UK internet executives are the best paid in Europe and earn the
similar sums to their US counterparts, demonstrating a substantial
shift in the last six months. The CEO of a post-flotation UK
internet company earns an average of £172,000.
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.
