New study reveals the highest paid CEOs in Europe are in the UK

A comprehensive new study courtesy of Vlerick Business School has revealed that Britain has the highest paid CEO’s in all of Europe. The study was put together using the data from the annual reports of every listed company in France, Belgium, The Netherlands and Germany, as well as those British companies in the FTSE 100.
The financial data was split into 2 categories for analysis; companies who had total assets of between €1-5bn and those who total assets added up to over €5bn.
The median total compensation of a UK CEO of a company with total assets over €5 billion was found to be just over €4.700.000. The next best paid CEOs were found in Germany at €3.100.00. In contrast, the lowest CEO compensation packages were found to be in Belgium at €1.980.00 and France at €2.290.000 

Virtually all the FTSE 100 companies (99%) still use cash bonuses to reward their top management but the value of these has dropped 20% since 2010. In the UK, over the same period, the value of all incentives such as bonuses, stock options and shares has dropped 35%; which may explain why there was an 8% drop in the total CEO pay. Nevertheless, there was a 2% increase in incentives as a proportion of pay. In Belgium, combined incentives account for 30% of a CEO’s remuneration, whilst in Germany these make up to nearly 60%. 

Xavier Baeten, expert in reward management and Professor at Vlerick Business School says: 

“One positive aspect revealed by our data is the way firms are using KPIs – more and more companies are moving towards offering non-financial incentives to motivate their CEOs. This means that companies are looking at what motivates people beyond financial incentives, which may lead to better performance. Furthermore, I believe CEOs have lost their confidence in being rewarded in shares as they are afraid the share price will drop.”

“Typically CEO pay increases with firm size; I am not saying that size should have no impact, but rather that its impact should be lower. Today, 70% of the differences in CEO remuneration are explained by firm size while performance only accounts for around 3%. This happens as an effect of comparable evolution rather than CEO ability. So if a company grows, the remuneration of the CEO grows too. In my opinion, CEOs should be valued based on the complexity of the job, their relationship with the stakeholders, and last but not least, public acceptance, which plays an increasingly important role. To me, the vital question is `what should pay look like, to motivate CEOs to engage in sustainable value creation?”