US benchmarks heighten exec pay inequality in Europe, a new study shows. Median CEO compensation rose 12% last year, and firms that reference American peers pay CEOs about 80 times the average worker, versus 47 times when they do not.
Rising CEO Pay Across Europe
The analysis comes from Vlerick Business School in Ghent. Researchers Professor Xavier Baeten and Marthe Van Hove examined the STOXX Europe 600, which tracks 600 listed firms in 17 countries.
Since 2016, median total CEO remuneration has climbed 48% before inflation. In the United Kingdom, the median reached €6.07 million, while France and Germany reported medians of €5.19 million and €5.28 million respectively. German base salaries sit about 22% above the European average.
Incentive Structure and Shareholder Returns
Long-term incentives grew the fastest, up 41% since 2016. Grants exceeding 200% of base pay correlate with weaker three-year shareholder returns, a warning for boards.
Short-term bonuses showed no measurable link to better performance, according to the researchers.
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Financial key performance indicators (KPIs) often overlap, adding complexity without clear benefit. Professor Baeten said: “Some companies just pick one KPI and use it for both short-term and long-term incentives.” Boards should focus on how incentives are designed and look for KPIs that express strategic priorities, rather than copying market practice and assuming bigger rewards produce better results.
Non-financial goals appear in 72% of long-term plans but receive only 18% of the weighting. Financial metrics still dominate with 82% of total weighting. Accounting measures such as profit and cash flow feature in 80% of firms, while 70% use share-based metrics like total shareholder return.
Climate change targets are the most common non-financial objective, present in 47% of organizations. Usage is highest in Germany (65%), followed by France (62%) and the United Kingdom (47%).
Short-term climate goals appear in 37% of plans, unchanged from the previous year. France stands out with 70% of firms including such targets, compared with 33% in the United Kingdom and 38% in Germany.
Diversity objectives have slipped, falling from 14% to 8% of long-term plans. France remains the leader at 20%, while Germany and the United Kingdom sit at 10% and 7% respectively.
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Female representation at the chief executive level has risen from 3.7% in 2016 to 9.6% in 2025. The United Kingdom reports 12.5%, and Germany 7.7%. After adjusting for size, performance and listing country, the study found no statistically significant pay gap between male and female leaders.
Benchmarking Against the United States
More than half of the surveyed firms—51%—use at least one American competitor as a salary reference. Higher U.S. pay levels make European packages appear low, prompting upward adjustments mainly through larger long-term incentives.
Marthe Van Hove said: “We seem to be importing a practice which is typical for a specific societal, economic and stock market context into a continent which has a different approach.”
The authors conclude that CEO pay had become too complex to deliver lasting value.
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