European bosses pocket 12 per cent pay rise as earnings gap with workers widens

New research finds chief executives earn up to 80 times as much as their employees at companies that benchmark salaries against US rivals, with little evidence that bigger bonuses improve performance

Pay for Europe’s leading chief executives rose by 12 per cent last year, taking median annual remuneration to €4.65 million (£4 million), according to new research suggesting that companies comparing executive salaries with American rivals are contributing to wider pay gaps.

The study by Vlerick Business School found that chief executives at European companies using U.S businesses to benchmark pay typically earned 80 times as much as their employees, compared with 47 times at companies that did not.

Researchers examined remuneration across the STOXX Europe 600 index, covering major listed companies in 17 countries, and found that 51 per cent used at least one American competitor when setting executive pay.

They warned that comparing European salaries with generally higher U.S packages could increase remuneration, particularly through long-term share-based incentives.

Marthe Van Hove, the senior researcher at Vlerick’s Executive Remuneration Research Centre, 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 findings also suggest substantial differences between European countries. According to the report, median UK chief executive remuneration reached €6.07 million in 2025, compared with €5.28 million in Germany and €5.19 million in France.

Since 2016, median European CEO pay has increased by 48 per cent before inflation, with British executives recording a 68 per cent rise over the same period, it adds.

But the research, published today, questioned whether increasingly generous incentive schemes deliver better results for shareholders.

Long-term incentives, including share awards linked to future performance, have increased by 41 per cent since 2016 and now represent the largest component of executive remuneration.

Yet awards exceeding 200 per cent of a chief executive’s basic salary were associated with lower shareholder returns over three years. Larger annual bonuses showed no clear relationship with improved performance over either one or three years.

Professor Xavier Baeten, who led the research with Van Hove, questioned the practice of rewarding executives against the same financial targets in both annual and long-term bonus schemes.

“Some companies just pick one KPI and use it for both STI and LTI. The executive is going to be rewarded for the same KPI in both the short term and the long term. 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,” he said.

The study also examined how companies assess performance beyond financial results.

Non-financial targets featured in 72 per cent of long-term incentive schemes, although they accounted for just 18 per cent of the average weighting. Climate-related targets appeared in 47 per cent of plans, while diversity measures declined from 14 per cent in 2023 to eight per cent in 2025.

Women held 9.6 per cent of chief executive positions in the European sample, up from 3.7 per cent in 2016. The UK figure reached 12.5 per cent.

After adjusting for company size, financial performance and country, researchers found no statistically significant difference between male and female chief executives’ remuneration.

READ MORE: Women who earn more than their partners still pay the price at work, landmark study finds. A 22-year study of more than 7,200 couples reveals that women who bring home the bigger pay packet still shoulder much of the housework, potentially damaging their chances of promotion.

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_{Main image: A new study by Vlerick Business School shows that median pay for Europe’s leading chief executives rose by 12 per cent to €4.65 million in 2025, with bosses at companies benchmarking salaries against U.S rivals typically earning 80 times as much as their employees. Credit: Vlada Karpovich / Pexels}