How much top managers earn. The ceo earns an average of 2.6 million euro

In listed companies, the year 2023 marked a jump in the number of millionaire top managers. In fact, the average total remuneration of CEOs reached EUR 2.652 million, up 8% on the previous year, despite a 10% reduction in the fixed component, which fell to an average of EUR 846,000. The figure is contained in Spencer Stuart's Board index 2024, which analysed the boards of directors of the top 100 Italian listed companies by capitalisation, including the largest ones in the FTSE MIB index, and which confirms that the central theme in the coming years will be that of governance, the solidity of which is crucial to ensure prosperity in the medium to long term, but also to ensure succession. "We are in an interesting situation. On the governance of listed companies, progress has been made towards an increasing awareness of the need to create value for all stakeholders, in line with stakeholder capitalism, so much so that many boards of directors are now looking more closely than in the past at the skills needed to develop the business'. Giovanna Gallì, partner and director at Spencer Stuart, looks at the evolution of governance with some optimism, starting from the data that emerged in the 2024 Board index, at a time when we are witnessing an expansion in the size of the Italian stock market, which in 2023 had 429 listed companies and a capitalisation of 761 billion, up 22% compared to 2022. However, the weight of our stock market remains limited (3.1% of the European basket and 0.5% of the world basket).

Among the elements that have emerged is certainly the evolution of remuneration that increases the attractiveness of companies in our country. The average CEO compensation exceeding EUR 2.6 million is a sign that remuneration policies are evolving towards international standards, also with the aim of becoming more attractive both inside and outside the country. Taking the FTSE MIB companies, the average remuneration rises to EUR 3.8 million, with 78% of CEOs having a remuneration exceeding EUR 1 million and 24%, i.e. almost one in four, exceeding EUR 4 million. Considering the chairmen, the average total remuneration amounts to EUR 1.2 million, which has gradually increased over the last five years. The figure for chairmen's remuneration shows the widest range of all, ranging from a symbolic minimum of EUR 7,000 to EUR 21 million for a chairman and CEO. For councillors, the average total remuneration is EUR 168 thousand. There is a clear difference between the 'non-executives' who receive an average of 105 thousand euros and the executives who receive 956 thousand euros. On the subject of internationalisation, there are 105 directors of non-Italian nationality, i.e. 9.6% of the total, while the international experience of Italian directors is growing: 39% have in fact had significant experience in global contexts.

The biggest changes concern incentive systems: 91 companies have in fact adopted annual systems and 84 medium-long term plans: in both cases, the figure is a significant increase compared to 2022, when there were 88 annual plans and 70 medium-long term plans. Among the parameters that are now permanently present and integrated in incentive systems are ESG objectives: 66 companies have in fact included them in their long-term plans, with an average weight of 20%. The indicators range from inclusion in sustainability indices to gender diversity, from occupational safety to energy transition.

If it is precisely thanks to the evolution of the last few years that the boards have also seen the entry of skills more closely linked to technological innovation, IT security, and artificial intelligence, this is not enough, however, to erase the criticalities and weaknesses, the first of which is certainly linked to succession plans. "We always talk about the board's role in relation to controls and administrative responsibilities, but we cannot overlook the fact that the role of directors, as the stock exchange's self-regulatory code also states, includes the creation of value for shareholders in the medium to long term,' Gallì interprets. This means that the board of directors has an important task in examining and approving strategic plans and also has a great responsibility for succession plans. What creates the greatest vulnerability for companies is not having visibility and transparency on who is leading the company'. The numbers that have emerged in our country on this issue, however, bring down optimism and, if anything, highlight the great work ahead of us. Structured plans remain an uncommon practice, mainly due to the strong cultural resistance that leads Boards to postpone the issue until the actual emergency: only 59 companies out of the 100 considered have defined a plan that concerns the CEO, and just 16 present a structured plan that looks at the medium to long term. Of the companies with a succession plan, the majority (43) only had a contingency plan for emergency situations. Significant is the figure for the companies that state that they have no plan at all: they number 30, while 11 provide no information on the subject. However, 'succession cannot only be an emergency issue, but is a path that the company must undertake and develop and that concerns not only the top management figures, but also the leadership and committee roles,' says Gallì. The situation is even more critical in smaller companies and those controlled by families.

In Family Businesses, the CEO comes from the family in almost half of the cases (51%) and often also holds the office of Chairman. In the case of the office of Chairman alone, this proportion rises to 79%: 76%, however, retain executive powers. The peculiarity of family businesses is the evident concentration of decision-making power in family figures, according to the analysis of family companies in Spencer Stuart's Board index. We are talking about 57% of the 100 companies analysed, mainly in the industrial and consumer goods sector. It should also be noted that the average tenure of top management is 9.3 years, much higher than that of the total sample (7.2 years): this on the one hand suggests greater stability, but on the other hand also possible critical turnover. Distinctive governance characteristics emerge from the analysis: the average size of boards of directors is slightly smaller (10.4 members against 10.9 in the sample), with a greater presence of executive directors (2.7 against an average of 2.3) and a lower proportion of independent directors (48% against an average of 57%). On the remuneration front, average fixed remuneration is lower than in non-family companies, with an average emolument for directors of EUR 42,000 compared to EUR 65,000 in non-family companies. This, however, could have an impact on the attractiveness for talent combining skills and seniority.