2023-12-06 16:32:52
December 06, 2023 Today at 5:30 p.m.
The CEOs of listed Belgian companies experienced mixed fortunes last year: their median pay fell by 5% and 41% of them earned less, shows the Vlerick study.
The CEOs of listed Belgian companies are not all in the same boat in terms of salary. Last year, 41% of them saw their overall compensation decrease compared to 2021, we learn from the new edition of the study on salaries of the Vlerick Business School. This is obviously the story of the glass half empty, because it also means that 59% of CEOs received a raise, but this puts into perspective the impression that reigns in public opinion, that they always win more. And, good news (because it’s not always easy either), there is a “significant” link between increases and improved outcomes of the companies concerned. In other words, in the majority of cases, the increase is motivated.
Overall, the CEOs of the companies making up the index Bel 20 saw their median total compensation increase by 11% from one year to the next to reach 2.701 million euros. But their index counterparts Bel Mid (mid caps) saw theirs drop by 4% at 868,000 euros and those of Bel Small (small caps) decline by 1% at 579,000 euros.
“For the Bel 20, 42% of CEOs experienced a drop, compared to 34% for the Bel Mid and 50% for the Bel Small.”
Xavier Baet
Professor of Reward & Sustainability at Vlerick Business School
No more “decreased” CEOs in Bel Small
In the combined ranking, the median remuneration for all 87 listed companies under review stood at 873,000 euros, down of 5% on the 919,000 euros of 2021.
“These medians only reflect part of reality,” emphasizes Xavier Baet, professor in Reward & Sustainability at Vlerick. “We wanted to see how many CEOs had experienced a rise or, on the contrary, a reduction in their remuneration. For the Bel 20, 42% of them experienced a drop, compared to 34% for the Bel Mid and 50% for the Bel Small.”
If we leave the framework of this study for a moment to place ourselves at the company levelwe will recall that in 2022, within the Bel 20, he is the CEO of the brewer AB InBev Michel Doukeris who received the highest total remuneration with 7.2 million euros, ahead Tim Van Hauwermeiren (ArgenX)7,1 millions, Jean-Christophe Tellier (UCB)5.8 million, and Ilham Kadri (Solvay), 4.8 million. Despite their height, the salaries of Doukeris and Tellier had decreased compared to 2021 (-13.5% and -7% respectively) while the other two had increased (+6.4% and +19.5%).
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The average salary of big bosses in the Bel 20 fell by 10% last year
Far behind the Germans
In the game of comparisons with some European countries Western countries, the salaries of our leaders remain modest. In the index Stoxx 600company CEOs German show median compensation the highest, 4.7 million euros, ahead of the British (4.1 million) and the French (3.9 million). Belgian bosses (3.1 million and no longer 2.7 million, because the Stoxx 600 only includes 18 Belgian companies) are, however, ahead of the Dutch (2.5 million) and the Swedes (1.7 million).
As to short-term variable parts remuneration, Xavier Baeten’s team sought to identify the most used performance indicators in Belgium to qualify for it. Indicators financiers are unsurprisingly the most popular, with revenue, cash flow and ebitda leading the way (used by 52%, 39% and 35% of companies respectively).
“Unfortunately, we must see that environmental indicators continue to lag behind.”
Xavier Baet
professor in Reward & Sustainability at Vlerick Business School
If this seems logical, “we must unfortunately note that environmental indicators lag behind. A painful observation to say the least at a time when COP 28, the UN climate conference, is being held,” notes Xavier Baeten. The criterion on greenhouse gas emissions and that on energy consumption energy and other resources are, in fact, only used by 6% of companies.
The diagnostic study also a lack of transparency in the manipulation of performance indicators. “Many companies remain vague in their remuneration report, often without citing concrete criteria.”
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Overly complex systems disconnected from results
This raises the question of the complexity of remuneration systems, which was also scrutinized by researchers. They analyzed the number of instruments included in the remuneration, the spread over time of the variables as well as the characteristics of the indicators. To be sure of having a sufficiently representative sample, they expanded their scope here to include all European companies included in the Stoxx 600 index.
Their conclusion is surprising: “The complexity of CEO remuneration greatly increased over the years”, underlines Marthe Van Hove, senior researcher at Vlerick. “It is greater in companies which pay their CEO more than normal and where a significant part of the remuneration is granted in variable form.”
“We find relatively more big companies in the group characterized by greater complexity”, adds Xavier Baeten. Other points common to these companies: they generally have more institutional investors in their capital as well as a more dispersed shareholding.
“Ultimately, more complex compensation systems have a negative impact on company performance.”
Marthe Van Hove
Senior researcher at Vlerick Business School
The most astonishing thing comes next: “The most striking observation,” says Marthe Van Hove, “is the existence ofa negative link between complexity and company performance. In other words, over time, more complex compensation systems have a negative impact on company performance.” In their research, they detected a negative effect on financial results after three years.
Marthe Van Hove concludes that “companies have any interest in not making remuneration systems too complex.”
The summary
Last year, 41% of CEOs of listed Belgian companies saw their overall remuneration decrease and 59% increase compared to 2021, according to the new edition of the Vlerick Business School salary study. The CEOs of the companies making up the Bel 20 index saw their median total compensation increase by 11% from one year to the next to reach 2.701 million euros. But their counterparts in the Bel Mid index (mid caps) saw theirs fall by 4% to 868,000 euros and those of the Bel Small (small caps) fell by 1% to 579,000 euros. On the scale of European companies (Stoxx 600), the increase in the complexity of remuneration systems does not necessarily go hand in hand with that of the performance of the companies concerned.
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