Executives at German companies have overtaken their counterparts in the UK in terms of pay for the first time amid growing pressure on UK compensation packages that are seen as excessive, according to a study by Belgium’s Vlerick Business School.
The study of 512 listed companies in five European countries shows salaries for executives at large Germany companies averaged €3.44 mn ($4.1 mn) a year after taxes in 2013, compared with €3.4 mn for executives at FTSE 100 companies.
The data shows a sharp reversal from the previous year, when FTSE 100 executives earned an average of €4.7 mn and German executives averaged €3.1 mn, according to the study by Vlerick professor Xavier Baeten.
Just under half (49 percent) of the CEOs at the companies in the five countries studied received no pay rise or had a salary cut in the past three years, the study shows. In the UK, 61 percent received no raise or had a pay cut.
Baeten says his research also shows that the size of the company is the number one factor in determining an executive’s pay, followed by the country in which the company is based. A company’s profitability is a distant third factor.
‘It is striking that the country where the company is based has become more important over the last few years,’ Baeten says in a press release announcing the study. ‘This doubtless has to do with the fact that many countries have developed laws and codes in an attempt to curb [remuneration] excesses. It also means, however, that we cannot really speak of a European vision, which is a shame in itself.’
The research further shows that variable remuneration accounts for 67 percent of the total compensation of UK executives and 61 percent of German executives’. It accounts for 42 percent in the Netherlands, 34 percent in Belgium and 33 percent in France.
