Germany Vies with UK on Executive Pay Levels

Top German companies now rival their peers in the UK when it comes to executive pay levels, according to the latest annual study from Vlerick Business School’s executive remuneration research centre.

The report from the Ghent, Belgium-based business school found that, for companies with assets over €5bn (US$5.9bn), the best paid chief executives (CEOs) are found in Germany where the median total compensation of €3,438,000 narrowly exceeds the UK at €3,401,000.

However, the best paid CEOs across the two categories covering businesses with assets under €5bn are still found in the UK.

The study assessed 512 listed companies in the UK, Germany, France, Belgium and the Netherlands – with specific attention paid to pay developments over the past three years, particularly with regard to retirement benefits and variable remuneration.

Financial data was split and analysed separately for three different categories; companies with total assets of under €500m, €500m to €1bn and companies with total assets over €5bn.

In the UK and Germany remuneration packages are heavily reliant on variable remuneration (short term incentives + long term incentives) as these comprise 67% and 61% respectively of a CEO’s total pay. France and Belgium are more risk averse – only 34% and 33% respectively of their executives’ pay is variable.

Across the five countries studied, 49% of companies had not granted their CEO pay rise in the past three years and, in some cases, had even reduced their total remuneration.

CEOs in the United Kingdom were treated most severely, 61% of them did not receive a raise. Germany, on the other hand, was the most flexible; with seven out of 10 CEOs there were given a raise.

“The changes we see this year are influenced by the fact that most UK companies did not grant a pay rise to their CEOs, whilst most German companies did,” said Professor Xavier Baeten, an expert in reward management at Vlerick Business School.

“Company size is the most important factor determining the level of CEO pay. However, the structure of the pay – i.e. the 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 and judging by the pay discrepancies, the idea of a ‘unified Europe’ seems to be a distant dream.”


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