CEO pay amongst the largest businesses varies considerably, however, in general, CEO pay is highest in the US and lowest in Europe. Several factors contribute to these differences, including the size of the economy, the competitive nature of the business landscape, and the regulatory environment. But how much do CEOs get paid?
America
CEOs in the United States are among the highest-paid in the world. In 2022, the average CEO of an S&P 500 company earned $16.7 million, according to the AFL-CIO, a labour union federation. That figure is 272 times the average salary of an employee at an S&P 500 firm.
Many factors contribute to the high pay of CEOs in the US. One factor is the size of the US economy. The US is the world’s largest economy, and its companies generate a lot of revenue. Another factor is the competitive nature of the US business landscape. Companies in the US are constantly competing with each other for customers and talent. This drives up the cost of CEOs, as companies are willing to pay top dollar to attract and retain the best talent.
Finally, the US has a relatively weak regulatory environment for CEO pay. There are no federal laws that cap CEO pay, and shareholders have limited ability to say no to executive compensation packages. This has led to a situation where CEOs in the US are able to command very high salaries.
United Kingdom
CEOs in the UK are paid less than their counterparts in the US, but they still earn a significant amount of money. In 2022, the average CEO of a FTSE 100 company earned £4.1 million ($5.2 million). That figure is 120 times the average salary of an employee at an FTSE 100 firm.
There are a few reasons why CEO pay is lower in the UK than in the US. One reason is that the UK economy is smaller than the US economy. Perhaps more significantly, the UK has a stronger regulatory environment for CEO pay. In 2012, the UK government passed a law that requires companies to disclose the ratio of CEO pay to median employee pay. This law has helped to put pressure on companies to reduce CEO pay disparities.
Europe
CEO pay in Europe varies from country to country. In general, however, CEO pay is lower in Europe than in the US or the UK. For example, the average CEO of a STOXX Europe 600 company earned €5.8 million ($6.3 million) in 2022. That figure is 70 times the average salary of an employee at a STOXX Europe 600 firm.
Like the UK, European legislation has stricter regulation and disclosure on CEO remuneration.
