Among the World’s CEOs, Americans Are Best Paid
Chief executives of U.S. companies are the best paid in the world and have the greatest purchasing power, according to a new survey of top business managers in 20 industrial nations.
The survey, conducted by a unit of the New York management consulting firm of Towers Perrin, ranked U.S. executives first both in cash pay and total compensation, including bonuses, benefits, long-term incentives and perquisites. Managers in Switzerland and Japan were second and third.
A typical chief executive of a U.S. company with sales of $100 million is paid $311,000 cash, according to the survey. That is 19% more than his Swiss counterpart, who earns $261,000 and 45% more than Japanese or West German executives, who earn $216,000 and $215,000 respectively, the survey showed. South Korea ranked 20th with $69,000.
Compensation Packages Key
The study also found that U.S. executives did better overall in net pay than those in other countries when taxes and other required deductions are considered.
The survey also looked at the cost of living in the countries surveyed and ranked nations according to the goods and services that could be purchased at the compensation level found in each country.
In terms of the purchasing power of their wages, U.S. executives again ranked first. But the Swiss dropped to sixth, the Japanese fell to 16th and the West Germans dropped from fourth in cash compensation to 12th in purchasing power. Venezuela, ranked 17th in cash compensation, moved up to second place in purchasing power.
The Towers Perrin survey results are similar to findings of other surveys comparing pay in the United States with that in other countries, said Chip Thomas, a Los Angeles-based consultant with the Sibson Co. management consulting firm. “We have found that in the U.S. (compensation packages) are higher in terms of base salary and bonus opportunities. U.S. executives are more likely to receive stock options than in Europe.”
In analyzing total compensation packages, the Towers Perrin survey showed that bonuses and profit sharing make up a higher percentage of executive income in Venezuela (40%) than any other country. In the United States, bonuses accounted for 35%. The elements in total executive compensation in different countries “are significantly influenced by tax policies and local customs,” the Towers Perrin report said.
Bonuses Vary
However, in the United States the high percentage contributed by bonuses is not related to tax questions but to a different compensation philosophy, management consultants said. “We have found that U.S. firms have been more progressive in adopting pay for performance as a management philosophy,” Thomas said.
In Japan, he said, compensation is based more on a philosophy of lifetime employment. “Pay is designed for security,” he said.
In Japan, bonuses make up 20% of income. In Switzerland and Australia, they were found to contribute 18% and 15%, respectively, but were said to be no factor at all in South Korea. Among other countries surveyed, France ranked fifth in total cash compensation followed by Belgium, the Netherlands, Canada, Italy, Spain, United Kingdom, Brazil, Argentina, Singapore, Hong Kong, Sweden, Venezuela, Australia, Mexico and South Korea.
