UK firms overpay CEOs when compared to European neighbours

Companies who pay their CEOs more modestly perform better financially, according to new research from Vlerick Business School.

The study examined the pay levels and habits of CEOs and CFOs in 861 companies in the major stock indexes across Europe, including the FTSE 100 and 250 in the UK, the OMXS60 in Sweden and all listed firms across Germany, France, Netherlands and Belgium.

Using firm performance data to calculate what companies should be paying their CEOs, researchers found that firms with better financial performance tended to pay their CEOs less than others.

Analysis of the data also revealed that UK companies, along with those in Germany, overpay their CEOs in comparison with other countries – and that there were more cases of CEO overpayment in firms with more widely dispersed share ownership, another feature of UK companies.