CEOs and CFOs of the largest US global companies are paid more than counterparts around the world because they earn larger incentive compensation based on performance, according to the inaugural 2018 Global Top 250 Compensation Survey of CEOs and CFOs from FW Cook, Inc., FIT Remuneration Consultants LLP and Pretium Partners Asia Limited. “Total pay levels are higher in the Americas than in Europe & Australia or Asia, although a disproportionate share of total pay (91% for the CEO and 86% for the CFO) is tied to annual bonus and long-term incentives,” said David Cole, managing director of FW Cook, Inc. He added that total direct compensation for CEOs in the Americas is typically above the global “average” level when adjusting for company size while annual bonus levels are higher than in the other regions for the CEO but are in line with Europe and Australia for CFOs.
According to John Lee of FIT, at the median, a significant portion of the total compensation package (69% for the CEO and 68% for the CFO in Europe & Australia) is tied to annual bonus and long-term incentives. This represents a smaller proportion than is the case in the Americas, with pay at median split almost evenly between base salary, annual bonus and long-term incentives in Europe & Australia. “The Americas put a premium on incentive compensation in line with shareholder expectations, and the
higher risk has historically been a justification for higher target pay,” said Lee. “In Europe & Australia, shareholder expectations over quantum has generally kept long-term incentives more modest.”
May Poon of Pretium said base salaries in Asia are often significantly below the global “average” level when adjusting for company size due to the state-owned nature of some companies. “Annual bonus levels are lower than in the other regions for both the CEO and CFO, as bonuses are regulated in China and some senior executives in family-run businesses are also major shareholders of the company,” said Poon.