Majority shareholders keep CEO remuneration within limits

Results of a European doctoral thesis into the connection between the level of CEO remuneration and the presence of a remuneration committee within the company

CEOs of companies with a remuneration committee are paid more than their colleagues in companies without remuneration committees. The shareholder structure also plays an important role in CEO remuneration. In companies with a fragmented shareholder structure, CEOs earn more than in companies with a concentrated shareholder structure. These are the main conclusions of a recent doctoral thesis produced by Xavier Baeten (Vlerick Leuven Gent Management School) at the Ghent University from a survey of 298 quoted companies in Belgium, the Netherlands, France and Germany.

The finding that the presence of a remuneration committee is associated with higher remuneration levels, according to Xavier Baeten, is to do with the fact that these committees pay more attention to market comparisons. “These comparisons cause an upward effect. The question may then be whether there is any point of making it a legal obligation for quoted companies to have a remuneration committee, as has been the case in Belgium since recently.”

It also appears that there is no connection between remuneration and morediversity in the remuneration committee (e.g. more women, a wider age spread, more nationalities). Whether there is any point in setting quotas is then another important question. According to Baeten, above all it must be ensured that not too many (ex-) top managers of other companies sit on the committee. Xavier Baeten: “It appears that the CEO has more power over these members, which leads to an influencing process. In the Netherlands, it is not permitted for more than one member of the committee to be employed as a manager in another company.”

Other interesting findings:

  • There are great differences in shareholder structures within Europe: in comparison with German (17%) and Dutch companies (11%), the main shareholder in Belgian (38%) and French companies (34%) holds a larger proportion of the shares.
  • Institutional shareholders play an important role in the Netherlands (57% of shares are in their hands) and Germany (50%). They are far less important in Belgium (16%). France comes between the two (39%). However it appears that these institutional shareholders have no significant effect on remuneration policy.
  • An average CEO in the 298 quoted companies from this study earned € 1,115,875. Slightly over half (56%) of the package consisted of variable remuneration.
  • 73% of the quoted companies have established a remuneration committee.
  • The diversity within the remuneration committee is limited: the average age of the members of the committee is 61 years, with a limited spread. In addition, only 19% of companies have at least one woman sitting on the committee. The number of nationalities is also limited. Almost half are or have been also employed as top managers in another company.


In comparison with existing research into CEO remuneration, this study offers a unique added value thanks to various aspects. Firstly, the geographical focus is on Continental Europe (where previous studies have been primarily aimed at the Anglo-Saxon market). Secondly, several countries were included in the study. Thirdly, the study looked at the typology of the shareholders. And finally, the role of remuneration committees was studied.

The study furthermore not only considered the level of remuneration but also its structure. In this respect, it appears that the proportion of variable remuneration (bonus) was lower in companies controlled by a family shareholder. This is to do with the fact that these shareholders take a long-term view and are less inclined to take risks.

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