The figures are from ePay Europe, a bi-annual research study published today by executive recruitment consultancy Futurestep and SCA Consulting, a global compensation specialist. The study looked at compensation in over 200 internet businesses across Europe.
According to ePay Europe, on average, the CEO of a pre-IPO (Initial Public Offering) company in the UK is paid twice as much as their European counterpart. The survey revealed that UK salaries and bonuses are now on a par with US levels – demonstrating a substantial shift in the last six months. The previous bi-annual survey had found that a UK Internet CEO was paid 40% less than his US equivalent. Currently in the UK, the CEO of a post-IPO company receives up to $270,000 (£172,000) in cash compensation compared to $300,000 (£190,000) in the US.
The ePay study, which Futurestep calls the only European survey of its kind and the first since the correction in technology stocks, polled over 2,000 senior executives across nine European countries. Other key findings include:
The gap is closing between internet and traditional companies when it comes to executive compensation. With the internet sector’s common currency of share options and equity failing to attract executive talent under current market conditions, the survey reveals just how much the sector has had to restructure its executive compensation packages in order to retain high fliers.
Salary and bonus compensation has increased substantially in the last six months and in many instances by 50%. And internet executives predict that salaries will further increase by 10% this year.
The study revealed that the wage-gap between the CEO of a post IPO business compared to their traditional counterpart has closed to only 10%, leaving internet wages only marginally behind the traditional business sector. Today, the average salary of the CEO of a post-IPO Internet company is £170,000, a similar amount to that of a traditional business CEO at £185,000. Only twelve months ago, the same post-IPO CEO would have earned £120,000 – 40% less.
UK companies grant larger option packages to their non-founder employees. A non- founder CEO in the UK could receive 5% of a post-IPO company compared to 2% in Continental Europe. The UK level is the same as the US.
Last year, UK companies were only granting half this amount. Based on last month’s average share price, a grant of 5% equates to £500,000.
The same survey conducted last year revealed that equity dominated the internet sector pay. Despite major stock re-evaluations, equity still remains a major component of pay.
In situations where options are ‘underwater’ or perceived to be worthless, some companies are considering alternatives such as co-investment plans or one-off payments at a lower exercise price.