Hay Group study challenges perception of lower executive pay in Europe than in US


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" A new study by Hay Group shows that European executives are not only closing the pay gap on their US counterparts, but in many cases earning even more.

'The study challenges the perception that executive pay is lower in Europe than in the US,' according to Doug Jensen, head of Hay Group's US executive compensation practice. 'This perception is true for the very top jobs in the biggest companies, but pay packages at US companies drop very quickly as you move down the organization--especially if stock options continue to lose favor as a long-term incentive vehicle. By contrast, many European companies have more egalitarian cultures, and senior executives often have the same incentive opportunity as the CEO (proportionate to salary). The result is that packages often exceed those for the US equivalents.'

Hay Group surveyed 153 publicly traded European companies to determine the prevalence and level of executive compensation practices, covering nearly 1,000 executives from 11 European countries. These results were then compared against data from 63 companies of a similar size from Hay's US Executive Compensation Survey, covering nearly 700 executive jobs.

The study showed that there is a greater diversity of executive compensation levels and practices in Europe than in the US. Within Europe, typical base salary levels are highest in the UK, and the highest bonuses tend to be paid in Germany. Long-term incentives are greatest in large French and German companies, which pay very well--up to 30% above the European norm. The lowest packages tend to be in the Nordic countries, which are often more than 30% below the European norm."