CEO salaries rise sharply despite corona crisis

News

Rodrigo Fernandez

Tobias J. Klinge (KU Leuven)

Adam Leaver (University of Sheffield and Copenhagen Business School)

Lukas Linsi (University of Groningen)

16 March 2022

Despite the corona crisis, the incomes of CEOs and other top managers of the biggest publicly listed Dutch companies have increased, according to research by the University of Groningen and SOMO. Even though average company profits fell in 2020, executive pay rose by an average of 15% compared to the period 2017-2019.

Pay and the pandemic

While numerous companies and employees struggled during the 2020 lockdown, many executives of the 48 Dutch companies in this research study actually earned more than in previous years – even as sales fell, or losses were suffered.

“The pandemic shows that CEO pay is disconnected from the actual performance of the company. The level of executive income is often linked to certain indicators, such as share price. But this can also be kept ‘artificially’ high, for instance by buying up the company’s own shares,” explains Lukas Linsi of the University of Groningen.

The data show a clear upward trend for executive salaries in the Netherlands over the past 30 years: these actually only continue to increase, even when companies perform badly. Top salaries are thus unrelated to the social or macro-economic context.

“Executive salaries in the Netherlands should have a much clearer relationship with the actual economic performance of a company, overall salary increases within a company and sustainable long-term developments”, states SOMO-researcher Rodrigo Fernandez.