Germany has overtaken the UK as the home of Europe's top-paid corporate executives in a shift that partly reflects public and investor pressure on remuneration at British listed companies.
A study of pay policy at more than 500 listed groups in five EU countries found that increased use of long-term pay incentives helped executives at big non-financial companies in Germany earn more than those in the UK.
At the same time, shareholder pressure and public scrutiny of UK-listed groups helped significantly constrain pay increases. While about two-thirds of companies in Germany increased executive pay in 2013, remuneration at two-thirds of UK companies was either flat or cut. The sample excluded financial institutions.
Xavier Baeten, a professor at the Vlerick business school in Belgium who led the research, said that UK executives had always been paid more compared with other European countries. While this remains true for companies with assets of €1 billion to €5 billion, the top spot for big groups has been taken by Germany, where median executive pay was €3.4 million, marginally higher than the UK.
"There has been a change. There is much more scrutiny in the UK from institutional investors. The UK is realising that it was perhaps paying too much," Prof Baeten said. "They have put a brake on top executive pay and that has not happened as much in some other European countries."
The shift comes even though some UK chief executives remain at the very top of the tree when it comes to pay. WPP chief Martin Sorrell made £29.8 million, according to the group's most recent annual report. Volkswagen chief executive Martin Winterkorn leads the German list with €15.0 million in pay and bonuses for 2013. US chief executives still outearn their counterparts in both countries.