Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Employee relationsCorporate governanceEmployee communicationsLatest NewsExecutive pay

Employees on boards do not restrict CEO pay

by Jo Faragher 11 Mar 2020
by Jo Faragher 11 Mar 2020 Researchers found that having an employee representative on the board did not reduce CEO pay
Researchers found that having an employee representative on the board did not reduce CEO pay

Having an employee representative on the board does not necessarily mean that a CEO’s pay will be reduced, according to research from Vlerick Business School in Belgium.

The research findings, which examined pay levels, habits and incentives of hundreds of company CEOs across Europe, go against received wisdom that greater employee representation at board level equates to more control over CEO remuneration and profit margins.

Its focus was on companies in the the STOXX 600 – a stock index of the 600 largest businesses across European countries, including 159 UK companies.

Executive pay and employees

Executive pay ratio reporting: six issues for employers to consider now

Germany: employee representation

Having an employee representative on the board is more common in Germany, France and Scandinavia than in the UK, with 78%, 72% and 60% of companies in those regions respectively having a staff member on the board.

Professor Xavier Baeten, a professor of reward and sustainability at the School, said that in Germany – where employee representation is high – CEOs are among the highest paid in Europe.

He said: “I would not push it that far to say that employee representatives on the board do not care that much about executive remuneration, but the least we can say is that such an intervention in corporate governance does not seem to be very effective.

Moreover, we have found that in Germany, a country with strong employee representation on the board, CEOs are among the highest paid in Europe.

The analysis also found that the more nationalities that featured on a company’s board, the higher the CEO’s remuneration tended to be. Board directors who had many other roles (known as ‘busy’ directors) were also highly paid.

Professor Baeten added: “Our research has already proven quite frequently that ‘modesty’ seems to be a key word in the field of executive remuneration.

“In this respect, having some diversity on the board will help, but having too much diversity in terms of nationalities might negatively impact board cohesion, making the board more vulnerable to the exercise of CEO power.”

In terms of countries to see the greatest rise in CEO pay, 56% of tracked companies in the Netherlands saw a rise of more than 10% in pay between 2016 and 2018. France and Belgium followed, with 44% and 40% respectively seeing greater than 10% rises in CEO pay over the period.

The researchers also found that the median remuneration of a STOXX 600 CEO to be €2.7 million, although UK CEOs earned significantly more than their European colleagues at around €3.2 million. Long-term incentive payments were also much bigger in the UK compared with the rest of Europe.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

Theresa May pledged to make it mandatory for certain companies to have an employee representative on their board before she became prime minister in 2016, but this never happened. The Labour party also promised that employee representation would play a role in its proposed nationalisation strategy during its 2019 election campaign.

Employee relations opportunities on Personnel Today

Browse more Employee Relations jobs

Jo Faragher

Jo Faragher has been an employment and business journalist for 20 years. She regularly contributes to Personnel Today and writes features for a number of national business and membership magazines. Jo is also the author of 'Good Work, Great Technology', published in 2022 by Clink Street Publishing, charting the relationship between effective workplace technology and productive and happy employees. She won the Willis Towers Watson HR journalist of the year award in 2015 and has been highly commended twice.

previous post
Quarter of women leave for another employer after career break
next post
Coronavirus: Why employers should be tackling presenteeism

You may also like

UK net migration slashed by half in one...

22 May 2025

The Law Society: Navigating the new world of...

22 May 2025

How neuroscience can unlock employee recognition

22 May 2025

HSBC employees warned of office attendance link to...

22 May 2025

Workplace stress: Why it’s time to rebrand resilience

22 May 2025

Restaurant tips should be included in holiday pay

21 May 2025

Fewer workers would comply with a return-to-office mandate

21 May 2025

Redefining leadership: From competence to inclusion

21 May 2025

Pay awards in real terms could fall for...

21 May 2025

Ryanair demands flight attendants pay back salary increase

21 May 2025

  • 2025 Employee Communications Report PROMOTED | HR and leadership...Read more
  • The Majority of Employees Have Their Eyes on Their Next Move PROMOTED | A staggering 65%...Read more
  • Prioritising performance management: Strategies for success (webinar) WEBINAR | In today’s fast-paced...Read more
  • Self-Leadership: The Key to Successful Organisations PROMOTED | Eletive is helping businesses...Read more
  • Retaining Female Talent: Four Ways to Reduce Workplace Drop Out PROMOTED | International Women’s Day...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+