the institutes listed below if you have any queries. For questions concerning the process, please get in touch with Dietmar Kokott, Chairman of the Foundation’s Management Board, Wittenberg Center for Global Ethics, Tel. 0621/60-47330.
The ethical foundations of management remuneration in the banking sector
DZ BANK AG
Tel. +49 69/7447-92748
HSBC Trinkaus & Burkhardt AG
Tel. +49 211/910-1664
Tel. +49 89/378-26714 and +49 40/3692-3378
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