Pay Shock: 35% of UK CEOs Took a Salary Slump in 2022
New research from Vlerick Business School cracks open the world of executive pay and finds that a whopping one‑third of UK CEOs saw their total remuneration dip last year. The study, led by Professor Xavier Baeten and researcher Marthe Van Hove, sifted through the latest data on the Stoxx 600 – a 600‑company index that spans the whole of Europe.
What the Numbers Really Say
The median total pay for CEOs across the Stoxx 600 hovered around £3.011 million (≈ €3.5 million) in 2022, down a slim £55 k from the previous year’s crest of £3.096 million (≈ €3.6 million). It’s a modest slide on the face of the numbers, but in the land of executive pay that still feels like a prank.
Pay Per Country – Who’s the Biggest Boss?
- Germany: Median pay tops £4.118 million (€4.787 million).
- UK: €4.108 million (£3.534 million).
- France: €3.985 million (£3.428 million).
- Down on the list, Sweden sits at £1.513 million (€1.759 million), Netherlands at £2.224 million (€2.585 million), and Belgium at £2.686 million (€3.123 million).
In the UK alone, 66% of CEOs nudged their pay upwards, while 34% felt the sting of a reduction. It’s a mixed bag that mirrors the volatility of the business world.
KPIs – Money Moves and ESG Moves
Baeten and Van Hove turned the spotlight onto the key performance indicators that shape short‑term (STI) and long‑term (LTI) incentives. Financial metrics still dominate, but the green, people‑centric ESG tick marks are creeping in.
- UK CEOs are 29% more likely to set emission cuts as an STI, compared with the Stoxx 600 average of 24%.
- When it comes to LTI, 73% of UK firms embed relative return targets – a sharp rise from 52% across the index.
A closer look at the top 10 STIs across the index shows that half of the metrics are ESG‑driven: employee engagement, emissions, health & safety, environmental strategy, and diversity. These features indicate a growing appetite for sustainable business practices in executive incentives.
Complexity – A Puzzle in Pay
For the first time, the study measured pay complexity using a scorecard that considered every pay component, KPI, ESG element, and holding period. The results caution that pay structures have become significantly more intricate over the past five years.
“We see an interesting relationship between pay systems and share ownership structures,” Professor Baeten says. “Where ownership is concentrated, the pay models tend to be simpler. When institutional investors shoulder the highest stakes, the systems balloon in complexity, driven by frequent performance dialogues and tight monitoring.” He warns that after a three‑year stint with overly complex compensation schemes, companies can see a dip in overall financial performance.
Bottom Line
CEO pay is no longer just about the headline numbers. Behind the glitter lies a sophisticated, evolving framework that balances market expectations, ESG commitments, and intricate pay polishing. While UK CEOs still enjoy robust remuneration, the trend toward more complex and mixed incentive structures signals that the boardroom is shifting gears, and perhaps widening the net where bonuses are paid.
