German companies are catching up with those in the UK when it comes to executive pay levels, according to an annual study by Vlerick Business School’s Executive Remuneration Research Centre.
Its report, which surveyed 512 companies in the UK, Germany, The Netherlands, France and Belgium, found that among those with assets worth over €5 billion, the best-paid chief executive officers (CEOs) are found in Germany receiving a median total compensation of €3.4 million, which is marginally higher than in the UK.
The data was split and analysed for three different categories: companies with total assets of under €500 million, those with €500 million to €1 billion and those with over €5 billion. The best paid CEOs in companies with assets under €5 billion are found in the UK.
The research also looked at pay developments over the last three years, particularly with regard to retirement benefits and variable remuneration.
It also found:
- In the UK and Germany, remuneration packages are heavily reliant on variable remuneration (both short and long-term incentives) and these make up 67% and 61% respectively of a CEO’s total pay.
- Just under half (49%) of the companies across the five countries studied did not grant a CEO pay rise, or have reduced their total remuneration in the last three years.
- 61% of UK CEOs did not receive a raise.
- Seven out of 10 CEOs in Germany were given a raise.
Professor Xavier Baeten, reward management expert and founder of the Vlerick Reward Centre, said: “The changes we see this year are influenced by the fact that most UK organisations did not grant a pay rise to their CEOs, while most German organisations did.
“Business size is the most important factor determining the level of CEO pay. However, the structure of the pay, [that is] proportion of fixed pay and design of variable pay, is mainly driven by the country in which the firm is located.
“For this, legislation and national cultures play an important role. Judging by the pay discrepancies, the idea of a ‘unified Europe’ seems to be a distant dream.”