The study looked at the annual reports of all listed companies in Belgium, France, Germany, and The Netherlands and those of the FTSE 100 in the UK.
Financial data was analysed separately for DAX, MDAX and SDAX companies. The median total compensation of a German CEO of a DAX firm was found to be 3.100.000, which sets Germany lower than Great Britain but above the Netherlands were a top CEO earns 2.470.000. The lowest CEO compensation packages amongst the sample, were found to be in Belgium at 1.980.00 and France at 2.290.000
In Germany, bonus percentages are higher than in any other country in Europe, at 122% of fixed pay, and the number of companies who now offer long term incentives (shares and stock options) has increased by 21% over the past seven years. Whilst in Great Britain combined incentives such as cash bonuses, shares and stock options have dropped 35% since 2010.
Whilst the total remuneration for German CEOs has remained stable, there has been a 15% increase in fixed remuneration. In Belgium, fixed pay accounts for 70% of a CEOs remuneration, whilst in The Netherlands the figure stands at 61%.
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? `