european executive remuneration trends 2014 merg survey ... · executive remuneration trends key...

MERCER WEBCAST

European Executive Remuneration trends2014 MERG survey highlightsNovember 13th, 2014

Cyrille BellangerExecutive Remuneration Consultant

Caroline PeyreMERG Survey Senior Product Owner

Paris

MERCER WEBCAST

MERCER WEBCAST 1November 13, 2014

Today’s speakers

Cyrille Bellanger

Associate, Executive RemunerationconsultantParis

+33 1 55 21 38 [email protected]

QuestionsPlease type your questions in the Q&A section of thetoolbarand we will do our best to answer as many questions as wehave time for.

To submit a question while in full screen mode, use theQ&A button on the bottom right-hand side of your screen.

To submit a question while in half screen mode, use theQ&A panel on the bottom right-hand side of your screen.

FeedbackPlease take the time to fill out the feedback form at the endof this web briefing so we can continue to improve. Thefeedback form will pop-up in a new window when thesession ends.

www.mercer.com/webcastsView past recordings and sign up for upcoming webcasts

CLICK HERE TO ASKA QUESTION TO “ALLPANELISTS”

Caroline Peyre

Senior Associate, Senior productmanager for the Mercer's ExecutiveRemuneration GuidesParis


MERCER WEBCAST 2November 13, 2014

AgendaWhat we’ll cover today

Executive Remuneration trends - MERG key highlights

MERG survey overview2014 Economic outlookBase salaryShort-term incentives (STI)Long-term incentives (LTI)PensionRemuneration mix

Key findings / 2015 focuses

Q&A

MERCER WEBCAST

Executive Remuneration trendsMercer Executive Remuneration Guide(MERG) - key highlights

MERCER WEBCAST

MERG survey overview

• An executive remuneration survey for the largest organisations in Europe

• A strong European coverage with 11 European countries available

• Focusing primarily on corporate headquarters of large size organizations or chosensubsidiaries that are equivalent to those large size organizations

• Covering the CEO and the next three hierarchical levels

• Covering the full reward package, including all forms of cash remuneration, long-termincentives and benefits

• Providing, with a complementary pulse survey, current remuneration levels and latesttrends and developments in executive remuneration

• MERG surveys are eligible to be included in the membership contracts

CONSISTENT IN THE REGION DELIVERABLES POSITION MATCH ANDEVALUATION

About 40 benchmark jobs covered

Job Coding (MUPCS®)

Job Evaluation (IPE)

Valuation Methodologies

Mercer’s WIN®

Published reports

Customized reports

Pulse surveys

Feedback Meetings

Match to role descriptions

Evaluate roles using Mercerclassification methodology: IPE

MERCER WEBCAST

DK43

NL63

CH40

IT91

DE71

513 November 2014

MERG survey overviewSurvey participation in Europe in 2014

UK149

FR37

ES10*

NO24

FI28

SE61

LOCAL MERG REGIONAL MERG INDUSTRY SPECIFIC MERG

Local executive remuneration levelsand trends.

Analysis by position and job levelfollowing the IPE methodology.

International peer groups

Industry analysis

Regional and sub-regional analysis

Region covered: Western Europe(WE MERG)

Industry specific benchmarking

Appropriate industry analysis

Industry specific roles covered

Industries covered: Pan-EuropeanFinancial Services (PEFS)

*survey not finalized, forecasted figure

MERCER WEBCAST

2014 Economic outlookA Cross Country View

-2

3

8

13

18

23

28

Salary Increase GDP Inflation Unemployment

%

Source: Global Compensation Planning Report, July 2014

MERCER WEBCAST 7

Base SalaryFreezes 2009 – 2014 & Projections 2015Executive committee (Level 2) - Median

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2011 2012 2013 2014 2015

Denmark Finland France Italy Sweden UK

Prev

alen

ce

Source: Mercer Executive Remuneration Guides 2011, 2012, 2013, 2014

0% 0% 0% 0% 0%

MERCER WEBCAST 8

Base SalaryRegular 2014 Salary Increases – 2015 ProjectionExecutive committee (Level 2) - Median

0%

1%

1%

2%

2%

3%

3%

4%

2014 , excluding zeros 2,3% 2,0% 2,0% 2,6% 3,0% 2,8%

2015 , excluding zeros 2,4% 2,2% 1,8% 2,5% 3,0% 3,0%

Denmark Finland France Italy Sw eden UK

*

* meanSources: Mercer survey 2014

MERCER WEBCAST

Short-term IncentivesEuropean outlook on CEOTarget and Max STI as percentage of base salary - Median

60%

87%

90%

100%

100%

60%

175%

141%

200%

50%

50%

175%

110%

70%

0% 50% 100% 150% 200%

Finland

Sweden

Nethlerlands

Switzerland

UK

France

Germany

Maximun CEO

Target CEO

Source: MERG Surveys 2014

MERCER WEBCAST 10

Short-term IncentivesAs percentage of base salary – MedianPer country

Denmark Finland France Germany Italy Sweden Switzerland UK

CEO 25 33 76 133 42 32 100 127

Executivecommittee 31 20 38 74 27 26 51 101

Level 3 22 23 31 69 26 21 43 36

Level 4 18 18 29 43 25 17 26 26

Sources: Mercer survey 2014

MERCER WEBCAST 11

Short-term IncentivesActual bonus vs. target bonus

%of

Targ

etB

onus

France Germany

Source: Mercer Executive Remuneration Guide 2013, 2014

0%

20%

40%

60%

80%

100%

120%

140%

160%

2013 - % of TargetBonus




CEO Executive Board Level 3 Level 4

%of

Targ

etB

onus

UK Switzerland

MERCER WEBCAST 12

Short-term IncentivesActual bonus vs. target bonus

%of

Targ

etB

onus

Netherlands Italy

Source: Mercer Executive Remuneration Guide 2013, 2014

%of

Targ

etB

onus

Sweden Denmark

MERCER WEBCAST

Long-term IncentivesPrevalence

73%

85%85%

64%

67%

67%

82%90%


MERCER WEBCAST 14

Long-term IncentivesTypical LTI awards as a percentage of base salary per level - Median

%of

Ann

ualB

ase

Sala

ry

147% 148%

48%57%

36%28%31%

20%

0%

20%

40%

60%

80%

100%

120%

140%

160%

2013 2014

CEO Executive Board Level 3 Level 4%

ofA

nnua

lBas

eSa

lary

114%102%

58%

80%

27% 27%27% 23%

0%

20%

40%

60%

80%

100%

120%

140%

160%

2013 2014


France

Germany

Source: MERG Surveys France, Germany 2013 & 2014

MERCER WEBCAST 15

Long-term IncentivesTypical LTI awards as a percentage of base salary per level - Median

%of

Ann

ualB

ase

Sala

ry108% 111%

66%71%

43% 43%

21%27%

0%

20%

40%

60%

80%

100%

120%

140%

160%

2013 2014

CEO Executive Board Level 3 Level 4%

ofA

nnua

lBas

eSa

lary

165% 166%

147%

123%

49% 44%34%

27%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

2013 2014


Switzerland

UK

Source: MERG Surveys Switzerland , UK 2013 & 2014

MERCER WEBCAST 16

Long-term IncentivesCEO - Overview - vehicles prevalence

Sources: Mercer survey 2014* Combines CEO and Excom members

*

MERCER WEBCAST 17* Combines CEO and Excom members


Long-term IncentivesExecutive committee (Level 2) - Overview - vehicles prevalence

*

MERCER WEBCAST 18

PensionPension Plan - Prevalence

11%

57%

6% 4%

41%

90% 92%

81%

65%

87%

52%

13%

0%

20%

40%

60%

80%

100%

Denmark Finland France Sweden Switzerland UK

Defined Benefit Defined Contribution Mixed


MERCER WEBCAST 1919

Remuneration MixCEO

5245 45

35

5541

33 27

79 81

1

1

2427 28

36

26

28

2627

13 1024 29 27 2818

3041 46

8 9

2013 2014 2013 2014 2013 2014 2013 2014 2013 2014

Long-termIncentives

Short-termIncentives

GuaranteedAllowances

Base Salary

France Switzerland

Source: Mercer Executive Remuneration Guide France, Germany, Switzerland, UK, 2013, 2014

United KingdomGermany Italy

MERCER WEBCAST 2020

Remuneration MixExecutive committee Members (Level 2)

62 60 5951

6454

46 50

79 81

0,7 0,5 0,10,2

2,1

1,10,7

0,3

0,8 0,721 20 25

30

20

21

1921

13 1317 19 16 19 1423

35 29

7 5

2013 2014 2013 2014 2013 2014 2013 2014 2013 2014

Long-termIncentives

Short-termIncentives

GuaranteedAllowances

Base Salary

France Switzerland

Source: Mercer Executive Remuneration Guide France, Germany, Switzerland, UK, 2013, 2014

United KingdomGermany Italy

MERCER WEBCAST

Remuneration MixChanges to the mix of pay between base salary, annual bonus and LTIsEurope evolution

4%

9% 9%

4%

8%

3%2%2%

15%

6%

4%5%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Europe 2012 Europe 2013 Europe 2014

Increase the weight of base salary Increase the weight of bonusIncrease the weight of LTI Increase the weight of benefits

21Source: Mercer Executive Remuneration Pulse Surveys October 2012, May 2013, June 2014

Per

cent

age

ofor

gani

satio

ns

Key findings / 2015 focuses

MERCER WEBCAST 23

Executive Remuneration trendsKey findings / 2015 focuses

• Modest salary increases, with a decrease in the number of salary freezes.

• STI Payout levels varies significantly between countries.

• LTI practices are also strongly impacted by the local cultures and regulationsas we see in the prevalence of vehicles used in the different countries.However there is also a tendency to have more single LTI plan, to decreasethe use of Stock Options and increase RSUs and PSUs.

• More emphasize given to variable pay in the remuneration mix whichstrengthen the linkage between performance and compensation

• UE directive plan to:

àHarmonize European Say on Pay practicesàBinding vs. non-bindingàEx-post vs. ex-ante

à Introduce a CEO/average employee pay ratio

MERCER WEBCAST

Q&A

MERCER WEBCAST 25

Q&A

Cyrille Bellanger

Executive Remuneration consultantParis


QuestionsPlease type your questions in the Q&A section of thetoolbarand we will do our best to answer as many questions as wehave time for.

To submit a question while in full screen mode, use theQ&A button on the bottom right-hand side of your screen.

To submit a question while in half screen mode, use theQ&A panel on the bottom right-hand side of your screen.

FeedbackPlease take the time to fill out the feedback form at the endof this web briefing so we can continue to improve. Thefeedback form will pop-up in a new window when thesession ends.

www.mercer.com/webcastsView past recordings and sign up for upcoming webcasts

CLICK HERE TO ASKA QUESTION TO “ALLPANELISTS”

Caroline Peyre

Senior Associate, Senior productmanager for the Mercer's ExecutiveRemuneration GuidesParis


MERCER WEBCAST

european executive remuneration trends 2014 merg survey ... · executive remuneration trends key...

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