CEO pay in Europe remains stagnant over the past decade, research finds

CEO pay across Europe has remained stagnant in real terms over the past decade, according to new research from Vlerick Business School, which examined remuneration trends in the STOXX Europe 600, an index of the largest companies across 17 European countries.

The study, led by Professor Xavier Baeten, an expert in reward and sustainability, and senior researcher Marthe Van Hove, found that median total CEO remuneration in 2023 was €3.8m, compared to €2.88m in 2014. However, a regression analysis factoring in company size, inflation and performance revealed no significant increase in CEO pay over this period.

Professor Baeten said: “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.”

The research also highlights a shift towards incorporating non-financial key performance indicators into executive pay. In 2014, just 16% of companies in the STOXX Europe 600 linked long-term incentives to non-financial targets such as emissions, employee engagement and customer satisfaction. By 2023, this had increased to 64%. The use of non-financial metrics in short-term incentives also rose from 71% to 90% over the same period.

Despite this shift, the overall pay structure has remained largely unchanged, with base salary accounting for 28-34% of total remuneration, short-term incentives making up 22-29% and long-term incentives representing 44-50%. The required CEO shareholding has also increased from 200% of base pay in 2014 to more than 250% today, reinforcing alignment with long-term performance goals and ESG-linked metrics.

The study was conducted by the Executive Remuneration Centre at Vlerick Business School in partnership with Deloitte.