The level of total remuneration for CEOs in Europe has been unchanged for the past 10 years, according to research from the Executive Remuneration Centre at Belgium's Vlerick Business School.
In 2023, median remuneration for CEOs of companies on the pan-European STOXX Europe 600 index was just over €3.8m, up from less than €2.9m in 2024, but regression analysis taking into account company size, inflation and performance as controlled variables found that CEO pay has not risen significantly over the last decade.
The study, which was led by Prof Xavier Baeten, an expert in reward and sustainability, and senior researcher Marthe Van Hove, highlights a major challenge Europe faces in staying competitive with global executive compensation.
Alternatively, it shows that Europe keeps CEO pay under control, avoiding steady increases without underlying performance logic.
There has been a substantial increase in the incorporation of non-financial KPIs such as emissions, employee engagement, customer satisfaction and diversity metrics into executive compensation since 2014 though.
Just 16% of STOXX Europe 600 companies linked long-term incentives to non-financial KPIs in 2014, but that figure had quadrupled to 64% by 2023.
In short-term incentives, 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," said Prof Baeten. "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."
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 short-term and long-term incentives 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.
(Pic: Getty Images)
