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Article | Executive Pay Memo Asia Pacific

European CEO compensation trends and AGM season 2023

By Dr Richard Belfield and Stephanie Schmelter | January 4, 2024

Key developments in CEO target remuneration levels and design, and our recap of proxy agency feedback and AGM season results across Europe.
Compensation Strategy & Design|Executive Compensation|Ukupne nagrade
Beyond Data
Every year, WTW analyzes remuneration report disclosures and the feedback from key proxy advisors on the remuneration levels and design for the executive boards of the largest European companies, and subsequent Annual General Meeting (AGM) results. This year, the analysis covers 328 companies listed in the top indices of nine European countries: Belgium (BEL 20), France (CAC 40), Germany (DAX 40), Ireland (ISEQ 20), Italy (MIB 40), Netherlands (AEX), Spain (IBEX 35), Switzerland (SMI), and the UK (FTSE 100). Remuneration data is sourced from WTW'S Global Executive Compensation Analysis Team and voting results are as disclosed by companies.

  1. 01

    Development of European CEO pay 2021 to 2022

    The median target total direct compensation of European CEOs increased by 7% to almost four million Euros in 2022. This was driven primarily by an increase of 5% in median base salary – resulting in a median base salary of EUR 1.1 million in 2022 – and an increase of 14 percentage points in the median level of long-term incentive (LTI) awards to 150% of base salary. While target short-term incentive (STI) levels remained stable at a median of 100% of base salary, actual STI levels paid for 2022 performance decreased by 14 percentage points at median to 124% of base salary.

    It must be noted that the top European indices typically cover between 20 and 40 companies. Only the FTSE 100 stands out, covering 100 companies. The addition of smaller companies beyond the top 20 to 40 considerably affects the median pay level. If only the largest 30 companies within the FTSE 100 were included in the European analysis, the median target total direct compensation across the region would be significantly higher, at EUR 4.45 million.

  2. 02

    Development of European CEO pay since 2017

    Overall, median target total direct compensation levels for CEOs increased by 15% between 2017 and 2022, corresponding to an average annual increase rate of 3%. However, the analysis below shows that the increase has not been linear. Instead, levels remained relatively stable between 2017 and 2020, even dropping slightly in two years, before increasing in the last two years.

    This growth in target total direct compensation levels was primarily driven by increasing LTI grants: the median base salary ranged between EUR 1 and 1.1 million during the period analyzed, and target STI levels remained static at 100% of base salary, while median LTI expected values increased from 130% to 150% of base salary. We think it’s fair to say that this development is aligned with investor expectations, as the realization of the increased target compensation will depend heavily on the achievement of companies’ long-term performance.

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    Development of European CEO pay since 2017

    This graph shows that the increase in CEO pay has not been linear. Levels remained relatively stable between 2017 and 2020, even dropping slightly in two years, before increasing in the last two years.

    In many European countries, the CEO’s target total direct pay mix typically consisted of one-third base salary, one-third STI and one-third LTI. However, this has changed over the past three years to a typical pay mix of 25 – 30% base salary, 25 – 30% STI and 40 – 50% LTI. The typical CEO pay mix in the UK and Switzerland has been weighted towards LTI for some time, so this wider trend indicates that other countries in the region continue moving in the same direction.

  3. 03

    No major changes in incentive design at the European level – local differences still observed

    There are no major regional shifts to be observed in incentive design. However, the introduction and increasing sophistication in implementing ESG metrics, especially in LTI plans, remains one of the prevailing trends among top European companies. In STI schemes, environment and sustainability metrics have made it into the top three most prevalent performance measure categories for the first time.

    It is important to note that market practice around incentive design still tends to follow country-specific regulatory requirements and trends. The most obvious country-specific differences are:

    • The use of STI deferral schemes is common in the UK (85%) and Ireland (81%), but rare in France (10%). In all other countries, prevalence lies between 20% and 40%.
    • While performance shares remain the most prevalent LTI plan type across Europe as a whole, and are clearly the predominant plan type in many countries, the LTI landscape is more diverse in others. Examples are:
      • Belgium – performance shares are not at all prevalent and the preferred plan types are stock options, restricted shares and long-term cash plans.
      • Germany – LTI plans are rarely settled in shares and therefore virtual performance shares and long-term cash plans are more common.
      • Spain – in addition to performance shares, long-term cash plans are more prevalent than in any other European country.
    • The use of ESG metrics in LTI schemes still varies significantly by country – while increasingly prevalent in Belgium (55%), France (83%), Italy (75%), Germany (55%), Spain (51%) and the UK (55%), they are still less common in Switzerland (20%), Ireland (40%) and the Netherlands (44%).
  4. 04

    The introduction of new share ownership guidelines plateaued in 2022

    While the increasing prevalence of share ownership guidelines (SOGs) has been one of the key trends in recent years, this plateaued in 2022. Currently, 72% of all companies in Europe’s top indices have SOGs in place. However, this statistic hides significant variation between countries. SOGs are market-standard in the UK and Switzerland, and prevalence has increased significantly in France, Germany, the Netherlands and Spain over recent years. In Belgium, Italy and the Nordic countries, however, they are still less prevalent. In addition, the required level of share ownership varies and is higher in those countries with either longstanding use of SOGs, a higher proportion of LTI within the pay mix, and/or where incentives schemes are typically settled in shares instead of cash. Consequently, the median required level is three times and five times base salary in the UK and Switzerland respectively, compared to two times base salary for most other European countries.

  5. 05

    Say on pay results 2023

    The voting results on remuneration report resolutions in 2023 show broad investor support, with acceptance levels of 84% to 93% on average and even higher rates at median, ranging from 87% to 97%. A similar level of acceptance can be observed for votes on remuneration policies but, as last year, the number of failed and low policy votes (between 50% and 70%) is much smaller to non-existent compared to those for remuneration reports. The main reason for this discrepancy is that the application of the policy and its possible outcomes become apparent in the report and thus might raise shareholder concerns.

    The following chart shows the average and median voting results as well as the percentage of failed and low votes on the remuneration reports by index:

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    Say on pay results 2023

    Voting results on remuneration report resolutions in 2023 show broad investor support.

    The low or failed votes all have case-specific causes. A common pattern across Europe is that low voting results are either triggered by a serious single reason or by a combination of several factors. Our analysis shows that single reasons are often:

    • Grants of large one-off awards – also sign-on bonuses and termination payments – without compelling rationale;
    • Adjustments to actual performance/outcomes under one of the variable pay components; or
    • A remuneration package generally perceived to be excessive.

    Other reasons more typically observed in combination are:

    • Lack of disclosure, especially related to ex post disclosure of targets, weightings and achievement levels;
    • Significant base salary increases without compelling reason;
    • Lack of pay for performance alignment, such as inconsistency with business objectives, grants of restricted shares without performance objectives, or payouts not aligned with financial performance due to a significant weight on individual objectives;
    • Limited response to significant prior dissent on the remuneration report and / or policy; and
    • High pension values.

    In addition, we looked at how often the eighteen largest and most active investors across the top European indices voted for or against remuneration reports during the period 2020 to 2023. Good news first: in countries with several years of experience with say-on-pay resolutions, investor voting outcomes are more positive than in those countries that have only put remuneration reports to vote since 2020 or 2021. We believe that adopting certain disclosure practices, already established by companies with several years of say-on-pay practice, could be one of the key drivers for more favourable voting results. Nevertheless, some investors are more critical across all countries, while others differ significantly according to the respective company-specific circumstances. It can be observed that UK investors, who vote according to detailed guidelines that are primarily focused on the UK market perspective, are very critical of individual topics that might not be relevant market practice in the majority of continental European countries, such as relative TSR hurdles requiring outperformance of median.

  6. 06

    Preparing for the next AGM season

    When preparing for the next AGM season, we recommend being aware of the detailed requirements of your company-specific investors, as well as their usual voting behaviour, but also to understand general “no gos”. We advise the following:

    • Understand whether your remuneration policy is in line with market practice – if your remuneration approach differs from typical practice, be prepared to provide a robust rationale as to why your company needs to follow a slightly different path.
    • In countries where say-on-pay was not common before the implementation of SRD: scrutinise your remuneration report and compare it to others – insufficient disclosure practice remains the top concern raised by proxy advisors and investors.
    • Do the voting guidelines of your investors include any specific requirements with which you might not be able to comply, but you have good reason to retain your current remuneration practice? Are your reasons company-specific or is this due to regional differences in market practice? Be prepared to disclose the relevant information in your report.
    • Understand the strength of feeling of your investors – if there are areas of your policy or report that might raise concerns, reach out to them pro-actively as early as possible.
If you are interested in more details on European or country-specific market practice, AGM results or investor analysis, please reach out to us.


Senior Director, European Executive Compensation & Board Advisory Practice Leader

Director, Executive Compensation and Board Advisory Germany/Austria
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