No pay rise for Europe’s CEOs in 10 years 

The level of total remuneration for CEOs in Europe has remained largely unchanged over the past decade, finds new research from Vlerick Business School. 

The study, led by Professor Xavier Baeten, an expert in reward and sustainability, and senior researcher Marthe Van Hove, examines the governance and compensation practices of CEOs in the STOXX Europe 600, a stock index of the largest companies across 17 European countries. 

The latest findings indicate that median total CEO remuneration in 2023 stands at €3.809.077, a modest increase from €2.881.581 in 2014. However, through a regression analysis, which considers company size, inflation, and performance as controlled variables, the study found that CEO pay has not significantly risen over the last decade. 

This highlights a major challenge Europe faces in staying competitive with global executive compensation. Alternatively, another viewpoint could be that Europe keeps CEO remuneration more under control, avoiding steady increases without underlying (performance) logic.

Additionally, there has been a substantial increase in the incorporation of non-financial KPIs into executive compensation. While in 2014, just 16% of companies in the STOXX Europe 600 linked long-term incentives (LTIs) to non-financial KPIs (such as emissions, employee engagement, customer satisfaction, diversity metrics, etc.), this number has surged to 64% by 2023. In short-term incentives (STIs), the proportion of companies focusing on non-financial KPIs has increased from 71% to 90% over the same period. 

“Our research shows that, in general, CEO remuneration levels are lower in continental Europe. At this moment, there is a debate whether lower top executive remuneration levels lead to a brain drain. However, we do see that European firms, notwithstanding the ‘remuneration handicap’, still manage to attract good CEOs. Other research by our centre has shown that CEOs are mainly motivated by challenge, making progress, and the pride to work for their organisation”, finds Professor Xavier Baeten 

Despite a surge in non-financial KPIs and growing attention to ESG goals, the pay structure for CEOs has remained relatively unchanged. Base pay still accounts for approximately 28-34% of total remuneration, while STIs and LTIs continue to represent 22-29% and 44-50% of the overall package, respectively. 

As part of a broader push for accountability, the required CEO shareholding has risen from 200% of base pay in 2014 to over 250% today. While this strengthens alignment with long-term value creation through ESG-linked metrics, the study finds that financial rewards tied to CEO performance have not increased at the same rate.

Partnered with Deloitte, the Executive Remuneration Centre at Vlerick Business School, where both Professor Xavier Baeten and Marthe Van Hove are based, conducted this annual survey to examine the evolution of executive compensation in Europe. 

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To speak with Professor Xavier Baeten or for more information on this research, please contact Stephanie Mullins-Wiles at BlueSky Education at smullins@bluesky-pr.com or call +44 (0)1582 790 703