---
title: "Translating the German remuneration report (§ 162 AktG) – Jetzt Übersetzt"
description: "How ISS and Glass Lewis read the English § 162 remuneration report—and the terminology decisions that can swing a Say-on-Pay vote at the AGM."
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remuneration report annual report translation corporate governance proxy advisors DE-EN translation

# Translating the German remuneration report: proxy advisors, ARUG II, and the terminology that cannot afford to be wrong

Why the English version of your § 162 AktG remuneration report gets read more critically than almost anything else in the annual-report package—and what that means for the person managing the translation.

![Alexander Kirsch-Clayton](https://jetzt-uebersetzt.de/assets/images/alexander.jpg) By [Alexander Kirsch-Clayton](https://www.linkedin.com/in/alexanderkc/), Specialist translator DE ↔ EN September 15, 2026 ·10 min read [Jetzt Übersetzt on LinkedIn](https://www.linkedin.com/company/jetztuebersetzt/) [ProZ](https://www.proz.com/profile/138291)

The remuneration report is the one document in your annual-report package that international investors vote on. Its English version is scored, line by line, by people who are looking for reasons to recommend *against*. That changes what the translation has to do.

## 1—Why the remuneration report is not just another chapter

Most of the annual report is disclosure you hope people read carefully. The remuneration report is disclosure you **know** people read adversarially. Since ARUG II took effect for financial years from 2021, every listed German AG, KGaA and SE must publish an annual *Vergütungsbericht* under § 162 AktG that names each current and former board member individually and breaks out all fixed and variable pay components with their relative proportions, a five-year comparison of pay against company performance and average employee pay, share and option grants, and whether any variable pay was clawed back.

Two features make this a special case for translation. First, the external auditor checks it—but only formally. Under IDW PS 870 the auditor reads the report and confirms that the categories required by § 162 Abs. 1 and 2 were disclosed. It is a separate engagement from the financial-statement audit, and nothing in the standard requires the auditor to look at the English version at all. The *Prüfvermerk* attached to the published report gives a proxy advisor exactly zero assurance about terminology accuracy in your translation.

Second, the AGM votes on it. Under § 120a AktG the approval resolution—the *Billigung*—is advisory: it creates neither rights nor obligations, and a negative vote cannot force the Supervisory Board to change the system. But rejection obliges the company to present a revised remuneration system at the next AGM, and in practice proxy advisors and activist holders use a weak result to escalate—up to recommending against the *Entlastung* (discharge) of Supervisory Board members. The vote is advisory in law and consequential in fact.

The report—with the auditor’s certificate—must stay freely accessible on the company website for at least ten years. The English translation is not a one-cycle disposable. A term you pick this year reappears in the five-year comparison tables through year six.

## 2—The proxy-advisor lens

Three proxy advisory firms are active in Germany: ISS, Glass Lewis, and IVOX Glass Lewis, the local specialist. ISS and Glass Lewis both run a straightforward *for / against / abstain* structure and both publish Germany-specific or Continental Europe benchmark policies applied across DAX, MDAX, SDAX and TecDAX. An *against* from either of the two international houses is the primary governance-risk signal an IR team has to manage in the AGM cycle.

How often does it happen? In the 2024 MDAX season, across 44 remuneration reports put to a vote, ISS recommended against 16 (36%) and Glass Lewis against 14 (32%); ten reports drew a negative from both at once. Average support was 83.7%, but the lowest single result was 37.4%. In the DAX, average free-float support edged up to 84% and ISS recommended against just four reports—better in aggregate, but the drivers of dissent had not softened.

And those drivers are increasingly about *disclosure*, not pay level. Sodali’s 2024 review lists the recurring grounds for negative recommendations: lack of responsiveness to shareholder concerns, inappropriate use of discretion, insufficiently challenging targets, high severance. ISS Corporate’s 2026 European review—which ranks Germany’s DAX 40 as Europe’s highest-paying executive market, median CEO compensation above €7 million—identifies the cross-market failure mode bluntly as “lack of disclosure.” Boards that fail to *explain* a remuneration decision draw an adverse recommendation regardless of the number.

Here is the connection people managing the translation miss. “Explanation” is a language artifact. The rationale a proxy analyst evaluates is the English sentence in front of them. If that sentence is a calque, an ambiguity, or a term that contradicts what the same investor read in last year’s report, the disclosure is worse—not because the German was worse, but because the English is.

> Proxy advisors such as ISS and Glass Lewis assess executive pay on the basis of the English-language remuneration report: a mistranslated performance criterion or an inconsistent LTI/STI label can feed directly into an “Against” voting recommendation at the AGM.

## 3—The terminology minefield, mapped

Compensation language sits on top of German company law, which does not map cleanly onto Anglo-American company law. A few of the landmines I disarm every season:

### STI and LTI

*Kurzfristige variable Vergütung* is the Short-Term Incentive (STI); *langfristige variable Vergütung* is the Long-Term Incentive (LTI). Market practice in German listed reports uses those exact labels and their acronyms. The failure mode is not translating them wrong—it is translating them **inconsistently**: “short-term variable remuneration” in the narrative, “annual bonus” in a table heading, “STI” in the chart. A proxy analyst tracking one component across three presentations now has to reconcile three names. Pick one pairing and hold it across every table, footnote and chart label.

### Clawback, malus, Rückforderung

The statute itself is instructive: § 162 does not use the loanword “Clawback.” It uses the native verb *zurückfordern*—to reclaim variable pay. The German source is deliberately neutral, which means the translator is making an active legal choice among “clawback,” “recoupment,” and “recovery of variable remuneration,” terms with distinct connotations in US and EU regulatory contexts. And “malus” (reducing an unvested amount) is not “clawback” (reclaiming a paid amount); collapsing the two is a substantive misstatement, not a stylistic one. The right answer is whatever the company’s own plan documents already use—more on that below.

### Zielerreichungsgrad, Maximalvergütung, Referenzrahmen, Peer Group

- **Zielerreichungsgrad** → “target achievement” or “degree of target attainment.” Not “goal fulfillment rate”—a calque that reads as machine output.
- **Maximalvergütung** → “maximum remuneration cap” or “remuneration ceiling.” This is the § 87a cap; leaving it as a vague “maximum pay” loses the fact that it is a formally resolved limit proxy advisors check compliance against.
- **Referenzrahmen** → “reference framework.” There is no settled English equivalent, so consistency matters more than cleverness; “benchmark frame” is simply an error.
- **Peer Group** → keep it. It is already English in the German source, and inventing “comparison group” only creates a mismatch with the horizontal-comparison methodology investors know.

None of these is hard vocabulary. What is hard is holding all of them consistent across a 30-page document produced under deadline by more than one hand—which is exactly the condition under which the report is usually written.

## 4—When the group already has an English compensation language

Most listed groups do. Offer letters, Board resolutions, stock-plan rules, and—if there is any US footprint—SEC-adjacent filings already contain English compensation terms that institutional investors have seen. If the remuneration report calls the long-term plan a “Performance Share Plan” but the plan rules an investor holds call it the “Long-Term Incentive Plan,” that reader now has two names for one instrument and no way to know they are the same thing. That is precisely the “inadequate disclosure” the proxy houses penalize.

So before I draft, I ask for the existing English-language artifacts: the prior-year report, the stock-plan documentation, any HR or Legal glossary. My job is not to produce the most elegant English rendering of the German—it is to produce the rendering that agrees with everything the company has already told the market in English. That alignment work is unglamorous and it is most of the value.

## 5—Workflow and deadline pressure

The remuneration report sits inside the *Geschäftsbericht* package, and it is one of the last pieces to stabilize. It cannot be finalized until the Supervisory Board has reviewed the figures and the auditor has completed the formal § 162 Abs. 3 check and issued the certificate. Both steps compress the translation window from the back: the German you are translating keeps moving until close to the AGM invitation deadline, and the AGM date is fixed by law and logistics.

A realistic briefing, in my experience, looks like this: a near-final German draft with tracked changes still landing, the prior-year English report, the plan documents, a named contact in IR or the corporate-secretary office who can adjudicate a term in an hour rather than a week, and an honest statement of which sections are frozen and which are still moving. What does not work is a single hand-off of a “final” file that turns out to have three more revision rounds behind it. Send me the moving version and tell me it is moving—I would rather manage the churn than pretend it away.

Rush pressure here is structural, not exceptional. Build the translation slot into the timeline the moment the AGM date is set—not the week the auditor signs off.

## 6—From 17 seasons: the errors I actually see

I have translated annual-report material full-time since 2008, across more than 7,000 jobs, much of it for DAX- and MDAX-adjacent issuers I cannot name. The recurring failures cluster into three types.

**Calque constructions.** German compensation prose loves long nominal chains—*erfolgsabhängige Vergütungsbestandteile mit langfristiger Anreizwirkung*—that a hurried translator renders word-for-word into English fog. A proxy analyst reads that as evasive. The fix is to unpack it into a plain English clause that states the criterion and the horizon. Clarity is not decoration in this document; it is the thing being scored.

**False friends between German compensation law and English company law.** *Vorstand* is the Management Board, not “the executive board” or “management” loosely; *Aufsichtsrat* is the Supervisory Board and the two-tier distinction has to survive translation because the whole governance logic depends on it. *Tantieme* is not a “tantième”; *Versorgungszusage* is a pension commitment, not a “supply promise.” These are the errors a generalist ships and a specialist catches on reflex.

**The one that cost a vote.** Years ago a client’s English report described a plan payout condition in a way that, read literally, implied the performance target was softer than the German said. The German was correct; the English introduced an ambiguity that a proxy analyst flagged as a lowered hurdle. It fed into a critical write-up and a weaker Say-on-Pay result than the company expected. Nothing about the pay had changed. One clause of English had. That is the whole argument for treating this translation as a governance deliverable, not a formatting chore.

## 7—What to look for in a specialist

A generalist LSP is a structural risk on this document, not a cost saving—because the failure mode is invisible until an investor or proxy analyst finds it, and by then the file is public for ten years. A checklist I would apply if I were buying this work:

- Corporate-governance language as a working register, not a lookup exercise—Vorstand/Aufsichtsrat, § 87a caps, horizontal and vertical comparison handled without prompting.
- Familiarity with ARUG II and § 162: what must be disclosed, why individual attribution matters, what the auditor’s certificate does and does not cover.
- Working knowledge of proxy-advisor methodology—ISS and Glass Lewis Germany guidelines—so the translator understands the reader who scores the text.
- A terminology-consistency discipline: a maintained glossary carried across years and aligned to the client’s own plan documents, so year-three tables still reconcile with year-one.
- Honesty about scope: certified/sworn translation is a separate, court-sworn discipline—if someone offers it as a bundled add-on to a remuneration report, that is a flag, not a feature.

For what it is worth, on that last point: I do not offer sworn or certified translation. When a document genuinely needs it, court-sworn colleagues handle it, and I will say so plainly rather than pretend otherwise.

## 8—The practical takeaway

The English remuneration report is read by the harshest audience your annual report has, using it to cast a vote. Glass Lewis’s 2025 Germany guidance even specifies presentation format—the five-year CEO pay comparison should show actual monetary values, not just percentage changes—which means format choices in the English version affect the recommendation directly. Treat the translation as part of the governance workflow: brief early, hand over the plan documents and prior-year English, name a decision-maker for terminology, and use someone who knows both the corporate-governance language and the reader scoring it.

If you are scoping the annual-report package for the coming season and want the remuneration report handled by someone who has done 17 of these, see [my services and rates](https://jetzt-uebersetzt.de/en/services) or [get in touch](https://jetzt-uebersetzt.de/en/contact) with the AGM date and I will tell you what a realistic timeline looks like.

## Sources

1. [Aktiengesetz § 162 Vergütungsbericht (Bundesministerium der Justiz / gesetze-im-internet.de)](https://www.gesetze-im-internet.de/aktg/__162.html) (accessed 2026-09-15)
2. [ARUG II – Implikationen für den Vergütungsbericht (Deloitte Deutschland)](https://www.deloitte.com/de/de/services/audit/perspectives/arug-ii-verguetungsbericht.html) (accessed 2026-09-15)
3. [IDW PS 870 – Die Prüfung des Vergütungsberichts nach § 162 Abs. 3 AktG (Kleeberg Wirtschaftsprüfer)](https://www.kleeberg.de/2021/11/03/idw-ps-870-die-pruefung-des-verguetungsberichts-nach-%C2%A7-162-abs-3-aktg/) (accessed 2026-09-15)
4. [Vergütungssystem des Vorstands und die Zustimmung der Hauptversammlung (Rödl & Partner)](https://www.roedl.com/insights/verguetungssystem-vorstands-zustimmung-hauptversammlung/) (accessed 2026-09-15)
5. [2024 Germany's MDAX AGM Season Review — Key Takeaways (Alliance Advisors)](https://allianceadvisors.com/2024-germanys-mdax-agm-season-review-key-takeaways/) (accessed 2026-09-15)
6. [2024 Proxy Season Review: Germany (Sodali)](https://sodali.com/resources/insights/2024-proxy-season-review-germany) (accessed 2026-09-15)
7. [Europe Proxy Season 2026: CEO Pay Rises, Support Holds (ISS Corporate)](https://www.iss-corporate.com/resources/blog/europe-proxy-season-2026-ceo-pay-rises-support-holds/) (accessed 2026-09-15)
8. [Glass Lewis 2025 Policy Updates (UK and Europe) (Georgeson)](https://www.georgeson.com/uk/insights/proxy/glass-lewis-2025-policy-updates) (accessed 2026-09-15)
9. [Proxy Advisors' Role and Impact in the German Market (GoingPublic HV-Magazin)](https://www.goingpublic.de/hv-magazin/proxy-advisors-role-and-impact-in-the-german-market/) (accessed 2026-09-15)