Mid-sized firms close executive pay gap on giants
Top bosses at medium sized Swiss companies have enjoyed better salary raises than their counterparts in larger firms in the last few years – but still earn about half as much as Switzerland’s best paid bosses.
Executive at flagship SMI listed companies earned 2.7 times more than those at mid-cap SMIM index firms in 2007. By 2015, the pay gap had narrowed to a factor of 1.9, according to a PricewaterhouseCoopers (PwC) study released on Wednesday.
In that period, the average pay of SMI chief executives declined 10.3% to CHF6.9 million ($6.9 million) while their counterparts at medium sized companies saw pay rise 25% to CHF3.6 million.
A similar narrowing of the pay gap also occurred in the boardroom, with SMI chairmen seeing their pay packets rise marginally to CHF1.3 million as remuneration for SMIM chairmen rocketed 84% to CHF708,000.
“This development is at least partially attributable to the fact that the demands on executives and the intensity of regulation have increased especially at medium-sized businesses,” commented PwC Switzerland partner Robert W Kuipers.
But the smallest listed companies appeared to be left behind as executive pay at mid-cap firms drifted towards the big league. Chief executives at small-caps were cut adrift, seeing the most marginal rise to CHF1.2 million and chairmen saw pay shrink -6% to an average of CHF310,000.
Those mid-sized companies that have approved rapid pay rises for their bosses have also tended to increase the share-based performance element in remuneration packages. In the last few years, the proportion of salary that is dependent on good results has risen to the same levels as in SMI companies, PwC found.
“In assessing executive compensation, not only the amount but also the structure needs to be scrutinised. The trend towards greater emphasis on equity-based remuneration is a welcome development,” stated PwC Switzerland partner Remo Schmid.
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