Top Executive Compensation in Top 100-Companies Averages 1.3 million Euros

The average cash compensation of a top executive in a Top 100-corporation in Europe and the United States is 1.31 million Euros gross per year. This amount includes an average base salary of 630,000 Euros plus a yearly bonus of 683,000 Euros. The total cash compensation of top executives in these companies increased by 8.8% compared to the previous year.

These are the main results of a study conducted by the executive search firm Pedersen & Partners. Their survey analysed more than 6,500 compensation data points of 1,200 top executives in 200 companies in ten countries in Western Europe and the United States in the last five years.

The top executives of this survey are CEOs and Board Members of international corporations with 100,000 employees, a turnover of 28.8 billion Euros, and profits of 3.3 billion Euros on average. Business in these companies has developed very successfully in recent years. Since the crisis of 2008, their revenues grew by 22%, their profits by 18%, and their number of employees by 16% on average.

Size of the Company Determines Top Executive Pay

“The greatest influence on top executive compensation is the scope of responsibility”, says Conrad Pramboeck, Head of the Executive Compensation Consulting practice at Pedersen & Partners, and project manager of the study. Management compensation largely increases with the size of the company, generally expressed by the turnover and number of employees. “The compensation of an executive in a Top 100-firm is seven times as high as the compensation of a General Manager in all companies on the market, which is just below 200,000 Euros both in Western Europe and the United States”, says Pramboeck. “Compared to the average salary of a white collar employee, top executives in the 100 largest corporations earn 40 times as much.”

The executives surveyed constitute the global elite of managers with regards to their responsibility and their compensation level. However, there is also a “glass ceiling” even for these executives. The best paid top executives earn a base salary of around 3 million Euros plus a bonus of 7 million Euros. There are only a few top executives with a total cash compensation of more than 10 million Euros.

European and US-American Top Executives have Similar Cash Compensation

The total cash compensation of European and US-American top executives is very similar.

The fixed cash compensation of a European top manager is 650,000 Euros plus a bonus of 644,000 Euros. Comparable US-American managers earn 575,000 Euros plus a bonus of 777,000 Euros. The difference in their total cash compensation including the bonus is only around 5%.

Stock Options Constitute the Greatest Difference in Executive Pay Structures

In addition to their cash compensation, US-American top executives were granted long term incentives, mostly stock options, valued at 409,000 Euros on average. European top managers only received stock options worth 136,000 Euros on average.

While stock options rarely account for more than 1 million Euros even in the largest European corporations they constitute a substantial element of executive pay in the United States. Around one third of top executives in the 100 largest US-firms were granted stock options worth more than 1 million Euros.

Larry Ellison, CEO of Oracle and one of the best paid executives worldwide, received 48 million Euros worth of stock options in addition to his yearly cash bonus of 10 million Euros. Ellison had his fixed pay reduced to 1 Dollar per year as Steve Jobs had at Apple.

Top Executives’ Compensation Increases Twice as Fast

The cash compensation of top executives increases substantially faster than average salaries of other managers and employees. Last year’s salary increases were 3.5% on average for employees and 5% for General Managers. The executive compensation increase across Top 100 corporations last year was 8.8% on average.

This has been a steady trend for the last few years. The average yearly base salary increase for executives in Top 100 companies in the last three years was 6.0% in the United States and 8.7% in Europe. The average yearly increase of their total cash compensation including the bonus was 5.5% in the United States and 5.3% in Europe.

Looking back over the past five years, top executive compensation in the largest 100 corporations in Western Europe and the United States grew by 6.5% per year on average. Including the bonus the average salary increase was even 8.5% per year, which is more than twice as much compared to white collar employees.

“Top executives in large corporations are not only granted much higher compensation packages than other managers and employees – their compensation has also increased twice as fast in both the short and mid-term”, says Conrad Pramboeck of Pedersen & Partners. “Most likely, this trend will continue over the next few years”, says Pramboeck.

If you would like to conduct an interview with a representative of Pedersen & Partners or have other media-related requests, please contact: Mark Anderson, Marketing & Communications Manager at: mark.anderson@pedersenandpartners.com

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