Top UK CEOs take home average €2 million more than EU counterparts

06 December 2017 Consultancy.uk

The average renumerations of CEOs in the Eurotop 100 companies list continue to hover above €5 million. The CEO of Reckitt Benckiser remains the highest paid in Europe, at €14 million, while UK CEOs, who accounted for 23 entries amid the top 100, averaged more than €7 million.

Executive pay has come under the spotlight in recent years, as many working within the companies that CEOs preside over have seen their pay stagnate or decline since the financial crisis. CEOs now regularly earn more than 100 times the amount of their lowest level employees, as bargaining power increasingly favours management.

Various initiatives have been developed to curb, and check executive pay, including in the UK, where the UK Corporate Governance Code provides guidance, focused largely on pay remaining competitive and largely dependent on actual performance, as well as initiatives to align executive interest with that of the company. However, concerns still remain, as many executives presiding over companies are pushed into short-termism, from their own or their shareholders’ interest, which has shown to have detrimental effects in the long-term. This is aside from high executive (and senior managerial) pay coming at the expense of paying lower level staff, which may affect their productivity as well as their mental and physical health.

CEO compensation profile

The latest report from Willis Towers Watson analyses the compensation package of The average Eurotop 100 CEO, who, on average, presided over a company with revenues of almost €49 billion, with around 120,000 employees and a market capitalisation of €64 billion.

Base pay for the Eurotop CEOs in Europe came in at €1.6 million on average, while the target bonus was 108% of base pay. The maximum bonus stood at 191% of base pay for the year. Total cash pay, on average, stood at around €3.5 million. Performance bonuses, however, pushed top CEO pay to an average of €5.9 million. The firm notes however, that the median actual pay came in at €5.4 million for the sample group, down 6% from last year, even while the average was nudged up from €5.8 million last year.Compensation makeup

In terms of changes to how CEOs for the Eurotop 100 companies are being paid, considerable differences are noted by country. In the Nordic countries, for instance, base salary dominated in 2016, at 59% of total compensation, up from 46% the previous year. In Switzerland, actual bonuses and long-term compensation represented 37% and 38% of the pie respectively in 2016.

The UK saw base pay increases slightly (3%) to 30% of total pay, while bonuses and long-term incentives also remained relatively stable at 24% and 46% of total pay respectively. In Germany, meanwhile, bonuses over long-term incentives remained the norm in 2016.

Top and bottom 10 CEOs

While the median stood at €5.4 million, there were considerable differences between the top ten and bottom ten, in terms of total direct compensation (TDC). The CEO of consumer goods company Reckitt Benckiser stood at €14 million (down 30% from last year due to no bonus being paid out), followed by publisher WPP, whose CEO was awarded with a €13 million packet, while UBS Group CEO enjoyed a pay packet of around €12 million. SAP and Novartis CEOs rounded off the top five, with the former seeing a 70% jump in TDC due to a change in company remuneration structure.

The bottom ten has considerably more modest total compensation, with Statoll, Glencore and H&M CEOs taking in around €1.2 million, €1.3 million and €1.4 million respectively. 

CEO pay by country

Different countries have relatively different profiles when it comes to average executive remuneration. The UK saw average remuneration of the 23 CEOs in the top 100 sit at €7.4 million, around €2 million higher than the list’s median of €5.4 million. Switzerland leads the pack, with an average of €10.3 million, almost double the median, in 2016 – up considerably from the previous year. Spain saw TDC fall to the median level, while German CEOs were slightly below the median. Nordic CEOs had the lowest average remuneration, at €1.8 million.

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