Mercedes-Benz Implements Major Cost-Cutting Measures While Executives Maintain High Salaries

The automotive industry in Baden-Württemberg is currently facing significant financial challenges. Despite the implementation of an extensive cost-reduction initiative, which includes the potential elimination of up to 20,000 jobs, it appears that the top executives at Mercedes-Benz are largely unaffected by these austerity measures.

On March 11, the Mercedes-Benz Group AG released its compensation report for the fiscal year 2024, which outlines the financial landscape amidst these pressing challenges. The report indicates that the company is grappling with substantial hurdles associated with sustainability efforts and the transition to electric mobility.

Despite the ongoing cost-cutting efforts, CEO Ola Källenius experienced only a modest decrease of 2% in his annual salary, bringing his total compensation to EUR12.488 million compared to EUR12.744 million the previous year. The structure of his compensation package consists of a fixed salary, a short-term annual bonus, and a long-term incentive aimed at ensuring sustainable corporate governance through deferred bonus payments.

The report highlights that the overall revenue for the Mercedes-Benz Group AG decreased from EUR152.4 billion in 2023 to EUR145.6 billion in 2024, a decline of approximately 5%. This downturn is attributed to the effects of record revenues in the preceding years, which led to a higher payout of deferred bonuses in the previous fiscal year.

Similar trends in salary reductions were noted among the other seven members of the executive board, whose total compensation fell from EUR42.511 million in 2023 to EUR41.461 million in 2024, reflecting a decrease of 3.5%. The most significant reductions were seen among executives responsible for sustainability, technology, sales, finance, and operations in China, whose collective salaries dropped by about 11%.

Conversely, some executives, such as Jörg Burzer, who oversees production and supply chain management, saw a salary increase of 28% to EUR5.882 million. Similarly, Sabine Kohleisen, responsible for human resources, reported a nearly 14% increase in her total compensation, amounting to EUR4.902 million.

The upcoming fiscal year will reveal how these substantial job cuts in 2025 will further impact executive compensation. Stakeholders are keenly awaiting the next compensation report for insights into the evolving financial strategies and executive remuneration amidst ongoing operational challenges.