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Swedish CEOs make peanuts in Euro study

Published: 15 Dec 2009 16:36 GMT+01:00
Updated: 15 Dec 2009 16:36 GMT+01:00

Pay cheques for Swedish CEOs are less than half the size of those of their counterparts in other European companies, a new study shows.

The review, carried out by Swedish corporate communications consultancy Hallvarsson & Halvarsson (H&H), also shows that the variable compensation paid to Swedish company chiefs is much lower than that paid to CEOs in other countries.

The heads of Sweden’s 23 largest listed companies, excluding investment firms, earn an average of 13.5 million kronor ($1.87 million) in salary each year, not counting pension contributions.

The figures comes in somewhat lower than the 16.8 million kronor average salary earned by CEOs in the Nordic region, and well below the 36.6 million kronor paid to the heads of other companies throughout Europe.

Adjusted for the fact that Swedish CEOs lead smaller companies than many of their European counterparts, the H&H study reveals that Sweden’s top managers earn about 43 percent as much as their colleagues in Europe.

“That doesn’t surprise me in the least. That’s just about how things look,” Christer Ågren, deputy head of the Confederation of Swedish Enterprise (Svenskt Näringsliv) told the TT news agency.

According to him, the appropriate pay level for a CEO is something that must be decided by each company’s board of directors.

“Companies shouldn’t pay more than they need to attract quality people to the job,” he added.

Carina Lundberg Markow, head of corporate governance with the Folksam insurance company, goes a step further in her analysis.

“If you want to have a career abroad, all you have to do is move to another country,” she told TT.

At the same time, she thinks it’s hard to compare between countries based on salary listings without taking other considerations such as price levels, the pension system, and social benefits into account.

“The entire cost situation needs to be included,” she said.

According to Ågren, one consequence of Sweden’s low CEO salaries could be difficulties recruiting foreign management talent.

But Lundberg Markow disagrees.

“If you want to have a specific competence, you simply have to pay for it,” she said.

Lena Westerlund, chief economist with Sweden’s main trade union organization, LO, thinks it more important to compare CEO salaries with what other workers earn in a country.

She’s also concerned about the increasing earnings disparities around the world.

In her eyes, the international success of Swedish companies is evidence that CEO salaries are high enough.

“I can’t see how the salary levels in Sweden can be a problem given the needs we have,” she said.

The H&H study, which was carried out ahead of a workshop on CEO salaries scheduled for next year, also shows that the heads of Sweden’s largest companies have a substantially lower percentage of variable compensation in their total earnings package compared to their European counterparts.

About one third of Swedish CEOs’ compensation consists of variable compensation, compared to about half for other Nordic countries, while variable compensation accounts for about 73 percent of annual earnings by CEOs in other European countries.

According to the survey, Ericsson’s Carl-Henric Svanberg is Sweden’s highest earning CEO, pulling in 24 million kronor last year, excluding pension contributions.

TT/The Local (news@thelocal.se)

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Your comments about this article

05:29 December 16, 2009 by randyt
In this article; "According to the survey, Ericsson's Carl-Henric Svanberg is Sweden's highest earning CEO, pulling in 24 million kronor last year, excluding pension contributions."

And then the headline from a few days ago; "Ericsson to Lay Off Nearly 1,000 Employees."

"Carl-Henric, your doing one heck of a job!" - words W Bush would say if he had stock in Ericsson.
08:43 December 16, 2009 by miau
I wonder if the same is true for an ordinary worker's salary in Sweden vis-a-vis Europe? I nearly took a job in Germany where the pay was €400 a month more (after tax). But after deducting the higher cost of housing, child care and transport, I still came out ahead in Sweden with a lower salary.
15:58 December 16, 2009 by glamshek
After all why does Mr Svanberg get paid so hugely? Ericsson to cut 450 jobs in Lund.... Close one plant in Stockholm..... Shut another .... The more these people get paid, the more the bring it down. And its strange . Its almost everywhere. The more one is clever, the more it is damaging for the whole economy in larger spectre.
12:12 December 18, 2009 by krigeren
CEO's are paid according to comparisons from those in their industry. Svanberg does not make much money compared to others in his industry.

Cost cutting measures, reduction in force, "rightsizing" measures are all part of management's toolbox. Cutting a workforce can lead to growth over time and the argument of ridiculing his salary in light of letting workers go is not a germane argument.

Many companies are doing poorly now due to industry wide issues. Some CEO's are receiving bonuses for keeping the losses to a minimum let alone turning a profit....its a reflection of the economy.

On a positive note. Once people get into the income range by the top few percent of the population pricing here is Sweden from a European perspective is quite cheap. One can buy their dream farm with many hectares of land for a very reasonable price compared to other countries. From a Scandinavian perspective if you are a car buff the taxes on vehicles are minimal.

The trick to living in Sweden is to generate your income from outside of Sweden and/or owning companies here and then it turns out all right.

The rank and file always complain about the wealthy when they should be focusing on getting ahead themselves. Sweden is rife with opportunities...
15:26 December 18, 2009 by rumcajs
That is good!

Why? Not because I don't like CEO's, but because in those other countries where the CEO's get more money, the "not CEO's" don't get enough to live as cool as in Sweden. And what happens then? If I have a pub, it's way better for me to have 10 "not CEO's" with a comfortable salary who will buy 3 beers each (10x3=30) and one quite rich CEO who'll buy 5 (30+5=35) than 5 "poor f**d up with mortgage not-CEO's who will buy 1 beer each (5 beers) and only one filthy rich CEO who won't be able to drink more than 10 beers even if he can buy 50 (5+10=15).

Not socialism or liberalism or any "ism", no politics.... just numbers.
06:29 December 20, 2009 by krigeren
@rumcajs

I see you point however, in Sweden due to the taxes on alcohol those 10 non-CEO's will be drinking their first 4 to 6 of those 10 beers in a grocery store and drink them at home or make their own booze in a still in their backyard.

Go to England, America, or Canada.........I don't see a shortage of pubs or non CEO's drinking it up.
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