The average cash compensation of a top executive at a large, global corporation is €1.4 million, with an average increase of +3.5% per year over the past five years, according to a global survey from executive search firm Pedersen & Partners. The compensation includes a base salary of €681,000 and a short-term bonus of €719,000 gross per year. 

Conrad Pramboeck, Head of Compensation Consulting at Pedersen & Partners and author of the study, commented: “Top executive compensation is increasing today at a slower speed compared to previous years. While base salary increased by +4% to +6% on average during the last five years, this rate has now dropped to just over +3%. In addition to that, the total cash compensation including short-term bonuses increased by almost +7% on average over the last five years, but is now only increasing at a rate of +3.5%.”

In most Western European countries and the United States, average salary increases for white-collar employees are between +3% to 4% on average. For this reason, even at the world’s largest companies, top executives are only receiving salary increases at about the same rate as their  managers and employees.

Paul Mewis, Client Partner at Pedersen & Partners, commented: “In the UK, executive compensation continues to be one of the most controversial and high-profile topics in business management, political, and media circles. Executive remuneration continues to rise at rates well above the average and the gap between leaders and employees continues to widen, with an increasing number of high-profile pay awards, “shareholder springs” and media commentaries.”

“The position of Chair of the Remuneration Committee is becoming increasingly difficult to fill as the political and technical demands of the role become increasingly onerous. In terms of Executive Talent Attraction, pay (while not a totally dominant factor) is still a major driver in any hiring strategy. The relatively strong improvement seen in the UK economy in recent years has stimulated demand for exceptional leaders, particularly people who can grow and re-engineer organisations to be more competitive in the new globalized and digital world economy. The link between increased executive pay and performance is becoming an imperative in the UK market; i.e., when an organization performs well, executive pay increases are justified.”

“New UK legislation, increased transparency, media scrutiny and shareholder pressure may have slightly slowed the rate of growth of executive compensation in the UK, but the perceived wisdom is that the trend will continue upwards for the foreseeable future,” he concluded.

The survey covered top executives in the world’s largest companies with an average headcount of 133,000 employees, an average turnover of €42 billion, and average company profits of €4.1 billion.

Research from Staffing Industry Analysts found that the median total compensation for the top two executives at a selection of 58 global listed staffing firms in 2013 was USD 777,160 (€624,661).

However, while total compensation lags behind non-staffing companies, the median increase in total compensation was +6.9% between 2012 and 2013.