As we have been saying for more than 20 years….
[O]verpaying executives can also be a sign of weaker corporate governance, [Xavier] Baeten said. Overall, companies whose chief executives are paid relatively less tend to have a higher return on assets, according to a study by Vlerick [Business School]. The research looked at companies in the UK, Netherlands, Sweden, Belgium, Germany, and France, from 2010 to 2016. As market capitalization increases, executive compensation also rises.
Baeten says there’s little-to-no correlation between higher executive pay and improving corporate performance. While that may be so, the strategy remains popular: In France, the median remuneration of CEOs running the 40 biggest public firms increased 31% last year from 2014.
Execs are also well compensated in the UK, where Vlerick found that CEOs at the largest corporations take home 100-times more than the average employee at their firms, compared with 86-times for continental European companies in the study, which excluded Sweden.
And women are almost entirely locked out of the executive suite: only 5% of European CEOs are female, according to the research. This imbalance, too, deserves scrutiny for many reasons, not least because research by Scandinavian bank Nordea has shown that women CEOs tend to beat the broader market, according to Bloomberg.