Is your CEO worth a €1bn bonus?

One of the biggest battles in legal history is raging in Germany – over the rights and wrongs of giving out a €1bn bonus to a CEO.

The CEO in question, one Klaus Esser, ex-boss of the Mannesmann telecoms group, was awarded a €15m payout for his work when the company was bought by Vodafone in 2002.

While €15m should be enough to keep anyone in beer and crisps for a while, Josef Ackermann, CEO of Deutsche Bank, who was responsible for approving the bonus, said that Esser was underpaid – and that the Mannesman executive was hard done by and deserved a lump sum more in the region of €1bn.

Although the idea of any CEO being worth such a princely sum might seem a tad on the generous side, Ackermann's logic does hold water to a degree. Speaking in a defence statement yesterday, he theorised that if the company had made €150,000 no one would have kicked up a fuss over a €1,000 payout. Given that the company made €150bn, a €1bn sum wasn't outrageous, but "justified rewards".

Paying a CEO €1bn on top of their no-doubt substantial salary - no matter how good their performance - would raise a few eyebrows in England. Germany, however, doesn't have the same laws or business culture to govern director payouts.

Esser's golden handshake is just one part of the legal wrangling hanging over Mannesman, following €60m in director bonuses being shared between six men following the Vodafone buyout.

One of the accused, Joachim Funk, in the dock for alleged breach of fiduciary duty, said that the bonuses were a "sensible business decision" and "based on performance and success" of the company at the time.

Is a €1bn bonus ever justified for a CEO? Let us know in the Reader Comments section below.