By James Mackenzie
BERLIN, July 22 (Reuters) - The acquittal on Thursday of German bosses in a landmark corporate pay case and a growing debate over management pay reflects Germany's steady, if halting, shift towards a more Anglo-Saxon management culture.
Since World War Two, German business has prided itself on consensus, with employees represented on the company board and a reluctance to accept huge and divisive pay gaps between the management and normal workers.
When executives involved in telecoms and engineering firm Mannesmann's takeover in 2000 by Britain's Vodafone were paid large bonuses, uproar led to criminal proceedings against them for "breach of fiduciary duty" in the complex negotiations.
But the acquittal of Deutsche Bank chief Josef Ackermann and five other defendants was a strong sign that U.S.-style management is here to stay, however much anger it triggers against "fat cats".
Executive pay at carmaker DaimlerChrysler has triggered a nationwide row, showing the transition won't be swift or easy.
Germany's economy is now too closely linked with the rest of the world for the old, more egalitarian system to be restored and most observers believe the trend will increasingly be towards U.S.-style performance-related pay structures.
"We have to face up to the demands of globalised, international markets," said Alexander von Preen, managing director and partner at Kienbaum Management Consultants, a specialist in executive pay.
But hostility is widespread to both the Mannesmann defendants and carmaker DaimlerChrysler's managers, whose offer to take a pay cut to help solve a working hours row ironically triggered a backlash over executive pay when media highlighted the huge pay gaps involved.
"Is this justified?" asked Bild newspaper on Thursday, contrasting a monthly salary of 435,000 euros ($533,400) for Chief Executive Juergen Schrempp with the 3,800 paid to a German mechanic for the company.
The issue has roused heated emotions in Germany, where the low-paid and unemployed are being asked to make big sacrifices as the government overhauls a straining social welfare system.
There has even been talk that the government may intervene at some point to set controls on top management pay.
HOSTILE CLIMATE
Combined with scandals such as the ousting of former Bundesbank President Ernst Welteke for accepting a paid-for luxury hotel stay, the effect has been to create an unusually hostile climate that has alarmed many business leaders.
"Most German managers are not comfortable with the idea of appearing in Bild because of unpopular decisions," said Florian Schilling, vice chairman at Heidrick & Struggles, a leading management recruitment consultancy.
The focus has been sharpened by the increasingly personalised nature of media coverage of business issues, another trend that follows Anglo-Saxon ways.
"Companies are much more closely identified with the person at the top than was previously the case, so there's a tendency to talk not so much about DaimlerChrysler, say, as the person of Schrempp," Schilling said.
But Schrempp and Ackermann both typify a growing tendency for German company heads to act as supreme American-style chief executives motivated by the concept of "shareholder value" rather than the broader interests of the whole company.
That change has angered old-school former managers such as Edzard Reuter, Daimler's head for a decade until 1996, who said this week top management pay had reached levels that were "not only immoral but ethically completely unjustifiable".
Unions have been particularly incensed that Schrempp, who presided over a merger between Daimler-Benz and Chrysler that has resulted in the value of both companies shrivelling to the level of Daimler-Benz alone, should have avoided any penalty.
Even defenders of U.S.-style pay systems acknowledge that more needs to be done to make managers who profit when times are good more accountable for weak performance. "We have to be very clear that these cycles are followed," said von Preen.