The World

CEO pay levels around the world

CEO compensation has emerged as an issue as Washington debates a rescue plan for Wall Street. Marco Werman speaks with Professor Brian Cheffins of Cambridge University about whether executive “fat cats” are a big issue in countries outside the US.

(Do CEOs in other countries benefit for the same kind of huge pay and benefit packages as CEOs in the U.S.?) The pay packages aren’t as large but the topic is still controversial. (What leads to those big packages in the U.S.?) Their executive pay contracts are much more lucrative than their international counterparts, because unless executives are fired for cause, then the company is breaching their contract so an executive to sue for that which leads to huge severances. (How big does the fat cat issue play in the public imagination?) It manifests itself in a variety of ways. In France, the co-chief executive of Airbus was fired and received a severance package of $11 million dollars, but Sarkozy stressed he wanted to introduce legislation which would put a cap on this. When the Home Depot executive was fired, he received a $200million plus severance package. (Are there regulatory systems in other countries in this?) This is very rare. The way things tend to work in Britain for example is pressure is brought to bear on companies to ensure the contracts they sign executives to are for short durations, which reduces the amount of severance for executives. (Will international companies be paying attention to how the bail outs and possible regulation affects the severance issue?) Oh yes, and if bail outs have to occur in other countries that will be especially true.